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Safal National Exchange of India Limited

SNX intended to establish a seamless spot market with national reach to enable transparent price discovery & delivery for fruits and vegetables in the country… Here are the excerpts of the interview with Mr. Ravishankar Natarajan, CEO, SNX India Ltd.

SNX is an electronic national spot market for Fruits and Vegetables with the concept of one India one market. Elaborate about the model and its current relevance with the country.

SNX is an electronic national spot market for Fruits and Vegetables, in an exchange format. We enable sellers and buyers connect through the member to the central computer in Bangalore, to find the best buy/sell options. The exchange provides counter party guarantee. It also facilitates provision for services like quality inspection and logistics to enable buyers transact with the comfort of staying at their own locations.

SNX is pursuing the vision of ‘One India One Market’. It is a national level equal opportunity, e-enabled market for all. It connects the farming community with the trade participants such as Commission agents, Processors, Retail chains, Exporters, Forwarders, and so on. Such an exchange has been made possible with the reach of Internet in remote rural locations, swift transfer of funds through e-banking, and growing familiarity in use of computers.

Concise, the trading system and delivery mechanism of SNX. Elaborate how do you monitor overall trading activities?

SNX is a seamless delivery based electronic spot market for horticultural commodities.

What are the contracts you have launched so far and what is your futures plan? Do you have any plan to extend your business operations from the existing operation in the area of F&V?

SNX had managed a pilot trading operation in mango for about two months during the mango season of 2007, limited to Totapuri variety. The exchange started operations on Dec. 14, 2007 and offers contracts in mango, onion, potato, tomato, grapes and banana which are being traded. Since commencement of trading about 9000 MTs have been delivered satisfactorily to the buyers under the exchange. Details of contracts can be seen on our website www.snxindia.com

The exchange has 250 members, including 150 SHG’s and Farmer associations that connect individual farmers. Members also include F & V traders and businesses interested in commodity trade. SNX has received wide spread interest from Traders, bulk buyers and retail chains. Similarly, response from farmer community has been positive. The exchange has created an opportunity for farmers, even the small ones to get access to national markets.

Currently our focus is on Fruits and Vegetables, which may widen to some more horticulture commodities as we go along. We may also consider imported fruits and processed fruit products.

Brief about the benefits SNX offers to stake holders in F&V.
The biggest benefit offered is that the farmer can sell his goods on SNX a day prior to harvest. He can advance or postpone harvest by few days based on the price trend. Of course, the farmer is assured of his payment and also knows the exact details of charges made on his account. He is entitled to receive a contract note as in the equities market, which would specify the full details of the transaction. Other benefits are a) Transparent price discovery process; b) access to national level markets; c) price dissemination which enables the farmers to get the right price and so on. We are also educating the farmers that, such facilities also come with responsibility to deliver graded material as per the quality specifications of the contract on which the material is traded.

Benefit to Traders
  • Access to wider market and opportunity to enhance turnover
  • Transactions totally guaranteed nullifying the risks of advances turning bad in physical markets
  • Larger participation on SNX platform enables small and medium traders to realize better price for their produce
  • Expand trading activities due to operational ease, availability of finance and absence of counter party risk under SNX system
Benefit to Exporters/Processors
  • Procure quality inspected material and free from hassles relating to procurement in physical market
  • Lower brokerage /commission payable to procurement agents
  • Customized logistics support
  • Looking at price available at SNX, can make export commitment and cover immediately through SNX
Benefits for institutions
  • All transactions through net banking, no hassles of handling cash
  • Absolute transparency in procurement prices
  • Makes it easy to diversify the range of F & V items
  • Growth in business without committing on fixed costs on additional manpower required as the volumes increase
  • Management can focus on managing their customers and grow rather than on back end
What are your readings on existing marketing system for F&V in India? Do you think that SNX could make the lagging physical market transitions more efficient? Elaborate your views.

Present markets have evolved over a period of time, and I believe, are helping the farmers to find market for his produce, and also meeting the needs of the consumers for many years. It is true that markets are fragmented and price discovery is localized. Day to day price variation is linked to the quantity arriving, which may vary for no specific reason. With SNX, arrivals could be moderated enabling improved price stability in markets. Such impacts would be seen as the volume of trade picks up on SNX.

Do you have storage and other facilities at delivery centers? If so, brief about the facilities you offer to the farmers.

Our focus is in establishing a transparent trading platform. All requirements of physical deliveries shall be through third party arrangements made available to the buyers or sellers as the case may be.

How do you find response from the farmers and other participants? Brief about the programmes being carried out in order to create awareness about the spot exchange.

There is a good response from farmers and also other participants. We are conducting regular awareness programme for farmers to appreciate the trading facility, their rights, and also their responsibilities in dealing with SNX. We are pleased with the response of farmers, their ability to assimilate the new system and believe that farmers would take benefit of this platform.

Some of the retail chains, exporters, and fruit processors have taken membership, besides several commission agents who are looking for an opportunity in SNX to modernize their functioning.

What are your suggestions to farmers and other market participants to improve the existing marketing system mainly for F&V?

We encourage farmers and traders to participate in the exchange. We would shortly be covering more than half a dozen F & V items and expands the range rapidly. Every trade in this world has been influenced by the use of computers bringing convenience to the users. We believe that SNX would also show such rapid growth in traded volume, as people get to know about this option and experience deliveries. The response from the commission agents, traders, and farmers in the early days of our operations has been encouraging.

Publication date: 5/28/2008


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