Issued on 22 December 2022 by Anil Ghanwat, President
A year ago, SEBI had imposed a one-year ban on trading of nine agricultural futures covering seven agricultural products and futures contracts based on them. The ban ended recently. But by extending it by one more year, SEBI has caused immense loss to the farmers. This decision should be doubted whether this is not a conspiracy to bring down the prices of agricultural commodities in the name of keeping inflation under control. In a statement, Swatantra Bharata Party National President Anil Ghanwat has warned of protesting in front of the Sebi office to protest against this anti-farmer decision if Sebi does not withdraw the extension of futures ban.
Last year, the Securities and Exchange Board of India (SEBI) had removed seven agricultural commodites futures trading to crub the country’s inflation rate. This deprived farmers of both an alternative market and the risk management pact that protected them from recession. But farmers and traders were also keeping their eyes on the hope that this ban will end in December 2022 and trading in the futures market will resume smoothly. But on December 20, 2022, SEBI has issued an order to extend the ban on futures on all these agricultural instruments till December 20, 2023. The list of agricultural commodities includes seven items which are non basmati rice, wheat, gram, green gram, soybean and its derivatives, mustard and its derivatives and crude palm oil.
The futures market gives farmers and traders an advance estimate of the prices of agricultural commodities in the next few months and they can take appropriate decisions based on this information. Also, the government institutions can also control the inflation by taking appropriate steps as they understand the future price trends. Farmers can also decide whether to store or sell their produce. If rates are expected to decrease, prices can be fixed by hedging. Some farmers’ producer companies had started trading fairly in the futures market but due to the ban, all transactions have come to a standstill. The ban is aimed at curbing inflation in food grains and edible oil, but a study conducted by several reputed institutes like Late Abhijit Sen Committee set up by the Lok Sabha and IITs and IIMs, has concluded that there is no link between inflation and futures. On the contrary, futures bans are often seen as helping to artificially inflate prices.
The ban on futures market has been done only to bring down the prices of agricultural commodities. If the prices of agricultural commodities rise, the futures market is banned, but if the prices fall, no solution is planned. Gram prices have remained below the MSP for the past year. However, the ban on its futures remains. Now, the prices of wheat, mustard and gram will remain low due to the ban on the arrival of rabi season crops in the market. This is injustice to the farmers.
SEBI may have taken this decision under pressure from the government. If the government is putting pressure on SEBI to win elections by keeping inflation low, SEBI should not succumb to that pressure and immediately withdraw the one-year extension given immediately.
One and a half months before the harvest of Rabi season agricultural produce starts coming to the market, if SEBI does not lift the ban on futures market, an indefinite sit-in will be held in front of SEBI’s office in Mumbai under the leadership of Swatantra Bharat Party. The National President of Swatantra Bharat Party, Anil Ghanwat, has announced that farmers, farmer producer companies, traders, importers, exporter and all stakeholders related to the futures market will be involved in this movement.
22/12/2022
Anil Ghanwat
National President, Swatantra Bharat Party.
REPORTS ON THIS PRESS RELEASE:
Hindu Businessline (see full text below)
Full text of the Hindu Businessline report
Farmers’ political wing to stage protest against SEBI’s ban on agri commodities derivatives
December 23, 2022 – Updated 10:47 am IST
BY BL PUNE BUREAU
The Swantantra Bharata Party (SBP), a political wing of the Shetkari Sanghatana, has threatened to launch a protest against SEBI in front of the latter’s office demanding the ban on derivatives trading of seven commodities be lifted, SBP president Anil Ghanwat has said.
Farmers, farmer producer companies, traders, importers, exporters and all stakeholders related to the futures market will be part of the protest, Ghanwat said in a statement.
The decision to extend the ban is a “conspiracy” to bring down the prices of agricultural commodities in the name of keeping inflation under control, he said, adding that this “anti-farmer decision” by the SEBI will be opposed tooth and nail.
Last year, SEBI banned derivatives trading in wheat, non-basmati rice, moong (green gram), chana (Bengal gram), mustard seed and its derivatives, soyabean and its derivatives and crude palm oil as a measure to control surging prices. This deprived farmers of both an alternative market and the risk management pact that protected them from recession, the SBP President said.
Earlier, farmers and traders were hoping that this ban will end in December 2022 and smooth resumption of futures trading, said Ghanwat.
On December 20, 2022, SEBI issued an order to extend the ban on futures on all these agricultural commodities by a year.
“The futures market gives farmers and traders an advance signal of prices of agricultural commodities in the following months and they can take appropriate decisions based on this information. Also, government institutions can control inflation by taking appropriate steps as they can understand future price trends. Farmers can also decide whether to store or sell their produce,” said Ghanwat.
No correlation with inflation
He said if rates are expected to decrease, prices can be fixed by hedging. Some farmers’ producer companies had started trading fairly in the futures market but due to the ban, all transactions have come to a standstill.
“The ban is aimed at curbing inflation in foodgrains and edible oil, but various studies have concluded that there is no link between inflation and futures. On the contrary, futures bans are often seen as helping to artificially inflate prices” he said.
UPDATE: MEMORANDUM TO SEBI
On 23 December 2022, Sh. Anil Ghanwat issued a memorandum to the Chairman of SEBI.