The Hindu Business Line : Farmers get it right

It was a debate, which even the media could ill-afford to ignore. Farmers at Khandoli, a sleepy village about a two-hour drive off the Delhi-Agra highway, were busy debating issues concerning potato futures. And, needless to say, cold-storage unit owners and MCX exchange officials were all ears.

Surprisingly, many young farmers were quite conversant with the ways of futures trading and some for sure could vie their expertise with the best in the market.

Manoj Gupta (24) from Farrukhabad says he pores over newspapers first thing every morning to track potato prices on the exchanges and mandis. His chai came only next.

“My father simply latched on to the MCX Agra-specific potato (3797 variety) contract launch and I had to leave college to help out. And, I have no regrets,” he says. He is at ease explaining the nuances of the trade.

“Potato for August delivery hit a high of Rs 694 per quintal on July 7 on news that the potato fields in Uttar Pradesh were waterlogged. I immediately sold five lots (of 30 tonnes). By month-end I bought at Rs 636, booking a profit of Rs 58 a lot.”

Yadvir Singh from Fatehpur (UP) is happy about the price signals he gets. “Now everything is on the board. Nobody can take us for a ride. We get finance at 7-8 per cent interest from banks based on our warehouse receipts. And, middleman need not be paid the 10 per cent commission we used to shell out earlier.”

The farmers while talking about their gains also want to get across the message that futures trading can benefit the farming community. “Over 80 per cent of small farmers in UP are still reluctant to step onto the MCX platform. But I am hopeful it will take place, as it is just two years since the trading started in Agra,” says Rustom Singh of Farukabad.

However, there are others like Shahid Singh (70) who are just not convinced.

“The main fertiliser for potato cultivation — diammonium phosphates (DAP) — is in short supply. Deliveries on the MCX have hit supplies on the mandis,” he says while agreeing that potato prices have not fallen below Rs 450 a quintal at the local mandi after MCX electronic boards began displaying spot prices.

It was not so long ago that these farmers sold potatoes at throwaway prices, says Ajay Gupta, CEO, Prabhat Ware House & Cold Storage. “In the pre-futures era, many farmers did not come to claim their goods at the warehouse as the storage levy used to be much higher than the market price of their goods.”

Futures trading of potato (Agra) is slowly, but definitely, catching up in many remote villages of Uttar Pradesh such as Agra, Hathras, Kanpur, Meerut and Farrukhabad. A year ago, MCX tweaked its contract specification and opened more accredited potato delivery centres in Agra. “We have 12 accredited cold storages in Agra which see about 6,000 tonnes of delivery per month. Potato is a rabi crop in Agra,” says Sanjit Prasad, vice-president, MCX. Another national commodity exchange, NCDEX, has a Delhi-centric potato futures contracts which is seeing good response.

With more farmers logging on to the electronic platform, can the exchanges end the hold of middlemen?

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Farmers get it right

Train through a sprain

Movie tones

Reviving Marathi cinema

Rural India calls

Falls trail

Chief concern officer

On the road