Farmers may soon start trading electronic warehousing receipts on e-NAM

Integration of electronic negotiable warehousing receipts (e-NWR) with the Electronic National Agriculture Market or eNAM, as announced by the Finance minister in her Budget speech on Saturday, is expected to be complete in one or two months.

Warehouse receipts are issued by repositories who keep electronic records of goods deposited in a warehouse and subsequent transfers, in much the same way as depositories operate in the capital market. However, receipts for warehoused goods can now also be negotiable and hence tradable. CDSL Commodity Repository Limited, a repository set up by the CDSL, has already been integrated and has begun issuing e-NMR for goods traded on eNAM. Another repository, the NERL set up by the NCDEX, is in the process of integration.

This integration will help farmers to participate in auctions by storing quality produce in registered warehouses of WDRA, which is already widening its network of warehouses across the country. This means registered warehouses will become market yards, marking the beginning of warehouse-based sales in India.

The e-NWR will be useful when farmers deposit their produce in warehouse regulated by the Warehouse regulator and that warehouse has to be notified as a sub-mandi or market yard. The Government has already asked states to follow the model APMC Act which also mandates notifying warehouses as market yards.

Andhra Pradesh and Telangana have already notified over 40 warehouses as market yards. At least 15 other states have conveyed to the Union Agriculture ministry that they are considering this.

eNAM is a national networked platform connecting mandis or Agriculture Produce Marketing Committees electronically for helping the farmer realise the best price for his produce in the state from where he is selling. In physical mandis, the farmer gets the prevailing price in that mandi or the APMC to which he has brought his produce. However, eNAM connects all mandis in the state and all states in a national network. Hence farmers can get the best price prevailing in any mandi of that state if sold electronically.

The farmer can also obtain finance against such receipts and hold the underlying goods till he gets better price, avoiding distress sale at the mandis, in the process.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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