The National Commodity and Derivatives Exchange has exempted all the margins on Farmer Producer Organisations which take sell posititon and immediately deposit their produce at Exchange-approved warehouses. However, FPOs have to maintain mark-to-margins on a daily basis.

The ‘Early pay in facility’ will be available from March 1 and can be availed by the FPOs after the start of trading in a particular contract. The facility will bring down the cost of hedging for farmers, said the exchange. The quality of the goods deposited in the Exchange approved warehouses will need to conform to contract specifications of the Exchange, it added.

This facility is being offered to FPOs, in order to encourage them to use commodity markets to manage commercial risk in the production, processing and marketing of their products.

Samir Shah, MD & CEO, NCDEX said by making market access easier and simpler, more farmers can be encouraged to formal, regulated, cash-less markets.

Over 25,000 small and marginal farmers have successfully hedged their crops on NCDEX in the last 10 months through thirteen FPOs. By creating the right mechanisms, more such companies can be persuaded to lock in prices and cover their risks on exchanges, he added.

Members will be required to inform the Exchange details of clients under FPO category to claim the benefit of ‘Early pay-in’ facility. In case of compulsory delivery and seller’s option contracts, delivery to the extent of open position at the expiry of the contract shall be mandatory after claiming early pay-in facility on the position.

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