Famers hoping for withdrawal of trade ban on exchange

Farmers in Nipaniya Baijnath village in Madhya Pradesh’s Agar Malwa district have pinned their hopes on a recall of the ban on the trade of soybean and six other agri commodities on the National Commodities and Derivatives Exchange (NCDEX).

“If nothing, the platform would provide another outlet for us to offload our goods. At present our options are limited, which allows traders to have an upper hand,” said Nandkishor Yadav, chairman of the local Avantika AtmaNirbhar Farmers Producer Company (FPC).

Last year in December in a surprise move, the Securities and Exchange Board of India (SEBI) banned NCDEX from launching mustard seed and its derivatives soybean, chana, paddy (non-basmati) wheat, palm oil, and moong till December 21, 2022. This move by the market regulator was met with mixed reactions with some trade bodies welcoming it as they felt it would put a stop to needless speculation in the future’s platform which would affect physical markets. However, farmers and other trade bodies protested against the ban with some calling it illogical.

With a few weeks now left for the ban to end, farmers in this soybean and chana heartland of Madhya Pradesh have kept their fingers crossed. “It is our earnest hope that better sense prevails and the ban is lifted,” said Meherban Singh, a farmer from the village.

Members of Avantika FPC have used the platform multiple times to “hedge” or trade using the ‘put’ option. In fact, as Yadav and Singh said, the choice of rabi crop is often dictated by the future price trend of the commodity on the platform. In absence of any such trend, most growers have taken mustard and wheat this year.

Data shared by the platform shows that since 2016, 83 FPCs and 37 FPCs have traded 45,000 tonnes of soybean and 5,770 tonnes of chana, respectively, on the platform.

Around 150 FPCs have used the ‘put’ option on the platform for their commodities.

Back in 2016-17, members of Avantika had used the platform to ‘lock positions’ of 1,800 tonnes of soybean, which they delivered in November-December. For farmers, the platform provided a much-needed third option to sell their produce. At present, Singh said the only option available for them to sell their produce, especially soybean is the wholesale markets in Ujjain or Agar and the solvent and extractors plants in the area. While solvent and extractor plants pay a higher premium, farmers complain about opaque quality parameters which cut into their earnings.

“A day or two after we deliver our products, the plant owner finalizes the bill. If the rate at the time of delivery is around INR 6,000/quintal, the final bill is calculated at lower rates. When we ask about this, plant owners cite lower-quality parameters like moisture, foreign material, or damaged seeds. But we fail to understand how this is calculated,” complained Yadav.

With weeks left for December 21, most farmers hope that the ban would be withdrawn. In fact, growers in the village have kept 30 per cent of their produce with them to sell once the ban is withdrawn.

“We had written multiple letters to various authorities for withdrawal of the ban but did not get any response,” said Yadav.

Source: The Indian Express