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Farmers, traders question govt decision to ban potato futures

Farmers, traders question govt decision to ban potato futures
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First Published: Thu, May 08 2008. 04 40 PM IST
Updated: Thu, May 08 2008. 04 40 PM IST
PTI
New Delhi: Potato farmers and traders have questioned the government’s rationale behind banning futures trading in the crop when there is a glut in the market and prices have declined due to bumper production.
“There was no reason for the government to ban futures trading in potato as the crop’s harvest is bumper, prices are stable and farmers are battling with the problem of plenty,” a former UP MLA and potato grower in Agra region, Pratap Choudhary told PTI on Thursday.
As an immediate fallout of the ban on futures trading of potato, industry experts fear that prices of the commodity may crash because of absence of price discovery mechanism.
The government yesterday suspended futures trading of potato along with rubber, chana and soya oil for four months.
Potato farmer Rameshwar Dayal of Nithei village, 40 km off Agra, said the ban will create more problems for farmers, who are already battling with a high level of production. He feels there will be no certainty of prices, as “no one will be able to tell us the real price”.
“When we knew the MCX price, at least we were able to tell the traders the rates at which they should buy. Now it will be decided at mandis,” he said.
MCX is the leading commodity exchange in potato futures where the open interest of Agra variety was 50,000 tons and that of Tarkeshwar (West Bengal) 35,000 tons. Open interest in futures trading is total number of outstanding contracts on a day that have not been liquidated.
Industry experts said prices may start declining and ultimately crash in a couple of months. Uttar Pradesh and West Bengal governments have purchased potatoes at Rs 2.50 a kg to help farmers.
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First Published: Thu, May 08 2008. 04 40 PM IST