Futures trading to benefit Punjab farmers

The National Commodities and Derivatives Exchange Ltd (NCDEX), the second-largest exchange in India has started an aggressive awareness campaign in Punjab and Haryana to apprise the farmers of the benefits of futures trading.

NCDEX currently has about 800 terminals in the two states and has a target to double the number by the next financial year. The Chief Business Officer of NCDEX told Business Standard that they had around 10 warehouses in the region and planned to proliferate five times in the next two years.

"We will tie up with state agencies and private warehouses to expand our storage network in the region," he added.

Gupta explained that most problems of agriculturists in Punjab related to storage of their harvest. They indulged in distress selling of their agriculture produce due to lack of post harvest infrastructure that resulted in a glut in the market and lower returns of their produce. But, through futures trading, they would get a platform where by they could sell their produce in a right price at the right time.

He said NCDEX had an understanding with the HAFED (Haryana Marketing Federation), Markfed (Punjab Marketing Federation) and Punjab Agro Industries Corporation for storage and trading of commodities.

He said there was not only need for godowns in the region, but also state-of-the-art warehouses with temperature control, for which discussions with state government officials were being held.He added that they were keen to work with farmers' clubs and non government organisations to spread awareness among the farming community.

According to Gupta, once trading participation by banks was allowed by the government for futures trading, the activity would pick up. Currently, the dependence of farmers on local money lenders was a big obstacle in the growth of the organised commodity market in India.

He told that besides conventional crops, the farmers of Punjab and Haryana had of late started trading the Gaur seed that was mainly sent to the export market.

"The farmers of this region are technology savvy and have come to our terminals for better price discovery and realisation", he informed.

NCDEX is opening new centres at Jaipur, Ahmedabad and Kolkata and appointing about a dozen new relationship managers to work at the grass root level.