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Price volatility hurts producers

Special Correspondent
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Ganga Murthy, Principal Advisor, Union Ministry of Consumer Affairs, speaking at a stakeholder awareness and education seminar in Coimbatore on Wednesday.– PHOTO: S. SIVA SARAVANAN
Ganga Murthy, Principal Advisor, Union Ministry of Consumer Affairs, speaking at a stakeholder awareness and education seminar in Coimbatore on Wednesday.– PHOTO: S. SIVA SARAVANAN

Price risk management in commodities is an indispensable phenomenon for development of the futures market, said Ganga Murthy, Principal Advisor of the Union Ministry of Consumer Affairs.

She was the chief guest at a stakeholder awareness and education seminar on “Agribusiness and Commodity Futures Market Price Risk Management” organised here on Wednesday by The Hindu Business Line , the Forward Markets Commission, and the National Commodity and Derivatives Exchange.

She said that instability of commodity prices had been a matter of concern as it had a negative impact on income and growth. Price volatility was a challenge faced by the producers of primary commodities.

The impact was greater in countries such as India that were basically agrarian economies. Several measures had been taken to help the producers.

The Indian commodity market had emerged as one of the fastest growing segments of the economy. Of the more than 100 permitted commodities in futures trade, 40 were traded actively and 27 of these were agriculture commodities.

It was the fundamentals of demand and supply that would decide the prices and the futures market only acted as a platform for price risk management for the participants of the physical market. Thus, there was a need for better alignment between the physical and futures platform.

Some of the challenges faced were the fragmented physical spot market and the need for greater participation of farmers in the futures and spot exchanges, she said.

K. Ramasamy, Vice-Chancellor of Tamil Nadu Agricultural University, said price volatility for the produce was affecting farmers. Efforts should be taken to ensure that farmers got good prices for the produce.

Lakshmi Narayanan, whole time Director of T. Stanes and Company, said that in developing countries such as India, the agribusiness sector included agricultural inputs, agricultural production, agro processing and marketing. The inputs segment played a key role in shaping the present day agri business industry.

The agricultural sector continued to face new challenges. A system that used judicious combination of chemicals and bio inputs and integrated nutrient and pest management practices will enable make the sector sustainable, she said.

Arun Anant, Chief Executive Officer of Kasturi and Sons Limited, said this was the 27th commodity conference organised as part of the series.

Several interventions are required for higher growth of the agricultural sector and agri commodity trading is an important part to achieve this.

T. Stanes and Company was the partner for the event.

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