Farmers' association welcomes NCDEX's move to suspend castor seed futures trading

The futures were suspended after prices fell by 20% in January and by 12% in last one week

Bharatiya Kisan Sangh (BKS), an association representing the farmers, on Saturday welcomed commodity exchange National Commodity & Derivatives Exchange (NCDEX)'s move to suspend futures trading of castor seed.

NCDEX had recently suspended futures in castor seed, one of the agriculture-centric exchange's most liquid contracts, after prices fell by 20 per cent in January and by 12 per cent in last one week. Apparently, the Securities and Exchange Board of India (Sebi) has asked NCDEX for a full report explaining why it suspended futures in castor seed and what further actions are being taken.

While BKS has made representations to government, NCDEX and SEBI, among others, Magan Patel, president - Gujarat region of the association said that farmers were now awaiting a decision on introduction of minimum support price (MSP) by the government.

"We are happy that futures trading in castor seed has been suspended, though this would provide only a short-term relief to farmers. The decision to delist castor seed rather than mere suspension should have been taken earlier. Nevertheless, the decision will benefit several castor growing farmers, especially from Gujarat," Patel said.

According to BKS, farmers of Gujarat and Rajasthan which produces the majority of the Indian castor crop have not been getting their due prices for the last three years.

"The price today has fallen much below the cost of production for a farmer which comes to around Rs 6000 per quintal. Decline in price has been to the extent of 48 per cent since December 1, 2015 which could have been averted if preemptive measures and prompt decision to suspend contracts were taken by the exchange earlier," said Patel while adding, "We demand that castor seed futures contract should not be restarted, otherwise castor seed farmers will have no option but to take drastic step of switching to other crops."

Currently, with a crop size of 1.2-1.5 million tonnes, average castor seed prices hover at around Rs 3000 per quintal which is much below the cost of production of Rs 6000 per quintal.

Meanwhile, with suspension of the castor seed futures trading, BKS is of the view that demand and supply factors of international demand and domestic production will now decide the prices which should be help farmers realise their cost of production as well as earn margins.