KARACHI: PMEX launched Red Chilli deliverable weekly futures contracts in October 2015 of three different grades of Dandicut (Longi) variety. Though it was the first-ever listing of a spice at the Exchange, the concerted efforts of all the market participants i.e. growers, traders and corporate buyers enabled PMEX to achieve this milestone.

During a brief trading span of three months, more than 600 tons of the spice was traded at the Exchange and delivered to the corporate buyers.

PMEX received an encouraging response from all the market participants for the efforts that resulted in better quality red chilli production, quick cash pay-out to the farmers and overall efficiency in the red chilli trade.

Capitalizing on this success, PMEX in the upcoming trade season will offer another variety of red chilli commonly known as Hybrid. The production volume of this variety has substantially increased in last couple of years as compared to Dandicut/Longi. For this type of chilli, the trade centres are located across the country with major trade activity in Kunri, Sindh and Faisalabad, Punjab. Addition of Hybrid variety of Red Chilli at PMEX and opening up of a centre at Faisalabad will increase trading volume and facilitate a larger segment of the Red Chilli value chain.

In the upcoming trade season of red chilli, to facilitate the farmers, PMEX is working with different banks for the warehouse receipt financing program. Under the program, the growers of red chilli will be able to borrow money from banks against the warehouse receipts issued to them.

To get the warehouse receipt, the growers will have to deposit their produce at PMEX designated warehouse after getting quality certification of their produce from SGS Pakistan. Once the warehouse receipt is issued, the grower will have two options: 1) sell the produce whenever the prevailing market price is favourable or 2) approach a bank for borrowing money against the warehouse receipt to fulfil his current liquidity needs. It will increase farmers’ holding power and help them to avoid distress sale at the time of harvest.

The process of quality certification, storage at designated warehouse and trading at PMEX is aimed at facilitating not only the growers in getting the best possible price for their produce but also the buyers in getting certified quality of red chilli.—PR