Connecting Farmers to Markets FPO update September 2018

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1 Connecting Farmers to Markets FPO update September 2018 Connecting Farmers to Markets 1 28 August 2016

2 Snapshot 183* FPOs have opened accounts 173 FPOs in the process of opening trading accounts 12 States covered ` Sep-18 Jul-18 May-18 Mar-18 Jan-18 Nov-17 Sep-17 Jul-17 May-17 Mar-17 Jan-17 Nov-16 Sep-16 Jul-16 May-16 No. of farmers representing the FPOs 35,156 28,429 26,049 25,769 24,629 24,629 14,495 10, , , , , , , , , , , , , , , , , , ,085 80, , ,085-50, , , , , Commodities traded 73 Farmer Producer Organisations (FPOs) Traded on the NCDEX platform 64,629 Farmers represented by trading FPOs 229,693 Farmers represented by all FPOs Sep-18 Jul-18 May-18 Mar-18 Jan-18 Nov-17 Sep-17 Jul-17 May-17 Mar-17 Jan-17 Nov-16 Sep-16 Jul-16 May-16 Traded Quantity IN MT *Geofin Comtrade Limited has surrendered their membership, so 21 FPO accounts have become inactive. We are in follow up with these FPOs for re-registration with another member. Connecting Farmers to Markets 1 September 2018

3 FPO Engagement a. Program with BIRD: - NCDEX engaged with various FPOs through BIRD residential training programs. The first of such two programs were conducted in Kota, Rajasthan (1-4 August 2018) and Akola, Maharashtra (7-10 August 2018). In continuation, the third one was recently conducted in Ujjain, Madhya Pradesh (24-27 September 2018). In total of 59 FPOs have participated in these three programs. Representatives from FPOs were made aware about 1. Purpose of their formation 2. Legal and Compliance formalities 3. Good corporate governance 4. Making sound business plans 5. Access to finance and requirements 6. Price risk management and technical know how 7. Different instruments available for price risk management b. National workshop for FPOs: - NCDEX through IPF trust fund participated in the day long National workshop on making FPOs smart, sustainable and competitive conducted by VAMNICOM (Ministry of Agriculture and Farmer s Welfare, Govt. of India) at Pune on September 20, About 450 representatives of FPCs from different parts of the country participated in this workshop. NCDEX IPFT has sponsored the workshop and had placed a stall. NCDEX officials have made the participants aware about the price risk management as a concept and its importance for famers to get fair price realization. Monthly Progress: QuantityTraded (MT) FY # Commodity April-18 May-18 June-18 July-18 Aug-18 Sep-18 Total 1 Maize ,130 2 Soybean Cotton seed 3 oil cake Castor Jeera Chana Total 140 1, ,582 Connecting Farmers to Markets 2 September 2018

4 Summary (Jul Sep 2018) S.No. Particulars Till Aug 18 Jul-18 Aug-18 Sep-18 Cumulative (FY-16-19) 1 FPOs On-boarded Farmers Base 2,20,389 1,875 3,308 9,304 2,29,693 3 FPOs Traded Farmers Base of FPOs Traded 64,309 16,003 15,098 10,329 64,629 5 Commodities Traded Quantity Traded (MT) 27, ,919 7 Traded Turnover (Rs in Lakh) 6, ,204 8 Delivery Given (MT) ,225 9 Turnover of Delivered Quantity(Rs. Lakh) Delivery Taken (MT) Farmers Base 7, ,776 Commodities traded on the Exchange platform since April 2016 Jeera 39 MT Kapas 24 MT Pepper 16 MT Wheat 200 MT Soy Meal 20 MT RM Cake 40 MT Chana 140 MT Castor 100 MT Guar Seed 60 MT Turmeric 50 MT Cocud 1,720 MT Barley 70 MT RM Seed 560 MT Soybean 9,760 MT Maize 15,040 MT Soya Refined 80 MT Connecting Farmers to Markets 3 September 2018

5 Feedback on Kharif Crop Sowing Progress Sowing activities are complete barring few crops like Castor as nearly 100% of the normal sown area under kharif crops is sown till September 20, As per the sowing reports published by the Ministry of Agriculture, the total sown area as on September 20, stands at lakh hectare as compared to lakh hectare at this time during 2017, up by 0.6%. Sowing is completed on around 96% in Cereals, 123% in Pulses, 97% in Oilseeds and 101% in Cotton of the Normal Sown area under these crops. The sown area is up by 0.3% in Cereals and 3.1% in Oilseeds while it is down by 1.1% in Pulses and 0.9% in Cotton compared to the sown area seen during same period of last year. Compared to previous year Bajra (-7.2%) has seen maximum reduction in sown area in cereals while Urad (-9.0%) sown area has fallen in Pulses. In oilseeds, soybean has witnessed an increment of around 6.3% in sown area however ground nut sown area has declined by around 3.3%. Did you know? The Central government has launched a new scheme, Pradhan Mantri Annadata Aay Sanrakshan Abhiyan, intended to shore up the prices that farmers get for their produce. The move follows increasing farmer unrest across the country as prices of many key agricultural commodities have fallen below their MSP (minimum support price). The three different components of the scheme, it is said, will cover gaps in the procurement and compensation mechanism for crops and help boost farmers income. The AASHA scheme has three components, and these will complement the existing schemes of the Department of Food and Public Distribution for procurement of paddy, wheat and other cereals and coarse grains where procurement is at MSP now. The first part is the Price Support Scheme (PSS). Here, physical procurement of pulses, oilseeds and copra will be done by Central Nodal Agencies. Besides NAFED, Food Corporation of India will also take up procurement of crops under PSS. The expenditure and losses due to procurement will be borne by the Central Government. The second leg is the Price Deficiency Payment Scheme (PDPS). Under this, the Centre proposes to cover all oilseeds and pay the farmer directly into his bank account the difference between the MSP and his actual selling/modal price. Farmers who sell their crops in recognised mandis within the notified period can benefit from it. The third part is the pilot of Private Procurement & Stockist Scheme (PPSS). In the case of oilseeds, States will have the option to roll out PPSSs in select districts where a private player can procure crops at MSP when market prices drop below MSP. The private player will then be compensated through a service charge that will be up to a maximum of 15 per cent of the MSP of the crop. Connecting Farmers to Markets 4 September 2018

6 NCDEX Footprint NCDEX is actively engaged in training farmers, handholding the Farmer Producer Organisations (FPOs) and connecting them with the Exchange platform in several states across the country. We have successfully on-boarded 183 FPOs so far. 15 training programs held in the month of September, Punjab - 1 Uttar Pradesh - 3 Bihar - 8 Rajasthan - 30 Gujarat - 10 Madhya Pradesh - 21 Maharashtra Chhattisgarh - 2 Telangana - 4 Karnataka - 2 Andhra Pradesh - 1 Kerala -1 The number of FPOs in each State represent those FPOs who have either traded or opened a trading account with NCDEX. Connecting Farmers to Markets 5 September 2018

7 Events & Training FPO Training 06-Sep An IEP was conducted at Sriganganagar, Rajasthan in which 125 farmers participated. 07-Sep Farmers participated in IEP conducted at Jaimansar, Rajasthan. 07-Sep An IEP was conducted at Bikaner, Rajasthan, 40 farmers participated. 11-Sep Farmers participated in IEP conducted at Radhanpur, Gujarat. 11-Sep A Regional Seminar was conducted in partnership with ATMA & GT at Osmanabad, Maharashtra in which 62 farmers participated. 12-Sep A training program was conducted in Jaimansar, Rajasthan in which 8 farmers participated. 13-Sep A FPO Awareness Meeting was conducted at Bikaner, Rajasthan. 14-Sep A Regional Seminar was conducted in partnership with Arunoday sarweshwari lok kalyan samiti at Mandsaur, Madhya Pradesh in which 150 farmers participated. 20-Sep In association with VAMNICOM a workshop was conducted at Pune, Maharashtra. Connecting Farmers to Markets 6 September 2018

8 24-Sep In association with BIRD a training program was conducted at Ujjain, Madhya Pradesh. 26-Sep farmers participated in a training program conducted in association with NABARD at Ganganagar, Rajasthan. 27-Sep An IEP was conducted at Akola, Maharashtra in which 65 Farmers participated. 27-Sep FPOs participated in a training program conducted by NABARD at Sirohi, Rajasthan. 28-Sep A Training program was conducted with MSRLM & IGS at Wardha, Maharashtra for raising farmer awareness about commodity markets. 28-Sep A Regional Seminar was conducted in partnership with MGP,NIWCYD,CARD, Indore, Madhya Pradesh in which 52 farmers participated. The Mandi.com show, aired on DD Kisan channel. It is a weekly show, aired twice every Sunday, at 8:00 A.M. and 5:30 P.M. All Episodes of Mandi.Com: Frequently Asked Questions for FPOs Circular on Early Pay-in Facility for Farmer Producer Organisation (FPO) sation_(fpo)_ pdf Link for Options launch on Soybean, Chana, Guar Gum and Refined Soy Oil Futures Connecting Farmers to Markets 7 September 2018

9 Kheti Ke Sikander The soybean is one of the richest and cheapest sources of protein and is a staple in the diets of people and animals in numerous parts of the world. The seed contains 17-18% oil and 62-63% meal, 50% of which is protein. Because soybeans contain no starch, they are a good source of protein for diabetics. Soybean is one of the most popular Kharif crop which is grown primarily in Madhya Pradesh, Rajasthan, Maharashtra, Karnataka and Telangana. Almost all the cultivated produce of soybeans are processed by millers so that the derivatives can be consumed. There are number of value chain participants between the producer farmer and the actual consumer, such situation often creates a big gap between the prices received by the primary producer and that paid by the consumer. According to USDA, the domestic as well as international Soybean crop projections for the crop year are better than the last year. Soybeans 2015/ / / /19 Domestic International The above figures are in lakh MT Supply Demand Balance Supply 5,269 5,729 5,854 6,182 Demand 4,464 4,762 4,906 5,099 Balance ,083 The above table shows that internationally the supply is projected to be higher than the demand, which generally leads to lowering of prices volatility. In such a scenario, facilitating soybean farmers to secure fair prices through is always a challenge for governments. Last year ( ) one intervention was made by the government of Madhya Pradesh through Bhavantar Bhugtan Yojna (BBY) during the month of October-December 2017 for a number of Kharif crops including soybean. Under the BBY scheme government declared to pay the difference between MSP and modal price directly into farmers bank account. The program was reasonably successful with around 23 lakh farmers registered under the scheme and government of MP disburse around Rs. 944 crore. With respect to soybean, the success was also announced by the fact that the arrival of soybean in MP mandis went up by 50% than 2016 and 96% than 2015 (between October to December). Due to higher than normal arrival, it also led to a decline in prices of soybean during the same period, indicating supply exceeding the current demand, a natural market phenomenon. It also impacted the farmers who were out of the ambit of BBY to sell their crop at market price and not getting the benefit of BBY. For the current crop year ( ): In case of soybean states has announced procurement plans. MP government plans to provide a flat Rs 500 per quintal as deficit finance to soybean and maize farmers (who have registered under the scheme) of the state under the Bhawantar Bhugtan Yojana (BBY). In case of Rajasthan, the govt has announced to procure around 7.5 lakh tonnes of groundnut and soybean at MSP. This can again lead to volatility in prices for this year s kahrif harvest.. Government always sets limits per farmer under such schemes depending on their land holding. Farmers who have not registered or the farmers who will have excess Soybeans (compared to the limit set by the government) will have to sell their produce at prevailing market prices. Farmers have one more opportunity available at their disposal through NCDEX. Farmer producer companies (FPCs) can participate in NCDEX Soybean futures contract by taking a sell position any time after sowing and can lock the price for their estimated crop production well in advance. Members of the FPC will be benefited by price protection against the normal downward trend at the time of peak arrivals. The price protection ultimately leads to a fair price realization. Connecting Farmers to Markets 8 September 2018

10 NCDEX has been continuously spreading awareness for price risk management (hedging) within the FPCs registered by different institutions. This effort has contributed in the way that 78 FPCs growing Soybeans have registered with NCDEX. The spread of these FPCs are as follows: State No of FPOs registered No of Farmers representing FPCs Maharashtra 56 25,271 Madhya Pradesh 16 21,090 Rajasthan 6 6,374 In August 2018, 2 FPCs traded 140 MT of soybean on NCDEX platform which swelled to 230 MT traded by 5 FPCs in September The data signals that the FPCs are finding the soybean futures contract useful in their price risk management. These FPCs have hedged the price of Soybeans between Rs per quintal in the month of August and September. This is an opportunity available to all the farmers across the country and is always rewarding for those farmers who produce more with less cost. NCDEX also launched Soybean Option contract, which is much easier tool for the FPOs to safeguard against any adverse price movement of their crop. Participating in Soybean options contract will go a long way in securing their interest in finding one more robust market tool to hedge their price risk more efficiently. A detailed product contract specifications is available through this link. Connecting Farmers to Markets 9 September 2018

11 NCDEX Indices Dhaanya Link for Dhaanya Index: - Dhaanya is an agricultural commodities index computed by NCDEX. It aims to provide a reliable benchmark for the traded Agri-commodities in India. It is based on simple and transparent methodology. The components of Dhaanya are selected from diverse sub sectors of the Indian Agri industry and accounts for nearly 70% of the trading on the NCDEX platform. Commodity selection is based on both endogenous (liquidity) and exogenous (importance in Indian/Global commodities market) criteria. The NCDEX AGRI futures index would be constituted by the top ten liquid commodities traded on the NCDEX platform. It is a value weighted index, weights are assigned to each component based on national production and the traded value. Equal importance is given to both parameters to calculate the final weights of the index components. The index is computed real-time, using the price of the near month traded future contracts. Dhaanya is a rolling index, i.e. periodically futures contract held in the index are rolled over onto next near month contracts as current month contracts approach expiration. Dhaanya components and their weights are rebalanced every three months based on the production values and liquidity situation prevailing in the market place. Currently, Dhaanya comprises of Barley, Castor Seed, Chana, Coriander, Cotton Seed Oil Cake, Guar Seed, Jeera, Rape Seed Mustard Seed, Soy Bean and Turmeric. At the beginning of Sep 17 Dhaanya index value was around Since then the value has hit a low of Dhaanya has shown sideways behaviour for almost 10 months and then has made a high of in Aug 18 which is 15.37% above its low for the shown period in the chart Cereals & Pulses Cereals & Pulses Index components are cereals or pulses which are a part of the Dhaanya Index. It is an equal weighted index. This means that each constituent in the index carries an equal weight in index value calculation. Currently, Cereals and pulses index comprises of Barley and Chana. Connecting Farmers to Markets 10 September 2018

12 Partner Ecosystem Members Promoting Agencies Financing Agencies Supporting Agencies Consulting / Training Agencies Connecting Farmers to Markets 11 September 2018

13 Disclaimer This Report is for general information of the recipients. The views and opinions expressed in this document may or may not match the views of the reader. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or other needs of the reader. This document is not intended to be and must not be taken as the basis for any investment decision. It should be noted that the information contained herein is from publicly available data or other sources believed to be reliable. We are not soliciting any action based upon this material. Neither NCDEX, nor any person connected with it, accepts any liability arising from the use of this document. Connecting Farmers to Markets 12 September 2018