FPOs, traders lock horn over turmeric futures contract

Turmeric traders and farmer producer organisations (FPOs) are locked in a battle of nerves over turmeric futures. While traders demand delisting of futures contract, the FPOs have turned to the NCDEX’s product advisory committee (PAC) to desist such a move.

Last month, the Marathwada Vidarbha Turmeric Traders’ Association raised various points and demanded the commodity’s delisting, sources said.

In response, Maharashtra’s Pariwartan Organic FPC of Washim district and Surya FPC of Hingoli wrote to the PAC of NCDEX not to ban turmeric futures and suggested the panel should take up the matter with the Centre. Both the FPOs which together have 1,200 farmers in their fold, contended that turmeric being a 9-month duration crop, is the only source of income for small farmers and their annual earnings depend on this spice.

“The price fluctuation is a risk and it is unfortunate when traders try to artificially depress the rates,” said an official of Pariwartan Organic FPC. He said the farmers’ fresh harvest were sold at ₹10,000-10,500/quintal in April whereas the rate has fallen to ₹7,000, now.

Product advisory panel views

Moved by the FPOs’ appeal, the PAC of NCDEX on turmeric urged the government not to delist the commodity from futures trading and instead train traders who advocated ban.

In a letter to minister of state for finance, Bhagwat Karad, the PAC chairman Punamchand Gupta, said seven FPOs have traded in turmeric contract and given physical delivery on the platform this fiscal. “Farmers specifically benefit through the price signals from the futures as these help in planning their marketing strategy even before the harvest,” he said.

Gupta said that the October contract is traded at ₹7,000/quintal on NCDEX platform whereas the spot price in Nizamabad is about ₹7,300/quintal and the difference between spot and futures was about ₹150 last Friday. “It has been seen that the difference between these two markets in turmeric is normally around ₹2-3/kg,” he said.

In the letter, he said that concerns raised by the Vidarbha traders were discussed at the panel’s meeting on August 19 in Mumbai and also members of the panel held a separate discussion with those traders.

The panel highlighted the price discovery on the NCDEX platform is for a single standard grade, whereas rates at the spot market vary according to quality. The average variation is about 30 per cent between the minimum and maximum prices and at times, go up to 80 per cent, depending on the quality, he added.

Production

The country’s turmeric production in 2021-22 is estimated at 13.31 lakh tonnes (lt) against 11.24 lt the year before, up by over 18 per cent. The weighted average mandi prices of turmeric are ₹5,438/quintal in Telangana, ₹5,973 in Maharashtra and ₹6,379 in Tamil Nadu during this month, according to Agmarknet portal.

“We believe that the members of Marathwada and Vidarbha Turmeric Traders’ Association should approach the commodity exchange to understand more about the futures market and the exchange can organise training sessions for their members,” Gupta said in the letter.

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