Shah was in the city last Sunday to address a national seminar on "Castor Trade" organised jointly by BOOE, the Ahmedabad Seeds Merchants Association (ASMA) and the Rajkot Seeds Oil & Bullion Merchants Association.Around 1,000 producers, dealers, exporters and brokers attended the seminar to discuss the far-reaching consequences of international castoroil futures trading.

The BOOE chief is hopeful or raising Rs 2.25 crore as members participation in the Rs 5 crores paid-up capital required for setting up of the autonomous clearing organisation, Prime Commodities Clearing Corporation of India Ltd (PCCCI). The balance Rs 2.25 crore equity capital is expected to be provided by banks and the financial institutions and 10 per cent by the BOOE.

After trading in international castoroil futures is successfully launched at BOOE,futures trading is likely to take place in palmolein and turmeric in a phased manner.

Meanwhile, Shah said the commodity exchanges of the country have informally decided to launch a Federation of Indian Commodities Exchanges (FICE) on the lines of The Federation of Indian Chambers of Commerce and Industry (FICCI) and the Association of Chambers (Assocham). The move is aimed to protect the interest of growers, processors and traders from enormous price risks and wide fluctuations in agricultural and agro-based commodities in international markets.

The decision was taken at a meeting of exchanges held in presence of the representatives of the Forward Market Commission (FMC), as well as World Bank and UNCTAD, in Mumbai last week. A five-member ad hoc committee comprising Navinchandra N Shah, Suresh Kotak (both of Mumbai), Jayesh Shah (Ahmedabad), Sanjay Mariwala (Kochi) and Pradeep Sheth (Calcutta) has been constituted to draft the bylaws, build the necessary infrastructure and capital or corpus fund for theproposed Fice.

The proposed FICE is expected to work as the second tier of regulatory authority under the Ministry of Food and Consumers Affairs (MoCA) for monitoring, surveillance and arbitration in case of disputes and settlements of claims. The 24 commodities exchanges spread all over the country (though only half of them being active) serve as the third tier. The oilseeds sector alone having a physical annual turnover of around Rs 45,000 crores has much more potential than the two stock exchanges put together. In the futures market the expected volume of trade is six times of the physical turnover (almost Rs 2,70,000 crores).

India produces about eight lakh tonnes of castor seeds annually, Gujarat alone producing six lakh tonnes, followed by Andhra Pradesh (90,000 tonnes), Rajasthan (35,000 tonnes), Maharashtra, Karnataka and Tamil Nadu (25,000 tonnes each). Out of 3.20 lakh tonnes of castor oil produced, domestic demand is only 1 lakh tonnes, leaving a large surplus for exports.

Most of thespeakers at the seminar expressed concern at India's failure to capitalise its dominant position as the worlds major producer of castor seeds. Last year was particularly bad for Indian exporters. Nimish K Patel, chairman of NK Industries, pointed out that the domestic price of castor seeds had doubled from Rs 1,200 to Rs 2,500 per quintal as the actual production was far less than the estimates. But the most of te exporters could not take advantage of the situation as they had already made large export commitments a a very low prices ranging from $675 to 810 per metric tonnes, which had gone up to $1,350 to 1,450 per metric tonne at the time of shipment.

SS Vakil, export manager of Hindustan Levers Ltd (HLL), said that in absence of Indian exporters capacity to meet the international demand particularly last year, attempts were made to bring more area under castor seed crop in Mexico and Chile. He said processing derivatives was another area in which domestic industry failed to seize the opportunity. Thelatest threat is to come from diesel and petroleum derivatives, far cheaper than that derived from castor oil.

Gujarat's finance minister Vajubhai Vala, who was the chief guest at the seminar, replying to a plea of the Ahmedabad Seeds Merchants Association, said that the state government was willing to reduce sales tax on castor oil if the traders could assure there would not be any notional fall in the state's revenue.