Spot trading in agri goods likely in MP

To ensure better prices for farmers, traders and exporters and to loosen the hold of arhatias (local traders holding a mandi licence) and middlemen on the commodity market, the Madhya Pradesh government is in advanced talks with the National Spot Exchange for Agriculture Produce for spot trading in select agri-commodities.

Though spot trading will make the functioning of the commodity market in the state seamless, the government has yet to give its consent to the exchange in accordance with Agriculture Produce Marketing Committee laws.

"It will take another two month to make the necessary amendments to the Act to launch portal-based trading in the state," said a government source, adding, "Traders or individuals anywhere in country will be able to do portal-based trading (spot trading) by next Kharif season."

Now, only licence holder traders are allowed in real auctions in mandis (also known as galla-mandis).

Spot trading is likely to be permitted in soyabean and wheat in the state initially at NSEC created centres and facilities.

Madhya Pradesh government was probably the first in India to allow corporate houses to procure commodities directly from farm gate under single license system on fee payment in lump sum.

The previous Congress government had amended by-laws of Mandi Act for the purpose. ITC Ltd was the first company to enter the state for procuring commodities (initially soyabean) outside mandis.

However, spot trading will also require few more amendments to the Mandi Act that are very stringent and allow only licence holders to participate in the mandi auction. Under the mandi auction system, farmers have no exit route if prices crash.

Arhatias put all the burden of trade, including transportation, loading, unloading, weighing and grading, on the farmers. The National Spot Exchange provides customised solutions to various problems of farmers, traders, processors and exporters.

Further, as the auction of the galla (commodity) takes place in open yards, rains are an additional burden on the farmer. Moreover, a trader-outside mandi remain bereft of the quality of a particular commodity of a particular region.

Add to it farmer does not get immediate payment of his yield in remote areas if state government officials become lenient to monitor the payment system.