Q&A: R Ramaseshan, MD & CEO, NCDEX

'Agricultural agencies have a long way to go'

The National Commodity and Derivatives Exchange Ltd (NCDEX) has been working since its launch, seven years before, to help modernise agricultural practices. Much more remains to be done, R Ramaseshan, managing director and CEO, tells Dilip Kumar Jha. Edited excerpts:

Why has there been a 13 per cent decline in NCDEX turnover in the past four months?
As a national exchange, we need to serve the larger economy and will strive to remain the premier agri commodities exchange. The turnover reflects the larger agri economy and varies from season to season and from commodity to commodity. A decline is also possible if prices soften despite an increase in trading activity, namely, the number of contracts. The decline in trade volume reflects the market outlook on agri commodities.

It is a healthy scenario, where turnover varies depending on agricultural production, supply-demand factors etc. Thus, the shift or drop in turnover is a natural course of trading activity.

Where do we stand on the role of aggregators in a commodity futures market?
Aggregators are required for wider participation of farmers on both spot and futures commodity exchanges. Given the agri economy’s size, active participation of various agencies, including NGOs, self-help groups, consumers, institutions like Hafed, state-level farmer co-ops etc is critical. At present, we are far from creating a system where aggregators or various agencies acting as aggregators are dominant. Participation by farmers and co-operative organisations is restricted to specific states and commodities.

We discovered in an experiment in Karnataka last year that farmers are keen on selling more produce in the spot market. Many models have been tried by various participants, including the private sector. Which one succeeds is to be seen as we move on.

What challenges do institutions like Nafed, Hafed and others farmers’ bodies face on participation in the derivatives market?
Agencies like these are more focused on specific crops or a specific area. Their collective exposure to the overall size of the market is yet to reach significant levels. They’ve done phenomenal work individually, but looking at the overall agri-economy, they have a long way to go.

Do you see any benefit of the recently notified Warehousing Act for the commodity derivatives market ?
We would be able to achieve systematic and transparent warehousing practices. Receipts issued by registered warehouse service providers will ensure the quality and quantity of the stored commodity. The Act will also ensure that warehouses serve the larger interest of storing commodities with reduced levels of wastage and timely release into the system, with adequate quality control. When all these are put in place, the entire commodity eco-system will benefit.