It is estimated that 30 percent of the harvested produce gets sold at the farm gate itself and on most occasions considered as distress sale due to financial stress of farmers. These types of sales are, in majority of cases carried out directly between farmer and trader on mutual negotiation of price. The transaction does not undergo the process of price discovery in a competitive environment. In these types of transactions accuracy of weighment of the produce, timely settlement of full payments and access to market information are not assured.
The warehouse based sales model is designed in such a way to address those short comings and provides linkage to buyers including processors, organised retailers and intermediaries. Also that it enhances the holding capacity of the farmer and enables to utilize the time value of his commodity. The method of keeping the agricultural produces in scientific warehouses and trading from there without transporting it to APMC markets is known as Warehouse based sales.
Warehouses are the places where commodities could be stored without quality deterioration. Farmers/ traders and any others can store goods in ware houses/ go-downs Scientifically built according to the rules of the accreditation authorities. Its specifications include parameters like height of plinth level, commodity preserving methodology etc. The Directorate of Agricultural Marketing issues licenses for construction of scientific warehouses. The Director of Agricultural Marketing will accredit the warehouse buildings if conforms to the specifications prescribed.
There is a provision in the Karnataka Agricultural Produce Marketing (Regulation and Development) Act, 1966 to declare any accredited warehouse as Submarket yard by linking to the nearest APMC. Thereafter the warehouse would be treated as Sub-market under the said Act.
Farmer Producer Organisations, Farmers, Traders, Stockists, and associated individuals/ institutions can store their commodities in the warehouses. The warehouse service provider will take care of the commodities stored therein. Before accepting the commodities for storage, warehouses examine the quality of the commodities and accepts only if the commodity possess enough shelf life and can sustain the quality for a reasonable future period. Warehouse service provider extends assaying facility. For storing commodities beyond the expected certified shelf life, a re-validation of assaying certificate will be produced from the assaying agency.
Measures to protect the quality of commodities stored includes treatment against pests, fumigation of stored space etc. Warehouse provider would ensure insuring the commodities stored in the warehouse.
At the time when the commodity is offered for sale, it is assayed and the quality parameters are uploaded to the unified market platform (UMP). The intending licensed traders located in any place can offer bid on UMP. The highest bidder will win the trade if seller agrees for the rate quoted. The trader makes online payment to the market within the prescribed time, and thereafter warehouse hands over ownership of the commodity to the buyer. The cost of farmer’s produce at the price quoted will be transferred to his bank account through the UMP. If the buyer opts continue to store the material in the warehouse the buyer can do so and bear the cost.
The owner who deposits commodities in warehouse can avail credit facility from banks by pledging the goods. On sale of the pledged goods, with the consent of the owner (Farmer or Trader) the loan amount and interest can be transferred to the lenders account through UMP for discharging the pledge before delivery of goods to the buyer.
Developing a WBS center involves multiple organisations/parties, Viz, Department of Agricultural Marketing, State Agricultural Marketing Board, Rashtriya e Market Services, Warehouse Service Provider, Farmer/ Farmer groups and Farmer Producer Organisations. All the institutions involved have work in coordination to institutionalise warehouse based sales.. Buyers from across the country will have to be encouraged to participate in the initiative. Buyer / Trader who are registered with any one APMC would be valid to trade in any markets across the state. Electronic permit (e-permit) system will facilitate the buyer to transport the goods bought, to any destination smoothly.
Large FPOs can own warehouses or rent from the Central / State Warehousing Corporation (CWC / SWC) if situated in the area of operations of FPO/s. The warehouse maintenance and operations are carried out by a third party called the Warehouse Service Provider (WSP) or the FPO itself can act in this role. The FPO/ warehouse owner can submit the application to the Director of Agricultural Marketing for notifying the warehouse as a submarket. Once the warehouse gets declared as a submarket, the FPO/ WSP will get the license to operate as a Commission Agent under the Warehouse Based Sales Scheme. The entire trade operations will be carried out on Unified Market Platform of ReMS.
Once a pilot project of WBS is successfully implemented Government may consider establishing modern storage infrastructure, to minimise the transportation cost to the farmer.