Swantantra Bharata Party president Anil Ghanwat 
Swantantra Bharata Party president Anil Ghanwat 

The Swantantra Bharata Party (SBP), a political wing of the Shetkari Sanghatana, has threatened to launch a protest against SEBI in front of the latter’s office demanding the ban on derivatives trading of seven commodities be lifted, SBP president Anil Ghanwat has said.

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Farmers, farmer producer companies, traders, importers, exporters and all stakeholders related to the futures market will be part of the protest, Ghanwat said in a statement.    

The decision to extend the ban is a “conspiracy” to bring down the prices of agricultural commodities in the name of keeping inflation under control, he said, adding that this “anti-farmer decision” by the SEBI will be opposed tooth and nail.

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Last year, SEBI banned derivatives trading in wheat, non-basmati rice, moong (green gram), chana (Bengal gram), mustard seed and its derivatives, soyabean and its derivatives and crude palm oil as a measure to control surging prices. This deprived farmers of both an alternative market and the risk management pact that protected them from recession, the SBP President said.

Earlier, farmers and traders were hoping that this ban will end in December 2022 and smooth resumption of futures trading, said Ghanwat.

On December 20, 2022, SEBI issued an order to extend the ban on futures on all these agricultural commodities by a year.

“The futures market gives farmers and traders an advance signal of prices of agricultural commodities in the following months and they can take appropriate decisions based on this information. Also, government institutions can control inflation by taking appropriate steps as they can understand future price trends. Farmers can also decide whether to store or sell their produce,” said Ghanwat.

No correlation with inflation

He said if rates are expected to decrease, prices can be fixed by hedging. Some farmers’ producer companies had started trading fairly in the futures market but due to the ban, all transactions have come to a standstill.

“The ban is aimed at curbing inflation in foodgrains and edible oil, but various studies have concluded that there is no link between inflation and futures. On the contrary, futures bans are often seen as helping to artificially inflate prices” he said.