Vaithilingam urges them to participate in futures trading
PUDUCHERRY: Urging farmers to participate in futures trading, Chief Minister V. Vaithilingam on Wednesday assured them of steps to make more warehouses available so that they could store their produce and sell it when price is high.
He was speaking at the inauguration of an awareness workshop on commodity futures, organised by Perunthalaivar Kamaraj Krishi Vigyan Kendra, Forward markets Commission, Mumbai, and the Department of Commerce, Pondicherry University.
Although paddy, which is the mainstay of agriculture in Puducherry, is currently not on the forward market, it would be included soon. Produce would also be available in a few months, so farmers must make use of the facility for their own benefit, Mr. Vaithilingam said.
The Indian farmer is intelligent, but often does not get timely trade information, and with no proper storage facility, is forced to sell his produce at lower prices. Futures trading help farmers acquire better prices for their produce, Chairman of the Forward Markets Commission B.C. Khatua said, explaining the concept to the farmers gathered at the event.
Futures trading provides a common platform where buyers and sellers whose prices match alone may agree to a transaction by means of a formal contract, months before the transaction itself, providing the farmers a guaranteed price for their produce, Mr. Khatua elaborated.
The farmers may benefit by having access to an expanded market, getting timely market information on prices in both future and spot markets, and even avail themselves of credit against contracts already made. Information on commodity prices relevant to the farmers of a region would be available on numerous ticker boards put up in villages, and help farmers decide what crops to sow based on future prices. If the price is good on that day itself, farmers could sell in the spot market too. An increased storage space is necessary, but warehouse receipt would be a negotiable instrument that could be traded all over the country. Farmers could sell without physically moving goods from the warehouse themselves, he said.
Farmers may collaborate, by aggregating their individual produce, and share benefits proportionately even, Mr. Khatua said.
Speculators help bridge the gap between buyer and seller and provide insurance for both, he said in defence of speculation, adding that any attempt to manipulate the market by speculators with be regulated by the commission.
Responding to a request from M. Ramadass of Pondicherry University to include paddy in the market, Mr. Khatua said that there were difficulties, because there are so many varieties of paddy. “But we will try to re-launch quality grade contracts for paddy, so that paddy intensive regions such as Puducherry may benefit,” he said.