NCDEX initiative has Gulab Bagh reaping big with maize contracts

PURNEA: Gulab Bagh, a small town 315 km away from Patna, is gradually changing thanks to a better price recovery of maize, the major rabi crop from the region.
The crop is mainly grown in the districts of Purnea, Khagariya, Begusarai, Saharsa, Katihar and Madhepura. Average farms in these districts produce around 4 tonne of maize per hectare.

The change was initiated by NCDEX a year ago, when the exchange had launched a contract for Gulab Bagh maize.

"We had been watching the maize market on NCDEX from 2006 , when we launched our first contract. By early 2012, by which time Bihar's production had gathered pace, we began to realise that maize contracts between April and September with Nizamabad in Andhra Pradesh as the basis centre were showing a skew because they ignored Bihar.

By the end of 2012, we got permission to launch a maize contract with Gulab Bagh mandi in Purnea as basis centre and the first contract was traded in February 2013," said Pradeep Kumar, senior executive (grain and pulses), NCDEX. In the current season NCDEX has already procured 11,000 tonne of maize. The impact of the new contract was felt immediately on the local economy.

Price realisation for farmers went up from Rs 7-8 per kg in Rs 12 per kg in 2013 -14.

2011 -12 to 'In FY14, Bihar produced 8 lakh tonne of maize and this is expected to go up to 10 lakh tonne in FY15. Although traders did flock to buy maize from Bihar, local farmers were in equal rush to sell their harvest.

Maize does not take kindly to moisture and begins to rot fairly soon. In the absence of proper storage facilities, they had no option but to sell it off at a much less price.

Traders were taking advantage of this situation and quoting a random price, often at least a 10% discount to Nizamabad prices.

"The daily discovery of a single price for Gulab Bagh maize suddenly took away traders' power to exploit farmers. Traders from all over India now participate which has resulted in better price recovery. Now the mandi remains open six days a week. Nearly 11,000 buyers participate in the trade now.

Some of the buyers are Cargill India, Glencore, Louis Dreyfus Commodities. There has been an increase in demand by 30%," said 24-yearold Karan Kumar, a trader in the Gulab Bagh mandi.