Futures in rice, wheat from today

Commodity futures trading will enter a new phase Saturday with wheat and rice being traded in futures. They will be the first foodgrains traded in futures, and account for bulk of traded volumes in grains.

Prime Minister Atal Bihari Vajpayee will inaugurate futures trading in wheat and rice at Ahmedabad-based National Multi-Commodity Exchange of India Ltd. (NMCE).

Futures trading in these grains was banned along with that in most other commodities by the British rulers of India at the beginning of the second World War.

The suggestion to lift the ban on futures trading was made by the Kabra committee in early-1990s, though the committee expressed some reservations about trading in staple foodgrains.

Food and consumer affairs minister Sharad Yadav, who has been pursuing futures trading in these grains, maintains futures will bring benefits to both farmers and consumers.

He also expects it to lead to price rationalisation and provide the growers access to a national market.

Futures trading in wheat and rice would help traders avoid storage of excessive stocks and bring down carrying cost.

Access to price information from mandis will help farmers to get better prices and reduce arbitrage.

NMCE would conduct on-line futures trading in wheat and rice at 48 locations through 214 member-traders, on a delivery-backed system.

Central Warehousing Corporation (CWC) will handle NMCE deliveries through a reliable warehouse receipt system.

CWC has a network of 493 owned warehouses with storage capacity of 9.3 million tonnes as well as access to additional capacities of state warehouses where CWC has 50 per cent share.

NMCE is promoted by CWC,National Agricultural Cooperative Marketing Federation of India (NAFED), National Institute of Agricultural Marketing (NIAM), Gujarat Agro-Industries Corporation Ltd. (GAICL) and Gujarat State Agricultural Marketing Board (GSAMB).