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Innovative Technologies, Institutions and Policies for Successful Value Chains for Tur Farmers: A Case Study of NCDEX Spot

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  • Sinha, Rajesh Kumar
  • Kumar, Ranjit

Abstract

The electronic spot exchange provides synergy among the existing marketing systems in the country with its improvised technology and reach through the online system as it brings a variety of benefits to the existing system such as price transparency, better price realization for farmers and lot of arbitrage opportunities for trader community. These exchanges are aimed at enhancing efficiencies of the existing value chain of commodities by developing appropriate platforms for modern spot markets, financing of commodities based on credible warehouse management arrangements, reducing transaction costs, supporting Futures Exchanges, regulators and the Government with standardized and structured spot markets for compulsory delivery in all agri-commodities. Successful operation of such technologiesdriven initiatives require congenial policy support as these are largely governed under the state laws of APMC. From the case study of NCDEX SPOT market in the Gulbarga district of Karnataka state, it has been observed that for facilitating the small and marginal farmers in participating in new age marketing system, it is required that all the stakeholders work seamlessly in an integrated manner, which are state agencies (warehousing, APMC, Mandi, Board, etc.), financial institutions, other infrastructural facilities, etc. With the help of NCDEX SPOT, tur grower-farmers in the Karnataka states are able to reduce the marketing cost by 50-70 per cent and are also able to sell their produce, whenever they want by paying a small charge for warehousing. It is also evident that the farmers could realize, on an average, 5-10 per cent higher price for their produce as compared to traditional APMC market. Although the business model seems to be working successfully and showing reasonable confidence to all the stakeholders, requires for upscaling across the board customization according to the law of land of respective states. However, it is a win-win proposition for the farmers-state governments-NCDEX SPOT-banks, etc, as its creates values at every stages of value chain.

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Bibliographic Info

Article provided by Agricultural Economics Research Association (India) in its journal Agricultural Economics Research Review.

Volume (Year): 23 (2010)
Issue (Month): 2010 ()
Pages:

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Handle: RePEc:ags:aerrae:96917

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Keywords: Agricultural and Food Policy;

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  1. Singh, N.P. & Kumar, Ranjit & Singh, R.P. & Jain, Praveen Kumar, 2005. "Is Futures Market Mitigating Price Risk: An Exploration of Wheat and Maize Market," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 18(2005).
  2. Gulati, Ashok, 2009. "Emerging Trends in Indian Agriculture: What Can We Learn from these?," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 22(2).
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