Nagpur: The state govt is looking at futures and options to help farmers deal with risk due to price volatility in agriculture produce. In what is dubbed to be the first-ever move by the state, Maharashtra has opened a hedging desk in Pune covering cotton, the main crop of Vidarbha, as well as turmeric and maize.
Over 3,000 farmers will be trained in hedging tools and strategies. Training will be given to farmers' producers' organisations (FPOs) and farmers in regions cultivating cotton, turmeric, and maize, particularly in Hingoli, Washim, Sangli, Yavatmal, Akola, Nanded, Amravati, Chhatrapati Sambhaji Nagar, and Beed.
Turmeric is also grown in parts of Vidarbha, especially Waigaon in Wardha district, as the area under maize is also slowly going up in the region.
The hedging desk, which has been brought under the Balasaheb Thackeray Agribusiness and Rural Transformation (SMART) project, will be supported by the National Commodity Derivative Exchange (NCDEX), one of the two commodity bourses in the country.
The desk will be training FPOs for dealing in futures and options. It will provide hand-holding to the FPO members and ultimately facilitate deals at the exchange, said Neeraj Shukla, chief advisor for risk mitigation and hedging desk at NCDEX.
At present, futures trading can happen in cotton and maize, while options are available only for maize. Futures and options are two different methods of hedging. For example, a cotton farmer can fix a deal at a certain price for delivering the produce at a given date in the future — maybe at the time of harvest. This can provide a hedge against the possibility of rates going down at that time. Deals can be squared off without actual delivery of the commodity too, explained an NCDEX source.
A Risk Management Cell will formulate mitigation strategies. It will publish Annual Commodity Price Risk Assessment Reports for cotton, maize, and turmeric, offering current insights, forecasts, and policy recommendations too.
