FCI mulls futures trading in grains

Food Corporation of India (FCI), the country's nodal food grain procurement agency, is exploring the possibility of futures trading in surplus grains for better price realisation, said V K Malhotra, chairman and managing director.

A final decision on the issue will be taken only after ensuring that the food grain security of the country is not compromised,said Malhotra.

The FCI is in talks with the two Mumbai-based commodity exchanges, National Commodity and Derivatives Exchange (Ncdex) and the Multi Commodity Exchange of India (MCX), to decide whether to take part in futures trading. The proposal, however, is on the "drawing board stage" and would take about six months to finalise, he said. The proposal may require Cabinet approval.

The primary objective of the Food Corporation is to ensure food grain security and act as a market stabiliser, he said.

"We are looking at ways to trade food grain stocks that are surplus after meeting the public distribution and buffer stock requirements on the commodity exchanges without compromising on any of our objectives," he said.

FCI's primary job is to supply grains to 210 million ration card- holders through 500,000 fair price shops across the country.

"Before entering the futures trade, we will wait for some time as the commodity futures market in India is still at a very nascent stage," he said.

Besides, the country does not have a very large surplus at present, the Food Corporation head said.

As on November 18, the FCI had a total food grain stock of 19.73 million tonne as against about 25 million tonne last year due to lower wheat procurement.

This had led to speculation whether the country will have to import wheat.

Malhotra, however, ruled out the possibility of wheat import saying the food grain stocks were "comfortable".