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M.R. Subramani

`Transparency will make futures trade beneficial to farmers'

Benaulim (Goa) , May 17

The Forward Markets Commission (FMC) is trying to resolve problems relating to futures contracts in urad, after having successfully tackled a similar issue in tur.

"There have been problems with contracts of imported commodities. We have been grappling with it for sometime. There is nothing to feel negative about it. We are working closely to resolve such crisis," Mr S. Sundareshan, Chairman, Forward Markets Commission, told a gathering of global pulses trade.

He was inaugurating CICIL 2006 Convention, being conducted in the country for the first time, here.

CICIL is a French acronym for International Pulses Trade and Industry Confederation.

According to officials of futures exchanges, contract specifications for tur (chick pea) mainly conformed to the Myanmar variety.

This created problems in delivery, especially with consignments of Indian origin.

"Indian tur production is higher than that of Myanmar and having specifications relating to a country which produces lower than our country meant that our growers and traders were unable to benefit. So, the FMC stepped in to help in having a specification that also included Indian tur varieties," the officials said.

"A similar problem is being witnessed in urad contracts and the FMC is likely to sort out the problem soon," they said.

Mr Sundareshan said the decisions on these imported commodities would help to put the market on the right track.

Options trading

Stating that the FMC had proposed participation of banks, mutual funds and FIIs in the commodity futures, he said he expected banks, cooperative institutions and farmers' organisations to take part in futures trade in a big way soon.

"We need transparency in trade for making futures trade beneficial to farmers. Options trading is an instrument for it. We hope it will be introduced soon," Mr Sundareshan said.

Bill on Contracts Act

The Centre had introduced a Bill for amending the Forward Contracts (Regulation) Act, 1952 in Parliament and it would be discussed before being passed as an Act soon, he said.

Mr Sundareshan said the amendment would also help in introducing weather derivatives and indices futures. "We hope all this will be done in a year's time," he said.

The FMC Chairman said the volume in futures trading had gathered pace and touched $420 billion last fiscal from $120 billion the previous year. "This year also we are witnessing a similar trend," he said.

Mr Jignesh Shah, Managing Director and CEO, Multi Commodity Exchange, said the global markets could soon take a cue for price signals from India in at least five commodities. "Pulses could be one of them and its turnover is on a par with gold in our exchanges," he said.

Positive outlook

Mr G. Chandrashekhar, Associate Editor, Business Line, said outlook for pulses trade in the country was positive with rising demand, consumption and population.

There was good opportunity for processing and marketing of pulses in the country by foreign investors, he said.

The two-day convention has attracted over 400 delegates, including about 350 from abroad. China, Turkey, Pakistan, Australia and Canada have sent in a large number of participants for the meet.

More Stories on : Commodity Exchanges | Events | Foodgrains

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FMC to address urad futures contract issues

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