New Delhi, 14 January: If you are a commodity trader or member of a farmer producer organization, you now have an additional tool to hedge your price risk and optimize your profits with the launch of Agri-Options here today by Shri. Arun Jaitley, Hon’ble Union Finance Minister. The first ever Agri-Options trade was executed in front of a panel of distinguished guests.
National Commodity and Derivatives Exchange Limited (NCDEX) launched India’s first Agri-Options on guar seed futures in the presence of SEBI, WDRA, Industry Associations, Government Officials and FPO members. Farmers from various states across the country, present at the occasion marked the commencement with a live trade by a farmer producer company.
While inaugurating the conference, Shri Arun Jaitley, Hon’ble Union Minister of Finance said, “India ranks among the fastest growing major economies in the world. Since a large portion of our population is dependent on agriculture, it is important to have equitable growth. Farmers have helped the country overcome a long period of scarcities to reach the present era of abundance. NCDEX Agri-options are an important tool which will contribute to the Prime Minister’s vision of doubling farmers’ incomes by 2022. Guar seed is a major contributor to revenue generation, hence making it a suitable commodity to start with for Options. I congratulate NCDEX for this initiative.”
“This may appear to be a small step, but is a significant one, in the direction of agricultural trade as this will ensure that the farmers will receive a better price for their commodities.” The Hon’ble Finance Minister further added.
Launched on the auspicious occasion of Makar Sankranti, this new hedging tool, Agri-Options: Ek Aur Kadam Kisan Pragati Ki Ore, is set to mark an important evolution in trading of agriculture commodities market. This instrument will give a strong impetus towards systematic development and transformation of commodity derivatives market in India, which will make the agri-economy more efficient and bring huge amount of value for the farmers of India. A Mandi.com mobile application was also launched on the occasion, where farmers can learn more about agri-Options and the commodities market. Mandi.com is a pro bono half-an-hour ‘weekly show’ produced by NCDEX for national broadcaster DD Kisan, a program dedicated to farmers’ education and awareness.
Elaborating on the benefits of Options, Shri Rabi Narayan Das, Chairman, NCDEX, said, “The long wait for agri-commodity Options has finally come to an end with the launch of agri-Options on NCDEX’s platform. Agri-Options will serve as a powerful tool to empower farmers by allowing them to lock in the prices of their produce at a minimum cost. It has the potential to transform Indian commodity market in a way that will benefit more farmers across the country for their hedging requirements. While, as of now, agri-Options is allowed in only one agri-commodity, we can expect more commodities under this over a period of time.”
Gracing the occasion with a recorded video message, the Hon’ble Minister of Commerce & Industry Shri Suresh Prabhu whole – heartedly welcomed the Agri-Options to the commodity market, “I congratulate NCDEX for taking this noble step, which will contribute towards empowering the farming community and will further strengthen the agricultural ecosystem.”
Announcing the launch, Shri Samir Shah, MD & CEO, NCDEX said, “We are thankful to SEBI for giving us the ‘go-ahead’ for introducing Options on guar seed futures, which will help the farmers in better price realization and risk mitigation. Our journey to connect farmers to the market would not have been possible without the immense support of our stakeholders and value chain partners and I take this opportunity to extend my heartfelt thanks to all those who have contributed to make this happen. This instrument will create a win-win situation for farmers irrespective of the price movement. We hope with this step we bring more and more PRAGATI for everyone.”
In order to offer the audience a thought-provoking discussion on Agri-commodity markets, a panel discussion was also conducted by NCDEX. The panel was presided by experts Dr Ramesh Chand, Member, Niti Aayog, Mr. Shashank Saksena, SAG Economic Advisor, Department of Economic Affairs, Ministry of Finance, Mr. D.K. Aggarwal, Chairman and MD, SMC Comtrade Ltd., and Shri Samir Shah, MD & CEO, NCDEX. The panel discussed the role Agri-Options can play as a new age hedging tool in the hands of the farmers and will be a game changer in the Agri-Commodity markets. The speakers said working models in other countries need to be studied so that retail prices for consumers can come down.
For more than a decade, NCDEX has played a big role in developing agriculture ecosystem. It has put a lot of effort and brought in various technological innovations that have helped in providing wider network and market access to farmers and other stakeholders, better price discovery, reduced information asymmetry, provided tools to mitigate prices risks and increased overall efficiency and transparency in the system. It will also ensure minimum occurrence of unnecessary losses due to massive procurements undertaken.
Key information: Guar Seed Options
Options contracts expiring in the months of February 2018, March 2018 and April 2018 would be available for trading w.e.f. January 14, 2018. The Guar Seed Options will be European type with a tick size of Re. 0.50 per quintal. The Daily Price Range (DPR) will be based on the factors of DPR of the underlying Futures contract and volatility. Options contract shall be launched on the trading day following the day on which the underlying Futures contract is launched. The expiry date of agri-Options will be the last Wednesday of the month that precedes the month of expiry of the underlying Futures contract. If Wednesday happens to be a holiday, then the Expiry Date shall be the next trading day of the Exchange. In case of banking transaction closing days etc. close to the Options Expiry Date, the same shall be fixed to provide for sufficient time ahead of such days. However, launch calendar with exact date of expirations shall be notified in advance.