On March 26, the Cabinet Committee on Economic Affairs approved futures trading in eight edible oilseeds, oils and cakes. These are rapeseed/mustard seed, groundnut, sunflower, ricebran, cottonseed, coconut, sesamum and safflower.

This announcement has woken up the members of five existing comexes dealing in various edible oilseeds and oils. Currently, de-oiled cakes are not traded on any comexes. The exchanges interested in taking oilseeds futures are: The Rajkot Seeds Oil and Bullion Merchants' Association (RSOBMA) and the Kathiawad Agri Produce Association (KAPA) in Rajkot, The AhmedabadCommodity Exchange (ACE), The Soyabean Producers' Association (SOPA) which is to set up Soyabean Futures and Options Exchange at Indore and the Bombay Oilseeds and Oils Exchange Mumbai.

Interestingly, with changing times, the Solvent Extractors' Association (SEA), Mumbai, with over 1,000 members under its fold, too has "started thinking aloud" the idea of floating a commodity exchange like the National Stock Exchange with its terminals spread in major oilseed producing, consuming and exporting centres. Said SEA executive director BV Mehta: "We have decided in principle to go ahead with setting up a multi-commodity exchange to trade in futures of rapeseed, cottonseed, groundnut and ricebran. We will put this proposition before our board members on April 23, get board's ratification and then seek members' permission for the same." Mehta added, as the futures trading in oilseed complex is capital intensive we will appoint an expert agency to look into the feasibility of the project. In any case, we do not wantto loose the opportunity and still not dilute the focus on our main activity of oil extraction.

What is more, the competing comexes at Gujarat (two in Rajkot and one in Ahmedabad) are forced to prepare themselves to trade in futures of oilseed complex through online, which currently is traded only through open outcry system.

BOOE, which is to soon start trading in castor oil international futures towards end of of this month, is said to be interested to lay a claim only in edible oils and de-oilseed cakes, leaving futures in oilseeds for comexes closer to the producing centres. The enthusiasm was spelt out by Haribhai Chhaganbhai, who is president of both the comexes--RSOBMA and KAPA.

"We are keen to undertake futures trading in groundnut, groundnut oil, and deoiled cake, rapeseed and cottonseed. As a major policy shift, the comexes have accepted condition of online trading, a prerequisite for the futures. A leading group is planing a strategy for fund raising and other related issues", Haribhai saidadding "we hope to start futures trading before the new season starts". According to Haribhai: We need futures at any cost and are serious to get it. We have accepted the condition of online trading which will cost around Rs 75 lakh. We are negotiating with four firms for the trading software and computerisation. A feasibility study will be carried out by experts.

The exchanges have prepared a draft set of bye laws. Once the required amount is raised, one of the two comexes will be selected as a formal bidder, provided it could raise the corpus earlier than it's rival, Haribhai said.

Rajkot is said to be ideal centre for the oilseed futures for it is the hub of Rs 15,000 crore groundnut trade, a large producer of cotton and rape seed. Saurashtra produces more than 35 per cent of total groundnut crop, and it has more than 900 oil mills and approximately 4,700 solvent extractor units.

RSOBMA conducts futures in castor futures since 1991, and is an active exchange. It has 104 odd members among which around50 are active.KAPA, though a dormant exchange since 1963, has good infrastructure and 232 members. It represents almost entire Saurashtra, for it owns trading ring at six producing centre: Rajkot, Jamnagar, Bhavnagar, Veraval, Dhoraji and Surendranagar. Each trading ring could be developed as a separate trading floor, hence it eliminates the need for separate exchange.

Infrastructure and membership strength give KAPA a competitive edge over it's rival RSOBMA. Probably it is only such exchange which has more than one trading ring. Edible oil futures was a long standing demand of the Rajkot, recalls Haribhai.The moot question is who will foot the cost of going online.A large section of the trading community in Gujarat is luke warm.