Protect our interests: castor growers to Forward Markets Commission

Bharatiya Kisan Sangh, the all-India farmers’ body, has made a representation to the commodity market regulator Forward Markets Commission to impose stiff margin on the sell side of castorseed future contracts to rein in speculators pulling down prices artificially.

A margin on sell position on castorseed contracts will arrest sharp fall in prices as speculators have to bring in more money upfront before taking a sell call.

Speaking to

BusinessLine , Magan Bhai Patel, Chief of Bharatiya Kisan Sangh in Gujarat, said the Regulator act promptly by imposing margins whenever commodity prices go up, but similar concern should be shown whenever prices dip swiftly to unrealistic levels.

“The margin currently on castorseed futures is 11 per cent on both buy and sell side in the futures market despite bearish outlook. We have demanded FMC to reduce margin by at least five per cent on the buy side so that farmers’ interest is protected,” he said. Further, a sell side margin should be increased by 10-15 per cent should be imposed to further restrict vested interest of international buyers who sell the produce in forward so that they can buy the seed at low levels in spot markets, he added.

Any move to suppress castor prices will be against the interest of farmers as castorseed is largely an export-oriented commodity, he said.

Despite imposing margins, if the Regulator cannot control the speculations then it should ban the commodity from the futures market, said Patel. Export of castor oil has increased 36 per cent to 4.72 lakh tonnes last fiscal from 3.45 lakh tonnes in 2009-10. However, castor oil prices has fallen from $2,850 a tonne to current price level of $1,400.

Despite expectation of a low crop in the 2014-15, increased export demand and India’s dominance in the world export market, it is hard to believe that prices have fallen to such magnitude, said Patel.

Focus on value-addition

Urging the Government to encourage value-addition of castor derivatives in India, he said though India is largest exporter of castor oil, other countries such as China and Brazil are the major beneficiaries as they earn hefty margins compared to plain vanilla crushers in India. The average cost of input for growing castor in Gujarat works out to about ₹60,000 a tonne while the current price hovers at about ₹44,000.

The association has demanded minimum support price and minimum export price as it was done in case of onion.