Union Finance Minister Arun Jaitley on Sunday gave a clear signal that the union budget this year would include a framework to support trading opportunities for farmers.
"The government is looking to fulfil farmers' wish to be connected with the larger market. In more than one way we are trying to remove the many barriers between the farmer and the consumer," said Arun Jaitley, while launching agri-commodity options in Guar Seed launched by NCDEX today.
Farmers and the Farmer Producer Organizations (FPOs) from various states like Rajasthan, Gujarat and Madhya Pradesh also attended the event and spoke about their experience in trading their guar crop.
"Options trading would enable farmers to cover risks of the vagaries in price right after harvest and distress selling," said Samir Shah, CEO, NCDEX, speaking to THE WEEK on the sidelines of the launch event.
As of December 2017, NCDEX has seen 59 FPOs across various states participate on the exchange, and more than 2.3 lakh farmers have already opened their trading account, Shah said.
"We are commited to doubling farmers' income and the government is working towards achieving this goal of our Prime Minister," said Jaitley while praising NCDEX for launching the options trading in guar seed on its platform.
Finance Minister Jaitley inaugurated the hedging tool which he said will prove to be a 'game changer for the farmers.' The finance minsiter also said that the government is exploring more options to improve market access for the farmers.
NCDEX's guar options instrument is approved by the Securities and Exchange Board of India (SEBI), and is expected to deepen trade in the agro-commodity and benefit farmers in reaping improved price realisations for their produce, with limited downside risk, Jaitley said.
So far, farmers who trade on commodity futures on exchange platforms, barely have any access to options to secure their market investment risk.
"We are delighted that NCDEX and the government is providing us with this opportunity to trade on guar prices. I believe it will help us limit our losses on fluctuating market prices," said Lekhraj Jakhad, managing director of Bikaner-based FPO, Veer Biggaji Dalhan Utpadan Sangh Pvt Ltd, which also markets guar as an input to industrial gum makers.
Guar seed is one of the most liquid contracts on the NCDEX platform and a large number of informal trading centres in Rajasthan are already involved in certain forms of informal options trading.
India's leading exchange, NCDEX, also launched a mobile application on this occasion, which will enable farmers to learn more about agri-options and the commodities market.