Even as rules and policies of the Central Warehousing (Development and Regulation) Act 2007 are being framed, the Central Warehousing Corporation (CWC) has begun promoting the Act in every village in Gujarat.

The Warehousing Development and Regulatory Authority (WDRA) has already been formed at Gandhinagar to establish accreditation agencies for registration and regulation of the warehouse receipt system. M V Lal, Assistant General Manager of CWC, told Newsline, “The introduction of Warehouse (Development & Regulation) Act, 2007 marks the beginning of a new charter to empower the farmers of India.”

He added: “The Act aims to make the warehouse receipts negotiable, thereby according an opportunity to the farmers towards safekeeping of farm goods in accredited warehouses. It also safeguards financial institutions by mitigating risks inherent in credit extension to farmers.”

Lal said these enabling provisions, a long-felt need of the industry, have the potential to render warehouse receipts as “a prime tool of trade, improve the lending portfolio of banks , and further enhance the interest of lending institutions in ensuring credit with reference to goods in warehouses”.

He said: “Earlier, due to the involvement of agents, farmers failed to sell foodgrain at the right time, when the prices soared high. With this Act, farmers will be issued receipts from the warehouses, and based on that, they could ask for a loan from any bank. This will help them sell foodgrains during the demand in the market.”

According to Lal, traders can also store their foodgrain in the warehouse, but “they cannot get much benefit of loan”. At present, there are 15 CWC warehouses in Gujarat.