KOLKATA: In an effort to make the agri-economy more efficient and bring huge amount of value for the farmers of India, National Commodity and Derivatives Exchange Limited (NCDEX) is launching the country's first agri-commodity options in Guar Seed. This unique first-of-its-kind hedging tool will be inaugurated by Union finance minister Arun Jaitley on 14th January.
NCDEX guar seed options is an important hedging tool which will prove to be a game-changer for farmers. Looking at its importance for the agri commodity markets, the new instrument will be launched on the auspicious occasion of Makar Sankranti, which is celebrated as a key harvest festival across the country.
The instrument, which is uniquely designed by NCDEX and approved by Securities and Exchange Board of India (SEBI), is expected to deepen trade in that commodity and will benefit farmers in reaping improved price realizations for their produce, with limited downside risk. This launch is largely inspired by the fact that guar seed is one of the most liquid contracts on the NCDEX platform and a large number of informal trading centres in some communities of Rajasthan are already involved in some form of informal options trading.
Announcing the day of launch, Mr. Samir Shah, MD & CEO, NCDEX said, "We are thankful to SEBI for giving us the go-ahead for this new hedging tool, which will help the farmers in better price realization and risk mitigation. Options will protect farmers from downward price movement as well as give them an opportunity to sell their produce at higher prices in case of price increase. This instrument will create a win-win situation for farmers irrespective of the price movement."
Welcoming the launch of this new hedging tool, Dr. Ashok Gulati, chair professor for Agriculture at Indian Council for Research on International Economic Relations (ICRIER) said, "The commodity market in India is at the threshold of a new take-off with the introduction of Agri-Options, a robust marketing tool which will further strengthen the agricultural ecosystem. I am sure with this new initiative by NCDEX, the commodity derivatives market will get a grip among farmers in a big way. By providing farmers better price realization and risk mitigation, Agri-Options is going to refurbish the growth story of Indian commodities market."
The official launch will also see farmers share their experiences on how NCDEX has helped better their lives. As of December 2017, NCDEX has already seen 59 FPOs across various states participate on the Exchange, and more than 2.3 lakh farmers have already opened their trading account. In order to promote awareness around this new agriculture hedging tool, the Exchange has already initiated a series of awareness programs and trainings across the value chain. The Exchange will also launch a mobile application on this occasion where farmers can learn more about agri options and the commodities market.