| The move is expected to enable wider participation for trade and better growers' realisation compared with the conventional spot auction carried out at select cities at present. |
| Speaking after launching the NCDEX's coffee futures contract here on Monday, Union Minister of State for Commerce Jairam Ramesh said, "Currently, infrastructure issues such as warehousing and tying up with coffee curing works are being addressed. Once all this infrastructure is in place, we will launch it in less than six months." |
| "The platform for coffee will be on the lines of e-auction launched in August for cardamom in Bodinayakunnur near Madurai. For developing the e-auction platform, NSE-IT (a subsidiary of the National Stock Exchange, which addresses information technology issues) has been roped in along with IT major TCS," he added. |
| The e-auction initiative is to help small and marginal growers (holding 1 to 10 hectares) directly and enable them in getting better value (up to 90 to 95 per cent) of the commodity, minus the middlemen. |
| The shift from a conventional spot auction to an e-auction platform is likely to impact 2 lakh coffee growers in the country. Karnataka accounts for 57 per cent, Kerala 24 per cent and Tamil Nadu 9 per cent and to lesser extent in non-traditional areas such as Andhra Pradesh, Orissa and a few north-eastern states. |
| Jairam Ramesh said, "NCDEX's coffee futures contract for Robsuta Cherry AB, relaunched today, is following feedback taken from stakeholders, including growers, traders, exporters and the Coffee Board. This new coffee futures contract aims to fulfil growers' target for better price realisation, act as a risk mechanism and bring stabilisation for this highly volatile commodity." |
| Talking about decoupling stock markets and commodity markets as in the West, Jairam Ramesh said "The two needs to be decoupled for smooth functioning. The main reason of concern is that the stock market practices have spilled onto commodity markets and there is no effective regulator in place." |
| "There is also a move to empower the Forward Markets Commission (FMC) on the lines of the Sebi, but the main issue for the government is how to maintain an arm's length from the stock market," he added. |
| Coffee Board Chairman G V Krishna Rau said the significance of coffee to the economy was underscored by the fact that in the coffee year 2005-06 (October 2005 to September 2006), India exported coffee worth $411.39 million. In 2006-07 so far (October 2006 to August 2007), the country's cumulative coffee exports have been $408.81 million." |
| "By launching the redesigned coffee futures contract, the NCDEX aims to provide an organised electronic marketplace for hedgers "" coffee growers, processors, exporters and merchants "" and investors for effective price discovery," said P H Ravikumar, managing director and CEO, NCDEX. |
| For the futures contract on Robsuta Cherry AB, the NCDEX has tuned the specifications of the global coffee futures contract so that all participants in the coffee value chain (from growers to exporters) are able to reap benefits of two-way liquidity. The unit of trading and the delivery unit is kept at two tonnes deliverable in 60 kg jute bags. |
| Ravikumar said the exchange proposed to launch five alternate-month contracts each with 12 months' life cycle from the second cycle onwards. In order to avoid squeezing of the market by a few players, it has incorporated the facility of staggered delivery on the last 10 trading days before the expiry of the contract. |
| For members and clients, position limits have been set at 11,250 tonnes and 3,750 tonnes respectively. "To make the relaunch of the NCDEX's coffee futures contract, we have set a target to shift 40 per cent of the total 2 lakh coffee growers on to futures in six months," he added. |
| BREWING INITIATIVE |
| |
Top Section
Explore Business Standard