The suspension of the futures trade in potato has taken away from the farmers, an opportunity to hedge their price risks, leaving them at the mercy of the local traders, market participants said.
Futures on the MCX and NCDEX acted as an indicator of price trends for farmers on the basis of far-month contracts, traders said.
Since the last three years, when the futures trading was allowed in potatoes, farmers were getting decent prices, but after the suspension farmers are at the mercy of traders, Sanjit Prasad, vice president-business development, MCX said.
“Agra and Bengal have 19 and 23 cold storages, respectively, and a lot of farmers had taken sell positions and given deliveries, but suddenly the ban arrived and left farmers in a shocking position,” Prasad said.
Following the suspension, Forward Markets Commission (FMC) Chairman B C Khatua said that the government’s move to ban potato futures trade was likely to sharply hit farming community that has been struggling under the impact of low prices this year.
“Retail potato prices are sharply down at Rs 6-8 a kg from Rs 25-30 traded last year and so I am not sure why the government suspended the contract,” Khatua had said on May 15.
The impact of suspension has been extremely negative for the potato prices as its production across the country has been extremely good, traders said.
In Agra market, best quality potatoes are being sold at Rs 280-290 a quintal, and average quality potatoes at about Rs 260 a quintal, said Ritesh Agrawal, president, Agra Cold Storage Owners’ Association.
The prices of potato are seen falling in August across India on substantial increase in supplies and weak demand, traders and farmers said. Also, with arrival of monsoon the commodity is competing with green vegetables in the market.
“The earning from the sales is negligible at the prevailing rate. Farmers will start committing suicide here, as the situation is expected to get worse in the near future,” Satindar Pal Sethia, president of Agra Potato Spot Market, said.
But the worrying factor is that only 25-30 per cent of the produce has gone out from cold storages, and around 70 per cent is still lying in Agra warehouses, he said.
Only 20-22 per cent of the produce has been taken from Delhi spot market, said Deepak Bhojwani, a-Delhi-based trader.
Besides, huge quantities of fresh arrival are also expected from Karnataka and other parts of Maharashtra during first week of August, which would further worsen the condition, traders said.
