* The Negotiable Warehouse Receipt (the “NWR”), is an instrument introduced in 2007 under the Warehousing Development & Regulation Act (“WDRA or Act”) which has the potential to provide an alternate market channel that can link the farm gate to the national markets. (Pattnaik, 2010) * Warehouse receipts (WR) are documents issued by warehouses (licensed warehouseman) to depositors against the commodities deposited in the warehouses, for which the warehouse is the bailee. These documents are transferred by endorsement and delivery. (Gujral and Joshi, 2009) * Negotiable warehouse receipt is a negotiable instrument. It is in the nature of an actionable claim representing a right to a commodity. (Gujral and Joshi, 2009) * With the warehouse receipt based trading:
* Farmers can store their produce in the nearest registered warehouse * Farmers can take the NWR to the nearest physical market (the “spot market”) or virtual market (the “spot exchange”). The farmer can sell the NWR to a trader. The trader can sell the NWR to another trader in a distant market. * Thus, even though the receipts are handled by several intermediaries, the ‘physical goods’ need not move until the final delivery and this would greatly reduce the costs / wastages associated with multiple handling. * The grading of commodities and scientific storage by an accredited warehouse (i.e. a third party) provide credibility to the receipts and facilitates paper based trading. * Thus, WRs can help the farmer to improve profitability addressing his need for credit, by allowing him to sell at the right time at the right place. (Gujral and Joshi, 2009)
BENEFITS OF NWR:
(Gujral and Joshi, 2009)
Indian agriculture scenario remains riddled with a plethora of laws that are outdated and continue to provide incentives to promote a system that has clearly failed. Current policy & regulatory...