Government of Karnataka and the NCDEX Spot Exchange Limited signed a shareholder agreement on 23rd December, 2013 for establishing a Special Purpose Vehicle for carrying on reforms in the agricultural market sector in the state.

This is as a follow up to the Karnataka Agricultural Marketing Policy 2013 to bring about farmers’ friendly revolutionary reforms in the field of Agricultural Marketing being adopted by the State in September 2013.   The policy, first of its kind in the country, aims at helping producer-sellers (farmers) secure the best price for their produce through a transparent auction process, rationalization of market practices, grading of the produce and provision of warehouse based sales in market yards and whereabouts and other measures enabling efficient price discovery

Subsequent to the agreement signed today, Government and the Exchange would establish a “company” in the state that would modernize APMC markets in the state by bringing in electronic auctions, providing for grading of the produce, arranging payment to farmers directly and usher in all other best international practices adopted in advanced markets

In the initial phase, major markets and major commodities would be covered following which other smaller markets would be covered, eventually covering the whole state.  The company would also link participants in the markets on the state to the national market and reduce payment default risk that is common at present

Warehousing for scientific storage of the produce, bank funding for the stored produce and other facilities would be possible, once the company becomes operational.  While grains and cereals would be the focus of the project initially, fruits and vegetables would be covered in the last stage of the project

The company will be a joint venture between the Government of Karnataka and the NCDEX Spot Exchange Limited, with equal shareholding.  After an initial phase, other similarly placed institutions could be inducted into the company.   The NCDEX Spot Exchange Limited is a subsidiary of the National Commodity and Derivatives Exchange Limited, which is the premier commodity exchange in the country for agricultural commodities

A beginning has been made by the present Government for a revolutionary step in the area of Agricultural Marketing.  It is appropriate that the Karnataka Government has signed an agreement with the NCDEX Spot Exchange Limited by mutual consent for bringing Agricultural Marketing Reforms favorable to farmers by creating an institutional arrangement on the National Farmers’ Day