Jaitley launches options trading in guarseed; says will benefit farmers

New Delhi: Aiming to enhance the agri-economy and to bring huge amount of value for the farmers of India, National Commodity and Derivatives Exchange Limited (NCDEX) launched agri-commodity options for the first time in gaur seeds here on Sunday.

While speaking at this occasion the Union Finance Minister Arun Jaitley said that "It might sound very small but will have a larger impact on the nation.'"

"It is indeed a very important initiative by NCDEX. Agriculture is one of the primary pillars of the Indian economy- which too holds a significant position globally," the minister added.

Option is a financial derivative that represents a contract sold by one party to another party. The contract offers the buyer the right, but not the obligation, to buy or sell a security or other financial asset at an agreed upon price during a certain period of time or on a specific date.

Meanwhile, looking at the importance of the agri commodity market, the new instrument will also prove to be a new hope for the farmers, experts feel.

"Traditionally we started with a time of shortage and agriculture recovered the situation and so the farmers. So, now it is the time to help them giving a proper justice to the pricing system," Jaitley mentioned.

Adding further, the minister said that, "The maximum number of population is associated with agriculture in this country. So this government has been trying to come up with more friendly schemes for farmers to push this sector."

Farmers of Bihar, Punjab, Gujarat and Rajasthan attended the event on the auspicious occasion of Makar Sankranti, which is celebrated as a key harvest festival across the country.

"This system is approved by Securities and Exchange Board of India (SEBI), is expected to deepen trade in agriculture commodity and will benefit farmers in reaping improved price realizations for better production, with limited downside risk as India shares 90 per cent stake in gaur gum market globally," Sameer Shah, CEO of NCDEX mentioned.

"As of December 2017, NCDEX has already seen 59 FPOs across various states have participated on the Exchange, and more than 2.3 lakh farmers have already opened their trading account, " he also said.

In order to promote awareness around this new agriculture hedging tool, the Exchange has already initiated a series of awareness programs and trainings across the value chain like, "Mandi.com" and "Kisan sanchar call centers".

Ashok Gulati, chair professor for Agriculture at Indian Council for Research on International Economic Relations (ICRIER), and Rabi Narayan Das, chairman of NCDEX were also present.