Agri markets. Why farmers are wary of SEBI’s move suspend agri futures trading

Ramkisan Nirmal, a farmer, is struggling to manage the monthly budget with rising inflation like many others in the nation. But unlike others, Ramkisan is wary about the government’s moves to keep inflation under control. “I am worried whenever the government talks of controlling inflation. It essentially means that we farmers will have to face more losses. It’s double inflation for farmers” he says.

“Many farmers in the region depend on soya. Farmers were expecting better prices this season. But now the government has ensured that prices come down in wake of elections in Uttar Pradesh and other States,” says Nirmal.

Farmers and Farmer Producer Companies (FPCs) are agitated with the Department of Economic Affairs directions to the Securities and Exchange Board of India (SEBI) to suspend futures and options trading for one year in agricultural commodities including chana, mustard seed, crude palm oil, moong, paddy (Basmati), wheat, and soya complex. Suspension of futures and options trading will definitely affect prices of agri commodities and farmers will be the most affected, say experts. Farmers and FPCs have been slowly entering the futures market and the government’s move comes as a setback.

Govt intervention

The government recently announced that it is monitoring the price situation of major essential commodities on a regular basis and corrective action taken from time to time.

For pulses, a buffer stock target of 23 lakh tonnes (lt) has been approved for 2021-22. Stocks are subsequently utilised for cooling down prices through supply to States and disposal through open market sales.

The government also imposed stock limits on some pulses under the Essential Commodities Act, 1955 in July and also made changes to the import policy by keeping tur and urad under the ‘free’ category till December 31, 2021. Basic import duty and Agriculture Infrastructure and Development Cess on masur have been brought down to zero and 10 per cent, respectively.

Recently, to soften the prices of edible oils, the import duty on edible oils have been rationalised and stock limits have been imposed to avoid hoarding up to March 31, 2022.

The government is importing urad and tur from Myanmar, Malawi and Mozambique.

Lesser price for farmers

This essentially means that the farmers will not get a higher price for their produce as per the market demand and supply. On one hand, the government was ready to introduce farm reforms to make farmers stronger to compete in the world market. But at the same time the government continues the policy to intervene in the market, says Anil Ghanwat of Shetkari Sanghatana.

Ghanwat said that the government must stop intervening in the market as this policy has proved disastrous for farmers.

Shivraj Kharbad and members of FPCs in Beed are confused. Kharbad says farmers want to free themselves from the clutches of traders and arthiyas (commission agents) in APMCs. Platforms like e-NAM and futures and options trading have not yet reached many farmers, but these platforms give farmers an option to trade and also understand the future trend. Many like Kharbad feel that controlling agri produce and its rates to control inflation comes at the heavy cost to farmers.

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