Farmers want review of SEBI’s ban on seven commodities

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THE SECURITIES and Exchange Board of India (SEBI)’s decision to extend the ban on trade of seven commodities has met with criticism both from trade bodies and farmers. In the absence of a future’s market, farmers say they have no avenue left to gauge the price movement of the commodities and decide on whether to offload or hold it for better prices.

On Monday evening, SEBI decided to extend the suspension of trade on seven agri commodities namely 1) soyabean and its derivatives 2) mustard seed and its derivatives 3) paddy (non-basmati) 4) wheat 5) moong 6) chana and 7) crude palm oil, for another year. On December 20, 2021 the market regulator had taken this decision in order to control what was widely seen as a bid to control food inflation.

With farmers having harvested a new crop, hopes were high that SEBI would revoke the ban. In fact, many farmers had decided to postpone their offloading decision especially that of soyabean in the hope of prices firming up, post the revoking of the suspension. However, Monday’s decision saw all such hopes dashed as SEBI decided to continue the ban for another year, that is till December 20, 2023. This decision, Vilas Ufade, director of the Vikas Agro Farmers Producers Company (FPC) said, would certainly affect their realisation. Ufade, whose company procures soyabean from both its members and non-members in Maharashtra’s Latur district, said while farmers do not trade directly on the exchange, the price indications had helped them make their business decision. “If anything we were to get some directions on when to offload our commodities based on the future’s prices,” he said.

While the actual physical delivery on platform, Ufade said was low, the exchange had directed prices in the physical markets. “This move would certainly affect our prices. We hoped to sell our produce when the prices hit Rs 6,000/quintal in the markets, but now it does not seem likely,” he said. At present, soyabean at Latur’s wholesale market is trading at Rs 5,500-5,600/quintal.

This move was also criticised by the Solvent and Extractors Association (SEA) of India. Aditya Jhunjhunwala, president of the association in a release called this move unfortunate. “This decision has not gone down well with our members as they had suffered massively due to very high volatility in the markets. In the absence of trading on Commodity Exchange, importers were put to grief and lost money heavily. We were hopeful that the ban would be lifted and importers can breathe easy. However, this decision has put a dampener on the risk mitigation tool,” the release read.



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