Source: The Hindu Businessline

Our Bureau Coimbatore, April 3

The Indian commodities markets have emerged as the fastest growing sectors in the economy with liberalisation. They will be drivers of economic growth in the near future, said Ganga Murthy, Principal Advisor, Union Ministry of Consumer Affairs.

Speaking at a stakeholder awareness and education seminar on ‘Agribusiness and Commodity Futures Market Price Risk Management’ organised by The Hindu Business Line in association with Forward Markets Commission and the National Commodity and Derivatives Exchange at the Tamil Nadu Agricultural University here, Murthy conceded that instability in commodity prices was becoming an issue of concern not just in India, but world over impacting income, economic growth and the poor adversely. And price mortality is a bigger challenge for producers of primary commodities, more so in India basically because we are an agrarian economy, she added.

Urging the participants, particularly farmers to participate in the market, she said the environment of volatility in prices could be mitigated through these commodity exchanges. While stating thus, Murthy also pointed out that out of the 100 commodities in futures trade only over 40 were actively traded and approximately twenty seven of these were agri-commodity.

Price risk management

The fundamentals of demand and supply would determine the price and the futures market acts merely as a platform for price discovery and price risk management for the market participants. “Price risk management in commodities is not just a cliché, but a necessity for the development of the futures market,” she added.

She also said that the price discovery in the futures market would not be effective unless spot markets were regulated and integrated. “The physical spot market is fragmented. Out of the three spot markets, only two are functioning and that too with a host of problems. Further, farmers’ participation in the market is rather poor,” she observed and urged for better involvement.

The Wholetime Director of T Stanes and Co Lakshmi Narayanan said that about 35 per cent of the country’s national income came from agricultural production and stressed the need for gearing up with the transformation that was taking place on the agri-business front. The Vice-Chancellor of Tamil Nadu Agricultural University K. Ramasamy stressed the need for fair price dissemination practices and protection to farmers. (Source: The Hindu Businessline)