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Virtual Food Grain Asset ("VFGA")

Objective is to participate in developing a more robust and resilient Financial services sector that supports broader, balanced and sustainable development goals in Agriculture sector.

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Last updated: 14 May 2022 11:55 AM

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The problem Virtual Food Grain Asset ("VFGA") solves

People associated with agriculture sector , mainly farmers will be able to access resources they need at a reasonable cost as against the extremely high cost they pay now while borrowing in the unorganised and unregualated lending arena. Digital system will bring transparency.

As we start VFGA launch by association or other bodies establised to represent pool for farmers that produce the same grain , these farmers would be motivated to learn ways to improve their production - not only quantum but also quality.

Trasaction of "VFGA" will be on digital platform and payment will all be digital. As assocition of farmers receive payments on digital platform they will also pay for their operational expenes on the robust digital payments platform; already operational. With transparency that tradable VFGA will bring these pool of farmers will get opportunity to export what they grow. Buyers that anyways buy same grain from intermediaries between them and farmer will be able to bid for the VFGA on the digital exchange. As a result farmers may get higher sale price than what they get on non-digital mandi's and the end buyer - domestic and foreign may get lower price.

While ab initio it will be virtual, every virtual food grain will turn into real i.e. tangible asset provided there is no natural calamity. As on the date of maturity of the unit(s) of VFGA holder will need to take delivery we may witness more parties setting up storage space.

As the end consumers i.e. large retail population starts direct or indirect exposure to VFGA i.e. through Funds, respective VFGA price movement and the farm activites will be closely monitored and reported by media also. Gap in price that retail consumer pays and what the farmer gets will grow as a point of discussion. Such large polulation driven transparency will add lots of value to the Suptech and Regtech systems that are established for VFGA.

We can start with grain and then move to Virtual fruits.

Challenges I ran into

Its a new concept. Only after the concerned regulator(s) give in-principle consent to launch VFGA we can initiate developing the technology backed platforms and products as proposed.

Discussion