The ministry of commerce along with the consumer affairs ministry and the department of economic affairs are planning to implement a pilot scheme for price assurance for coffee produce. The scheme will be implemented by Canara Bank with the assistance of the CRMG (Commodity Risk Management Group) of the World Bank.
According to the scheme, devised by the Canara Bank along with the Coffee Board would allow the bank to purchase bulk put options through an international price insurer operating in the coffee futures market. This bulk put option would then be fragmented and sold at the beginning of each coffee season to small coffee growers.
Sources said that by collecting a premium upfront from the producers, the put option would assure the growers a market-related price at a future date.
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