MSTC set to launch forward trading in niche horticulture products

Government-owned mini-ratna MSTC Ltd is planning to launch forward trading in niche horticulture products to support its recently launched nationwide electronic portal e-RaKAM.

The online trading platform, which primarily deals in foodgrains, vegetables, fruit, spices, and all agriculture-related commodities, and connects farmers directly with consumers, is set to launch forward trading in pineapples and mangoes, among a number of other such commodities, to make the platform successful.

Union Food Minister Ram Vilas Paswan had last week said, to begin with, around 2 million tonnes of pulses procured by the Food Corporation of India (FCI) would be auctioned on e-RaKAM.

MSTC, however, does not think it needs regulatory approval for launching forward trading because it is proposing it in the category horticulture commodities, especially perishable commodities that are not traded in the futures segment. It may be mentioned here that the markets regulator, the Securities and Exchange Board of India (Sebi), had suspended such forward trading in January last year.

“There is a normal practice in remote Indian villages to sell the entire mango for the season in an orchard at the time of flowering. This practice is prevalent for ages without any regulatory approval. If we are allowing mango/pineapple farmers to know their realisation at the time of flowering, farmers would be encouraged to take care of their fruit better. It is better if farmers find buyers ahead of harvesting of their products to reduce spoilage. For cereals, however, forward contracts may not be needed due to their long shelf life. Meanwhile, MSTC is just a platform and not trading in any commodity,” said BB Singh, chairman and managing director, MSTC.

Through its home-grown technology, MSTC is engaged in e-auctions of cereals and sandalwood, land parcels, teak wood and other such niche products on behalf of the state and central governments through its own e-portal.

Its newly launched electronic commodity trading platform, e-RaKAM, is dedicated to farmers in the north-east, who would be able to sell their commodities to the highest bidders across the country and fetch higher prices. “Target customers for the e-RaKAM portal are farmers, farm producer organisations (FPOs), federations of farmer cooperatives, institutional agencies like Nafed, Food Corporation, Agricultural and Processed Food Products Export Development Authority, mill owners, etc, on the one hand, and the traders, institutional buyers such as Mother Dairy, Spencer, and Metro, on the other,” said Singh.

The launch of e-RaKAM has raised eyebrows as a similar government project — electronic National Agricultural Mandi (eNAM) — launched by the Small Farmers Agribusiness Consortium (SFAC) in April 2016 failed to attract adequate liquidity despite having connected with around 500 agricultural spot mandis across the country.

Meanwhile, moving in tandem with the electronic trade wave, the India Farmers Fertiliser Cooperative (IFFCO) has introduced IFFCO Bazar, an online marketplace (online

mandi) for farmers wherein they can buy and sell their products to farmers located anywhere across the country. Through this, IFFCO aims to connect and bring on board all the 50 million IFFCO member farmers and the 36,000 cooperatives in the country on a single digital platform.

Existing private player in this business such as NCDEX eMarkets Ltd (NeML) has, however, gained handsome traction among traders especially in Karnataka where its parent National Commodity & Derivates Ltd (NCDEX) has modernised spot mandis.

MSTC says Sebi approval not needed in perishable commodity