With corporate push, more farmers get active on futures platform

An increasing number of farmers in the country are using the commodity futures market, with help from both non-government bodies and some major corporate groups.

According to the National Commodity and Derivatives Exchange (NCDEX), at least 30,000 growers are actively hedging for their produce through farmer producer organisations (FPOs).

Reliance Foundation, philanthropy arm of Reliance Industries, has formed 16 FPOs in 13 states. One of these, with 2,200 farmers, has been active on NCDEX over the past year. The foundation has also educated some of its FPOs on value addition in pulses.

“We started it as part of a rural transformation programme, planned for 26 clusters across India, to increase the production and income of farmers,” said Nitin Sharma of Reliance Foundation. On use of the NCDEX by one FPO, he said, farmers there had seen a 10-15 per cent rise in income. “We will extend it to other FPOs,” he added.

Jeevika Women Agri Producer Company, formed by Technoserve India with the help of a non-government organisation (NGO), Jeevika, in Bihar’s Purnea, was making losses for three years. In 2016-17, after participating in the futures market, it made a profit of ~9 lakh. The FPO traded about 1,000 tonnes of maize on NCDEX. Jeevika has funding from the Tata Group and the Gates Foundation. It plans a maize processing unit.

“To raise farmers’ earnings, multiple tools are required; the futures platform is one. Apart from the plan for maize processing units, we have joined hands with Reliance Fresh and Big Bazaar,” said Debranjan Pujahari, associate practice leader at Technoserve India.

NCDEX is working with these companies and NGOs to increase farmers’ participation on its futures platform. It says it is providing knowledge about the system and on how to hedge. “Futures are an important tool for managing price risk. It is heartening to see farmers make judicious use of this tool and see an increase of 15-20 per cent in their realisations,” said Samir Shah, managing director.

From about 30,000 farmers active on NCDEX, the bourse says it aims to raise this to over 100,000 by the end of this year.

Apart from trading, several FPOs are also focusing on value addition and direct marketing. Souvik Dhar, project executive at Srijan, said: “We are working with soyabean farmers in Rajasthan and Madhya Pradesh. Recently, we tied up with New York-based Bunge Ltd to provide soyabean. And, we will start trading of mustard on the futures platform in this year.”

According to the NCDEX, at least 30,000 growers are actively hedging for their produce through farmer producer organisations