SEBI’s ban on chana, mustardseed puts FPOs in a repair

SEBI’s ban on chana, mustardseed puts FPOs in a repair

by admin- Friday, October 22nd, 2021 07:56:20 AM

They used put alternatives, locked in expenses under NCDEX’s options trading
SEBI’s ban on chana and mustard futures and options trading on NCDEX has at a loss for words farmers manufacturer organisations as the move comes six months after it backed a farmers’ familiarisation programme on alternatives trading.

In fact, the regulator had parted away few lakhs of the regulatory expenses to be paid via NCDEX, in a bid to encourage farmers to apply alternatives trading in these commodities.

NCDEX options programme
NCDEX’s familiarisation programme for FPOs turned into performed among remaining November and this February. Farmers from Rajasthan and Madhya Pradesh thru FPOs were in a position to buy ‘Put’ options and lock in a minimal selling charge in chana and mustard seed even earlier than sowing the first seed on the floor. The premium price to shop for the placed choice turned into subsidised up to ₹300 according to quintal under the programme.

About 41 FPOs participated within the programme and locked-in price of 1,030 tonnes of chana and 1,980 tonnes of mustard seed. The top class cost of about ₹83 lakh for buying the put options changed into subsidised under this programme to guard merchandise worth around ₹15 crore.

Usually, farmers determine to grow a selected crop after seeing the then price. However, on the time of harvest, costs crash because of a surprising surge in output and depart farmers in the lurch.

In comparison, the positioned option agreement facilitates farmers to fasten inside the price by way of paying a small top class on the time of sowing. If the prices fall beneath the locked-in fee farmers can supply the commodity at the alternate platform and comprehend their money. If the spot prices are better than the locked-in expenses, farmers can forego the top class paid and sell their produce it inside the spot market.

Yogesh Dwivedi, CEO, Madhyabharat FPOs Federation, stated it had managed to fix the price of 80 tonnes of chana with a top rate of ₹1.60 lakh which become subsidised by SEBI.

Last year, farmers sold chana inside the spot market as expenses were better there than the locked-in option charge, however this year there is lots of uncertainty as sowing is behind schedule and would start best after Diwali, he stated.

The alternatives contract would have labored wonders for farmers this time, however the change advised the product become banned via SEBI, he delivered.

Ravinder Gaur, Director, Shubhlaxmi FPO, Nagaur, Rajasthan, stated it had locked in a hundred tonnes of mustard seed by paying a premium of ₹2.70 lakh closing 12 months and expects charges to fall inside the coming season after making new high final 12 months.

Ajay Kumar, Director, Kedia Commodities, stated once a commodity is banned from trading it is very difficult to get the hedgers again and regain their confidence. The latest ban in two commodities has set the clock back and some of the corporates at the moment are hesitant to take a sparkling role in agriculture commodities, he brought.

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