The Hindu Business Line : NCDEX ties up with IARI for grading agri-products

THE National Commodity & Derivatives Exchange Ltd (NCDEX) has tied up with the Indian Agricultural Research Institute (IARI) to evolve objective standards for the grading of agricultural produce to widen the range of contracts traded in its exchange.

"Currently, there are no well laid down objective criteria for grading and sampling farm produce in our country. In most cases, the grading involves subjective methods like feeling the physical commodity for texture, aroma, etc. This results in varying perceptions regarding quality, which inhibits proper price discovery," said Mr P. H. Ravikumar, Managing Director and CEO, NCDEX, after signing a Memorandum of Understanding (MoU) with the Delhi-based premier agricultural research institute on Thursday.

Under the terms of the MoU, NCDEX will avail itself of IARI's advisory services for gradation of wheat, rice and maize to begin with.

"We introduced wheat futures in our exchange July and already, we have achieved daily trading volumes of Rs 20-25 crore. And this is for just wheat of standard milling quality. If we can develop proper grading standards, it would help increase the number of trades through better benchmarking of different varieties grown in various regions of the country," Mr Ravikumar pointed out.

NCDEX plans to begin futures trading in rice from December 29 and launch maize futures next month. Mr Ravikumar said the total daily trading volumes in NCDEX was now around Rs 2,500 crore, "which is 50 per cent more than the 125-year-old Bombay Stock Exchange."

The Director of IARI, Dr S. Nagarajan, noted that the focus of agricultural research institutions, so far, has been more on improving the agronomic traits of plant varieties, such as increasing their yields, reducing the maturity period and making them pest or disease-resistant.

"We will now have to place equal emphasis on grain traits, which means breeding plants that produce grains for specific end-use applications. This, in turn, requires moving away from the concept of fair average quality (FAQ) and providing farmers a market for different qualities of grain. We hope that our partnership with NCDEX will improve the systems of gradation of farm commodities," he added.