New Delhi, Sep 10 (UNI) Minister of Agriculture, Consumer Affairs, Food and Public Distribution Sharad Pawar will inaugurate a two-day conference here beginning September 12 to discuss the impact of the Warehousing (Development&Regulation) Act, 2007 on the warehousing sector in the country.
Besides the Central Warehousing Corporation (CWC), the Food Corporation of India (FCI), Ministry of Consumer Affairs, the Food and Public Distribution and the Federation of Indian Chambers of Commerce and Industry (FICCI), a large number of other stakeholders would participate in the conference.
The main objectives of the Warehousing Act are to make provisions for the development and regulation of warehouses, negotiability of warehouse receipts, establishment of a Warehousing Development&Regulatory Authority and related matters.
The Act aims to address the long-felt need to develop a formal mechanism of Negotiable Warehouse Receipts System for commodities, especially agricultural commodities. Besides mandating the negotiability of warehouse receipts, the Act prescribes the form and manner of registration of warehouses and issue of Negotiable Warehouse Receipts, including in electronic form.
It also prescribes the establishment of Warehousing Development&Regulatory Authority (WDRA), which is in the process of being set up.
The proposed Regulatory Authority would register and accredit warehouses intending to issue negotiable warehouse receipts and put in place a system of quality certification and grading of commodities with a view to protecting the interests of holders of such receipts against negligence, malpractices and fraud.
Negotiable Warehouse Receipts (NWRs), issued by warehouses registered under the Act, would help farmers avoid distress sale of their produce by ensuring finance against their produce stored in registered warehouses and would also have significance for commodity trading, banking and insurance sectors by providing safeguards against risks inherent in lending against commodities. Farmers can also trade the NWRs and obtain finance against them.
Generally, at the time of harvesting, the price of agricultural commodities tends to be lower because of positive supply situation and farmers often do not get adequate price for their produce. By depositing their produce in a registered warehouse and obtaining NWR, farmers can use it as collateral for obtaining short-term borrowing for their working capital requirement for the current sowing season from banks. When the price of the stored produce becomes higher, the farmer can sell the same, repay the loan and get a surplus income.
The pledging/collateralisation of agricultural produce with a legal backing in the form of NWR would lead to increase in flow of credit to the rural areas, reduce the cost of credit (due to certainty of recovering credit by the bank) and would spur other related activities, like standardisation, grading, packaging and insurance services in the agricultural sector.
With the increased requirement of quality storage, the warehousing industry would also get a boost in rural areas. This would also fill gaps in the logistic chain of agri-business in the rural sector.
Apart from individual farmers, cooperative societies and Self-Help Groups (SHGs) would also be able to assist their members, particularly small and marginal farmers, by aggregating their surplus produce and keeping the same in registered warehouses.
An established NWR system would also act as an incentive for farmers to produce goods of quality and specification amenable to standardisation and storage in registered warehouses.
The national conference, 'Warehousing 2008: The Warehousing (Development&Regulation) Act- Issues and Challenges', would be followed by regional conferences at Chennai (September 30), Bhopal (October 17), Kolkata (November 4), Mumbai (November 18) and Chandigarh (November 25) to generate wide-ranging awareness about the provisions of the Act among stakeholders concerned.
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