The launch of the last pepper contract for delivery in June 2013 was earlier postponed indefinitely by the National Commodity & Derivatives Exchange (NCDEX), India’s largest agri-centric commodity exchange, due to quality related issues.
Early last month the exchange had postponed the scheduled launch of pepper contract for delivery in June 2013 till further notice. The revised launch date is expected to be announced in due course. Pepper contract for delivery in March 2013, however, is available for trading.
“We are in the process of applying afresh the specimen of new pepper contract to the Forward Markets Commission (FMC) which would be completed soon. On approval from the commodity markets regulator we would commence futures trading in pepper again,” said Ananda Kumar, Chief (Corporate Services) of the NCDEX.
Finding traces of mineral oil, the Food Safety and Standard Authority (FSSAI) officials sealed around 8000 tonnes of pepper demated in six NCDEX-accredited warehouses in Kochi on December 18, 2012. This raised serious quality issues with the pepper stored in these godowns.
Traders used mineral oil to polish pepper to improve appearance of the commodity and therefore hiding inferiority of it. Use of such mineral oil is a prohibited substance globally. A tasteless and odorless, mineral oil is a common ingredient in baby lotions, cold creams, ointments and cosmetics. Following global norms, the government of India has also prohibited use of mineral oil in food articles.
Since, mineral oil testing was not made mandatory by the FMC as per the current quality parameters, the commodity was conforming to the existing futures market guidelines. But, the same was found violating the mandatory requirement by other statutory bodies including FSSAI.
Understandably, the new contract specifications, therefore, would incorporate all mandatory requirements by major statutory bodies including FSSAI, Spices Board, Bureau of Indian Standard, Agricultural and Processed Food Products Export Development Authority (APEDA) and others.
The FMC, meanwhile, has also compiled quality specifications set by statutory bodies in India. The quality standard set by the commodity derivatives market regulator would be at par with global norms and, most importantly, acceptable to all. Exporters and domestic processors would also be able to ship pepper without any quality checking hassles.
The FMC had earlier asked commodity exchanges to incorporate quality specifications laid out by all statutory bodies across the country.
“The new contract, therefore, would incorporate all statutory requirements in terms of quality,” said Kumar.
While pepper contributes between 1 and 2% of NCDEX turnover, the commodity shares around 5% of the total worth of business of Ahmedabad-based National Multi Commodity Exchange (NMCE). Pepper is the sole commodity being traded on Kochi – based India Pepper & Spice Trade Association generating a fortnightly turnover of around Rs 280 crore.
Efforts to reach Anil Mishra, managing director of NMCE did not elicit any response.