'Krishi Raths' to raise awareness about commodity derivatives

It's a Rath (chariot) with a difference that has set out on a new yatra (journey) with a mission- the mission to create awareness and promoting progressive financial and trade practices! There is no denying the fact that even after so many years of introduction of commodity derivatives, there is high level of ignorance, misinformation and misconceptions around the commodity derivatives. The primary producers or the farmer partners, who are the key stakeholders in the whole ecosystem are often in the dark about many vitals aspects of the whole things and even the new offerings. The need for National Commodity and Derivatives Exchange Ltd (NCDEX) and the capital market regulator Securities and Exchanges Board of India (Sebi) coming together in creating awareness and promoting progressive financial and trade practices can therefore be hardly over-emphasised. The good thing is that the two authorities have now risen to the occasion and kicked off a nationwide awareness campaign that focuses on these issues.

The 'Krishi Raths,' as they are aptly christened as, will initially traverse across five states- Rajasthan, Maharashtra, Gujarat, Madhya Pradesh and Telangana to cover around 33 APMC market yards and villages.

Initiated by NCDEX and SEBI, Krishi Raths are actually mobile vans, where exchange officials will communicate and collaborate with regional or local government functionaries, local leaders, FPOs and other stakeholders to spread awareness about the importance of risk management through commodity derivatives.

This certainly is a unique concept of reaching out to the stakeholders in the villages through the Krishi Raths and urging the stakeholders to take advantage of this campaign and enhance their understanding about commodity derivatives markets. That's not all. In another novel move, the Exchange (NCDEX) will also launch the NCDEX IPFT Investor Protection League (IPL) to honour members, who are spearheading best practices and innovations in the customer servicing to withhold confidence of clients in the commodity derivatives market.

One has to keep in mind that one of the prime objectives of an organisation like NCDEX is to serve the interests of the primary producers, that is, its farmer partners and the entire commodities value chain, with better market access, efficient price discovery tools and financial inclusion. A well structured campaign initiative like this has come as an opportunity to enhance its investors awareness programme and sensitize its stakeholders about diverse opportunities they could explore in the commodity derivatives market, besides, guiding them with effective financial and trade practices.

It is pertinent to mention here that earlier last year, 'hack the risk', a pan-India industry-academia event, had evoked encouraging response among youths. And this will again be re-initiated, offering opportunities to college students to express their perspective on the importance of risk management. Additionally, NCDEX IPFT has successfully launched the Commodity Connect Program for undergraduate students at Wilson College. Through this event, the students were introduced to the concept of commodity as an asset class, the world of commodity derivatives and essential skills required of commodity knowledge for young minds.

All such initiatives are being undertaken by the Exchange across the length and breadth of the country. They aim at focusing on sharing knowledge and awareness about the commodity market among diverse nature of stakeholders about various risks they are exposed to. Since all risks like weather risk, product risk, policy risk etc, reflect into the price of the commodity, exchanges, this way, can play a big role in providing a one-stop solution in hedging the price risk via futures, options and indices.