How futures trading can help farmers

In this episode of the State of the Economy Podcast, Subramani Ra Mancombu and Arun Raste, MD and CEO of NCDEX Commodity Exchange, discuss the exchange’s progress in futures trading and derivatives, as well as its approach to enhancing returns for farmers.

NCDEX has seen increasing interest in futures trading and derivative products, with agri commodities like spices and guar performing well due to international price trends. The CEO highlighted the exchange’s role in attracting new participants, including corporate houses previously focused on other commodities.

Raste emphasised the potential of options trading as a complementary tool to minimum support prices (MSP) for farmers. He explained that options provide a form of price insurance, ensuring farmers receive a predetermined price regardless of market fluctuations. This approach allows farmers to manage risk and benefit from potential price increases. He also talked about the need for government support and private sector involvement in promoting options trading among farmers, alleviating the burden of MSP subsidies.

Regarding farmer participation, Raste discussed initial challenges and the role of Farmer Producer Organizations (FPOs) in facilitating access to options trading. He mentioned that while some FPOs initially required subsidies to participate, a growing number are now willing to engage without financial support. State initiatives in Maharashtra and discussions with NABARD (National Bank for Agriculture and Rural Development) indicate increasing interest in options trading at the regional level.

Looking ahead, NCDEX is planning to introduce new products pending regulatory approval. Proposed additions include sunflower oil and carbon credits contracts, expanding the range of trading options available on the exchange. The CEO expressed optimism about the potential benefits of these innovations for both farmers and the broader agricultural sector.

Listen to the podcast to know more about the NCDEX Commodity Exchange’s efforts to promote futures trading, derivatives, and options trading to benefit farmers and enhance the agricultural sector’s resilience.

(Host: Subramani Ra Mancombu, Producers: J Jayapriyanka, Siddharth MC)


About the State of the Economy podcast

India’s economy has been hailed as a bright spot amid the general gloom that seems to have enveloped the rest of the world. But several sectors continue to stutter even as others seem set to fire on all cylinders. To help you make sense of the bundle of contradictions that the country is, businessline brings you podcasts with experts ranging from finance and marketing to technology and start-ups.

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