Documentos de Académico
Documentos de Profesional
Documentos de Cultura
Jyoti Gujral
Infrastructure Development Finance Company Limited
Contents
Current Scenario in Indian Agriculture Regulated Markets: Showing signs of market failure Need for market based policy reforms in Agriculture Negotiable warehouse receipt (NWR) Potential holistic solution Benefits & impediments to NWR use Promoting use of NWRs an alternate approach for FCI Broader Legal & regulatory framework to facilitate NWR based markets
Negotiable Warehouse Receipt (NWR) Model with potential to offer a Holistic Solution
The Negotiable Warehouse Receipt (the NWR), is an instrument introduced recently under the Warehousing Development & Regulation Act (WDRA or Act) which has the potential to provide an alternate market channel that can link the farm gate to the national markets. Warehouse receipts (WR) are documents issued by warehouses to depositors against the commodities deposited in the warehouses, for which the warehouse is the bailee. These documents are transferred by endorsement and delivery. Negotiable warehouse receipt is a negotiable instrument. It is in the nature of an actionable claim representing a right to a commodity. With the warehouse receipt based trading: Farmers can store their produce in the nearest registered warehouse Farmers can take the NWR to the nearest physical market (the spot market) or virtual market (the spot exchange). The farmer can sell the NWR to a trader. The trader can sell the NWR to another trader in a distant market. Thus, even though the receipts are handled by several intermediaries, the physical goods need not move until the final delivery and this would greatly reduce the costs / wastages associated with multiple handling. The grading of commodities and scientific storage by an accredited warehouse (i.e. a third party) provide credibility to the receipts and facilitates paper based trading. Thus, WRs can help the farmer to improve profitability addressing his need for credit, by allowing him to sell at the right time at the right place..
6
Farmers
Increase in trade Reduced costs of transaction Assured quantity and quality of buffer stock Cost saving Rural Development Higher capacity utilization Higher charges Increased business Lower reinsurance premiums Boost for new types of products
7
11
12
Negotiable Warehouse Receipts (NWRs) Need for broader legal & regulatory framework
Given the web of regulations governing the agriculture sector there is a need for broader regulatory reform and for facilitating the emergence of more market based government and private sector initiatives. Enacting a comprehensive Warehousing Law: Though warehousing activity is not defined under any Schedule of the Constitution of India, still commencement of warehousing activity needs licenses from various authorities. Regulation of warehouses by APMCs results in requirements of separate approvals for establishing warehouses in different locations even within the same state. Additionally, many states have State Warehousing Acts that further regulate the establishment of warehouses that intend to store agricultural commodities that are notified or specified under the State Warehousing Act. This translates into a staggering licensing and regulatory compliance requirement for the development of any national network of warehouses that are of a uniform minimum standard. Consequently, in order that the benefits intended from introducing NWRs are actually realised and made available to the farmers, it is necessary that a comprehensive national level legislation regulating warehouses be formulated. For this it is recommended that WDRA be suitably amended and be made into a comprehensive warehousing law.
13
Negotiable Warehouse Receipts (NWRs) Need for broader legal & regulatory framework
Integrating National Spot Exchanges under WDRA: National Spot Exchanges have the potential to help NWRs achieve its full potential. At present the growth of the National Spot Exchanges is adversely affected as they have to register with the relevant APMCs to be permitted to trade. WDRA must free them from the undue intervention by the APMCs. Under the WDRA when they integrate the accredited warehouses, they would simply be the platform for EWRs and not traders or markets who need a license from the APMCs. WDRA can frame rules authorizing and registering spot exchanges as being one of the authorized platforms for issuing and trading of electronic warehouse receipts and thereby take them out of the ambit of the APM Laws. Integrating Commodity Exchanges under WDRA: FMC should encourage physical settlement through the use of warehouse receipts and should be made mandatory where possible. The use of warehouse receipts to fulfill margin requirements should be encouraged. Contracts that envisage delivery through warehouse receipts should be given fast track approval. Cash settlement may be disallowed until warehouse receipts become entrenched in the cash market. The Authority must recognise the standards adopted by the Commodity exchanges and permit their warehouse to issue NWRs.
14
THANK YOU
16