LS passes bill to regulate warehouses business

New Delhi, May 15 (UNI) The Lok Sabha today passed a bill seeking to develop more "scientific" warehouses in the country and regulate and streamline the sector in such a way that the farmers get higher returns for their produce and the consumers better services.

Winding up the discussion on the Warehousing (Development and Regulation) Bill, 2005, Agriculture Minister Sharad Pawar said the bill sought to regulate warehousing business which would ultimately result in greater liquidity in rural areas, besides providing security net to farmers in times of distress.

Accordingly, registered warehouses would issue "negotiable warehouse receipts" to the farmers who could get it fully redeemed in any bank.

"It is a pro-farmer bill," Mr Pawar said, adding that the "receipts" issued by warehouses to farmers (in return for the goods they store there) would now be treated as a "cheque" and honoured by all banks.

This would save the farmer from making distress sale of his produce and allow him to wait for a good price. The money he could get by encashing the receipts could be used for his next crop even without having sold the produce of the earlier crop, he said.

The bill provided for the setting up of an authority --- -- Warehousing Development and Regulatory Authority--to regulate and ensure implementation of the provisions of the legislation and to promote orderly growth of the warehouse business in the country.

At present, the warehousing receipts issued by the warehouses in the country did not enjoy the "fiduciary trust" of depositors and banks as there was a fear that it was not possible to recover the loans in case of fraud and mismanagement by the warehousemen or insolvency of the depositor.

The available legal remedies were also time-consuming and inadequate. The format of warehouse receipts issued by the various warehouses in the country was not uniform.

"The new legislation seeks to establish a negotiable warehouse receipt system for all commodities, including agricutlural produce," Mr Pawar said.

"The bill provides for making warehouse receipts a prime tool of trade and facilitate finance against it throughout the country," he said, adding, "it will allow banks to improve the quality of their lending portfolio and enhance their interest in lending in respect of goods deposited in warehouses." Mr Pawar said the system of negotiable warehouse receipts would result in providing considerable benefits, both at the macro as well as micro levels, and increase the liquidity in the rural areas, encourage scientific warehousing of goods, lower cost of financing, improve supply chains, enhance rewards for grading and quality and better price risk management.

Mr Pawar said the main thinking behind the new legislation was to create a situation wherein farmers were not forced to sell their produce in distress.

Replying to a question, he said the production of wheat had gone up to 73.6 million tonnes this season as against 68 million tonnes last year.

Mr Bikram Keshari Deo (BJP), Ms P Sathi Devi (CPI-M), Mr Prabodh Panda (CPI) and Mr Lakshman Singh (BJP) participated in the discussion.

UNI