The Hindu Business Line : ‘Farmers should get benefits of futures trading’

Mumbai, Nov. 12 The Forward Markets Commission on Monday convened a meeting of representatives of banks, ‘socially responsible’ corporates, cooperative marketing federations and NGOs to aggregate farmers for taking position on commodity futures exchange.

“Though many cooperative federations are aggregating farmers very few are participating on commodity futures exchanges. We want them to realise the benefit of futures trading,” said Mr B.C. Khatua, Chairman, Forward Markets Commission.

The meeting was jointly organised by FMC and the National Commodity Exchanges.

FMC is in the process of identifying organisations with rural connectivity and knowledge of futures trading to reach the benefits of futures to the farmers directly or indirectly.

“Participants at the meeting have raised several issues including opening of more delivery centres at smaller villages and conduct awareness programme to educate farmers on futures trading,” said Mr Khatua.

Some organisations such as NAFED, HAFED and a few other major co-operatives and federations are already participating in the market and there is a good possibility that several such organistions would participate in the market in future.

“The aggregators will be charging a small fee which will be decided by the market process and FMC will not interfere on the issue,” he said.

Taking the initiative forward the commission will be writing to the State marketing federations and other market participants seeking their opinion on how to improve the participation of farmers in the futures trading.

“Their participation would greatly benefit the farming community by way of better price realization. Some of these organisations may eventually develop into Aggregators for farmers, thereby, providing them with a mechanism to directly participate in the market,” he said.

FMC is looking at various aggregation models so as to develop a policy on aggregation of farmers for participation in the futures market. “We are not planning to have a set of norms for aggregators as such, but they have to register with the exchange. The open interest limits may be relaxed for aggregators,” he said.

The various measures adopted by FMC would fructify at the grass root level and that in the coming years this market will see greater participation direct and indirect by farmers and other supply chain functionaries.

Participants at the meeting opined that for protecting the interests of farmers and for making the benefits of futures market reach them, strict regulation of intermediaries will be required. They need to be protected against possible unscrupulous practices at the market place.

Some participants also opined that the Bill to amend the FCR Act will also pave the way for launching of “options” which may be preferred by the farmers to “futures” as this will enable them to hedge their price risks without losing the benefit of favourable price movement, if any.

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