The Forward Markets Commission (FMC) has granted cooperative societies approval to trade commodity futures on exchanges. The organizations will achieve this by acting as "authorized persons," according to Business Standard.

Until this policy decision, farmers in the region had to depend on guidance provided by their cooperative managers, who issued information related to demand, the media outlet reports. Previously, federations and cooperative societies gathered crops produced by farmers and then sold the items to wholesalers through auctions. Most farmer organizations were staying afloat via government assistance.

Gujarat Cooperative Milk Marketing Federation, Haryana State Cooperative Supply & Marketing Federation and the National Agricultural Cooperative Marketing Federation of India are three cooperative societies that will be able to utilize derivatives as a hedge, according to the media outlet. These three organizations are composed of more than 10 million agricultural producers.

"The decision will reduce dependence on middlemen for selling hard-earned farm produce, resulting in higher profit for small and marginal farmers," Haryana State Cooperative Supply & Marketing Federation administrator Captain Chattar Singh told the media outlet.

The Insurance Regulatory and Development Authority has recently stated that it is considering allowing insurers to hedge risk through the use of derivatives, Business Standard reports.