G Chandrashekhar

Mumbai May 11

, IF you thought tribal farmers do not understand the importance of price discovery and price risk management of the produce they grow, think again.

Price dissemination and cooperative approach to produce marketing can transform the fortunes of groups of farmers.

In a unique project that seeks to empower tribal growers of agricultural crops, the National Commodities and Derivatives Exchange (NCDEX) has shown how dissemination of correct market prices can convert growers into smart traders.

Several thousand tribal farmers in the drought-prone Adilabad district of Andhra Pradesh, belonging mostly to scheduled castes and scheduled tribes, cultivate grains (paddy, jowar, maize), oilseeds (soyabean), spices (chillies), sugarcane and cotton. But remunerative prices eluded them all the while because of sharp practices of local moneylenders and commission agents who short-changed illiterate and often cash-starved growers.

Change is now in the air.

Farmers in the village have formed themselves into a cooperative to market soyabean and red gram under the guidance of the Hyderabad-based Center for Collective Development. The cooperative outfit is expected to lend to farmers the requisite scale-economies by encouraging aggregation and facilitate marketing at correct market prices.

It is estimated that the incomes under the new dispensation can increase by as much as 20 per cent.

In its endeavour to reach out to poor farmers and enable them to know correct prices in the market and also manage their price risk, NCDEX has decided to provide the critical market intelligence through dissemination of spot and futures prices.

A price ticker recently installed at village Narnur in Adilabad has started to display real time prices for the benefit of growers who will now be able not only to know the correct market price but also demand it from potential buyers.

After initial scepticism, growers soon began to realise the commercial importance of real time correct prices - they can no more be fooled by untrustworthy middlemen.

The development is bound to have tremendous `demonstration effect'. Growers who are not members of the cooperative are beginning to show interest.

NCDEX believes it would only be a matter of time before the farmers' cooperative starts hedging the price risk in the futures exchange.

(This article was published in the Business Line print edition dated May 12, 2005)
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