Commodity futures trading platform National Commodity and Derivatives Exchange Limited (NCDEX) is planning to re-introduce pepper contracts with new quality specifications, company officials said. Pepper futures contract was launched in April 2004 and was stopped after quality issues cropped up on exchange delivered pepper. India is the largest consumer of pepper in the world and the second largest producer after Vietnam. NCDEX has applied to SEBI for re-launch of pepper contracts. The exchange will re-launch pepper contract once we get the approval from SEBI. The contracts specifications specified by the Exchange requires the depositing or selling clients to ensure compliance of FSSAI,” Kalpesh Sheth, assistant vice-president, marketing, NCDEX said.
Problems arose in pepper futures trade in December, 2012 when Food Safety and Standards Authority of India (FSSAI) seized 6,800 tonne of pepper, reportedly for the presence of mineral oil. Then FMC had asked NCDEX to resolve the issue before granting permission to re-launch the contracts.
Industry sources say that in the past, traders often used mineral oil to polish pepper and the oil used to evaporate after three months. The older FMC contract did not specifically mention mineral oil testing. Traders were taking advantage of mineral oil tests not being incorporated in the NCDEX contract specifications.
Sheth added that the new pepper contract will specifically adhere to the standards set by FSSAI and this would ensure transparency in the trade. He said that most of the pepper seized by FSSAI has been cleared and sold in the market. NCDEX is planning for an additional third delivery centre, Hasan in Karanataka, for the new contract. Kochi and Kozhikode will continue to be delivery centers for pepper contracts. “NCDEX in the past had launched futures contracts in commodities which are largely grown and traded in Kerala like rubber, coffee etc. The exchange is working on these products along with some new products and shall make best efforts to offer the same shortly subject to the approvals from SEBI,” he said.