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Commodities futures will benefit farmers, say experts

Special Correspondent
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‘It serves two purposes — price discovery and price risk mitigation’

G. Chandrasekhar of Business Line speaking at a seminar in Visakhapatnam on Wednesday.
G. Chandrasekhar of Business Line speaking at a seminar in Visakhapatnam on Wednesday.

Commodities futures, though in a nascent stage in the country, will help farmers get a better price and traders and others hedge price risks, according to manager of NCDEX Ashish Argade.

He was speaking at the stakeholders’ awareness and education seminar organised here on Wednesday by the Business Line , in association with NCDEX and the Forward Markets Commission.

He said the futures trading on the exchanges would serve two purposes — price discovery and price risk mitigation — to all those involved in the commodities market. The commodities exchanges offer a safe, transparent, electronic platform for trading and “though commodities markets still have a long way to go, they are growing at a rapid pace and the public awareness and participation is also increasing swiftly.” He said a study by the NABARD had shown that “out of every Rs. 100 paid by the consumer, only Rs. 30 or so reaches the farmer and there are too many intermediaries in the supply chain. Therefore, our markets have to be made more efficient and the supply chain should be improved by reducing the number of intermediaries. Then, the farmer would get at least 50 per cent of the price paid by the consumer.” Vishal Gangarapu of the NCDEX spoke about the dynamics of the commodities markets in the country and said it was a hassle-free trading procedure. G. Chandrasekhar of Business Line explained the current macro economic scenario and the future of commodities trading in the next two or three decades and how they would drive the country’s economy.

He explained the relationship between commodities futures and the physical market and how a trader, or farmer, or processor, or exporter/importer could hedge the price risk.

Principal of Godavari Institute of Engineering and Technology Ramji said information about commodity futures and how they would benefit farmers should be disseminated widely by the exchanges. He spoke about the agrarian crisis in the country and the causes for it and the policy changes required to cope with it.

There was an interactive session at the end.


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