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Linking Farmers to Futures Market in India

Author : Tirtha Chatterjee

Publisher :

Page : pages

File Size : 20,69 MB

Release : 2019

Category :

ISBN :

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Book Description

Farmers, especially small and marginal, do not directly trade in agri-futures market in India. Their small size, lack of trust and understanding of futures market and dependence on middlemen, are some of the main deterrents. The role of Farmer Producer Organizations (FPOs) is crucial in this context since they can procure commodities, aggregate them and ensure that size and quality standards required for agri-futures trade are met. In her Budget speech for Union Budget of FY20, the Union Finance Minister has set a target of creating 10,000 FPOs in the next five years (by 2024). NABARD has already been in this process of creating FPOs for the last few years (already has more than 3000 FPOs) and the major responsibility of scaling them with 10,000 new ones, is likely to fall on NABARD. Interestingly, NCDEX has also been trying to deepen FPOs participation in markets for the last few years. However, as our analysis shows that between April 2016 and May 2018 only a tiny fraction (0.004 percent) of overall agri-futures trade at NCDEX was through FPOs. This reflects the need for gigantic steps, if FPOs have to be involved in futures trading at any reasonable scale. The need is even greater if one considers the dire necessity of having forward looking cropping patterns, where farmers' planting decisions are based on future prices rather than last year's or even earlier year's prices. Keeping this in mind, the paper identifies the constraints in first linking farmers to FPOs and second, FPOs to futures market. Based on this research about constraints, the paper puts forward a few suggestions for the FPOs, NCDEX, as well as the government for better results: (1) Both FPOs and NCDEX need to focus initially on commodities not pereceived by the Government as 'sensitive' from food security point of view so that minimum disruption takes place in futures markets. This will help them gain confidence in the functioning of futures markets; (2) NCDEX needs to identify production centres, build delivery centres around them and encourage futures trading in these areas; (3) Resource Institutions involved in educating and hand-holding FPOs in futures trading, themselves need to upgrade their knowledge and skills about functioning of futures trading. Government policy and NCDEX both can help them in this direction; (4) Government initiatives like that of Bihar and Rajasthan can help scaling the efforts of linking FPOs to futures markets in other regions, (5) There could also be learning from small holder dominated agriculture of China, that has provided state support in linking farmers to futures, and helped customized products and reduce price distortions, (6) Government's trading arms can also be encouraged to directly participate in the futures market to give confidence to many others, including FPOs; and (7) Instruments like forwards and options have to be encouraged to invite greater participation by FPOs.



Farmers’ Participation in India’s Futures Markets

Author : Kushankur Dey

Publisher : Springer Nature

Page : 145 pages

File Size : 36,18 MB

Release : 2021-08-23

Category : Business & Economics

ISBN : 9811634327

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Book Description

Futures markets offer numerous advantages in the marketing of agricultural commodities, and in this context, the book examines the major factors and issues that determine the participation of India’s farmers in the futures markets. These include the efficiency of the futures markets in price discovery, the convergence of spot and futures prices, the dissemination of spot price information, and the socio-economic and exchange-related issues affecting farmer participation. It also examines the factors affecting the demand and supply of participation, and the access to futures trading services. The purpose is to identify different factors that can enhance or constrain farmer participation in the futures markets, which may include market characteristics, institutional features, socio-economic issues, and behavioural aspects of farmer participation. A number of organizations related to rural development, as well as farmer producer companies have sought to facilitate farmer participation in the forward/futures market through offering aggregation and other trading services, and the book also examines these efforts towards the exchange-traded derivative markets and the direct and indirect benefits that accrue. The book also studies the efficiency of futures markets in price discovery and price dissemination applying co-integration tests, and error correction and volatility models, using available data of wheat, rapeseed-mustard, cotton, guar seed, castor, cumin and coriander futures contracts traded in the largest agricultural commodity exchanges in India. Besides, case studies are used to examine and understand the institutional roles of aggregators in aggregation efforts towards the forward/futures market. This book covers several states and locations in India to enhance the representation and validity of the findings. It also examines representative farmer organizations which have obtained institutional membership in the forward or futures markets, and identifies areas of further research. In the current scenario, the book would be of immense importance and relevance to governments, commodity exchanges/markets, aggregators, many private and development organizations, as well as interested researchers and students.



Farmers' Participation in India's Futures Markets

Author : Kushankur Dey

Publisher :

Page : 0 pages

File Size : 18,91 MB

Release : 2021

Category :

ISBN : 9789811634338

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Book Description

Futures markets offer numerous advantages in the marketing of agricultural commodities, and in this context, the book examines the major factors and issues that determine the participation of India's farmers in the futures markets. These include the efficiency of the futures markets in price discovery, the convergence of spot and futures prices, the dissemination of spot price information, and the socio-economic and exchange-related issues affecting farmer participation. It also examines the factors affecting the demand and supply of participation, and the access to futures trading services. The purpose is to identify different factors that can enhance or constrain farmer participation in the futures markets, which may include market characteristics, institutional features, socio-economic issues, and behavioural aspects of farmer participation. A number of organizations related to rural development, as well as farmer producer companies have sought to facilitate farmer participation in the forward/futures market through offering aggregation and other trading services, and the book also examines these efforts towards the exchange-traded derivative markets and the direct and indirect benefits that accrue. The book also studies the efficiency of futures markets in price discovery and price dissemination applying co-integration tests, and error correction and volatility models, using available data of wheat, rapeseed-mustard, cotton, guar seed, castor, cumin and coriander futures contracts traded in the largest agricultural commodity exchanges in India. Besides, case studies are used to examine and understand the institutional roles of aggregators in aggregation efforts towards the forward/futures market. This book covers several states and locations in India to enhance the representation and validity of the findings. It also examines representative farmer organizations which have obtained institutional membership in the forward or futures markets, and identifies areas of further research. In the current scenario, the book would be of immense importance and relevance to governments, commodity exchanges/markets, aggregators, many private and development organizations, as well as interested researchers and students.





Transforming Food Systems for a Rising India

Author : Prabhu Pingali

Publisher : Springer

Page : 382 pages

File Size : 42,60 MB

Release : 2019-05-14

Category : Business & Economics

ISBN : 3030144097

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Book Description

This open access book examines the interactions between India’s economic development, agricultural production, and nutrition through the lens of a “Food Systems Approach (FSA).” The Indian growth story is a paradoxical one. Despite economic progress over the past two decades, regional inequality, food insecurity and malnutrition problems persist. Simultaneously, recent trends in obesity along with micro-nutrient deficiency portend to a future public health crisis. This book explores various challenges and opportunities to achieve a nutrition-secure future through diversified production systems, improved health and hygiene environment and greater individual capability to access a balanced diet contributing to an increase in overall productivity. The authors bring together the latest data and scientific evidence from the country to map out the current state of food systems and nutrition outcomes. They place India within the context of other developing country experiences and highlight India’s status as an outlier in terms of the persistence of high levels of stunting while following global trends in obesity. This book discusses the policy and institutional interventions needed for promoting a nutrition-sensitive food system and the multi-sectoral strategies needed for simultaneously addressing the triple burden of malnutrition in India.



Innovations for Linking Farmers to Markets

Author : Subhendu Chakrabarti

Publisher :

Page : 0 pages

File Size : 48,48 MB

Release : 2010

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ISBN :

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Book Description

Continuous fragmentation of land, lack of public investments and above all shifting of food consumption pattern towards high value products particularly fruits and vegetable have made India's grain-based cropping pattern non-remunerative. In the present era of globalization, horticulture appears to be the most potential sector for export as well as for generating non-farm employment opportunities. But, India's supply chain is crowded by numerous intermediaries that deprive both farmers, especially small holders, and the final consumers. Diversification of agriculture and linking farmers to markets become essential. The present study examines the modalities of the arrangements to link farmers to markets in India on the basis of published survey reports and records and undertakes a stakeholder analysis. The study reveals that no single arrangement can be a panacea for all the situations and emphasizes need to take into account India's socio-economic and agro-climatic diversities while formulating such arrangements for effective results.



Leveraging Mobile 2.0 in India for Agricultural Market Access

Author : Sriganesh Lokanathan

Publisher :

Page : 0 pages

File Size : 44,69 MB

Release : 2014

Category :

ISBN :

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Book Description

Farmers in developing countries are often unable to engage effectively in agricultural markets in their countries since these markets are prone to inefficiencies (Barret, 2005; Fafchamps, 2004; World Banks, 2002 amongst others). Small and subsistence farmers in particular tend to have unfavorable linkages to markets due to a lack of market orientation (Timmer, 1997). The commercialization of agriculture and the subsequent structural complexity it has induced in the food system has meant that poor farmers face higher transaction costs to access competitive markets (Pingali et al, 2005; Pingali, 2006). The lack of effective engagement translates into the inability of farmers to utilize market information in their livelihood decisions. These suboptimal decisions in turn restrict the possibility for farmers to leverage their produce or commodities to improve and sustain their incomes, by engaging, for instance, in financial instruments such as forward contracts. The inability to enter into such contracts precludes them from access to crop insurance and working capital loans using their produce as collateral (e.g., a forward contract or commodity backed financing using warehouse receipts). Providing access to accurate and timely market price information without physically visiting markets is the first step in reducing the transaction costs and allowing farmers to engage effectively in agricultural markets. Ratnadiwakara et. al., (2008) argue that provision of market price information in a timely manner reduces information asymmetry, which in turns allows farmers to reduce their transaction costs while also increasing their bargaining power in market transactions (also Jaleta & Gardebroek, 2007). A crucial benefit of having access to market price information (especially forward and/or future prices) is that it gives farmers more control over their crop planting and harvesting schedules which they can then optimize so as to align their agricultural outputs to meet the demand in local and external markets. This in turn would help facilitate a more stable revenue stream from their produce. ICTs can play an important role in bridging the information deficiencies and can provide access to markets. From pure market price dissemination to more sophisticated systems that link farmers to output markets, ICTs can play an important developmental role. Its potential as a poverty alleviation tool has been recognized and countless examples exist in the developing world of initiatives to improve farmers' livelihoods via ICT driven linkages to markets.



Agricultural Value Chains in India

Author : Ashok Gulati

Publisher : Springer Nature

Page : 324 pages

File Size : 36,19 MB

Release : 2022-01-01

Category : Business & Economics

ISBN : 9813342684

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Book Description

This open access book provides a clear holistic conceptual framework of CISS-F (competitiveness, inclusiveness, sustainability, scalability and access to finance) to analyse the efficiency of value chains of high value agricultural commodities in India. It is based on the understanding that agriculture is an integrated system that connects farming with logistics, processing and marketing. Farmer’s welfare being central to any agricultural policy makes it very pertinent to study how a value chain works and can be strengthened further to realize this policy goal. This book adds value to the existing research by studying the value chains end-to-end across a wide spectrum of agricultural commodities with the holistic lens of CISS-F. It is not enough that a value chain is competitive but not inclusive or it is competitive and inclusive but not sustainable. The issue of scalability is very critical to achieve macro gains in terms of greater farmer outreach and sectoral growth. The research undertaken here brings out some very useful insights for policymaking in terms of what needs to be done better to steer the agricultural value chains towards being more competitive, inclusive, sustainable and scalable. The value chain specific research findings help draw very nuanced policy recommendations as well as present a big picture of the future direction of policy making in agriculture.





Effects of Futures Markets on Agricultural Commodities

Author : Madhoo G. Pavaskar

Publisher :

Page : 223 pages

File Size : 18,97 MB

Release : 2009

Category : Agricultural prices

ISBN : 9788190810913

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Book Description

In the wake of trade liberalization since the mid 1990s in India, commodity exchanges have been allowed to operate after a long ban of around three and half decades. In the new millennium, national level exchanges have been launched for futures trading, and they have witnessed initial successes in terms of volume and turnover. But, what has been the impact of futures trading on agricultural production and prices? Have futures markets been successful in playing their critical roles of price risk management and price discovery? Can futures markets help the various stakeholders in the agricultural value chain to hedge against the impending risks that will be posed with further agricultural trade liberalization, as India moves further towards WTO regime? Proper research to answer these critical questions has been lacking so far in the Indian context. Resultantly the literature on these aspects of futures trading has, so far, been conspicuous by its absence. The volume titled, Effects of FUTURES MARKETS on Agricultural Commodities , edited by eminent economist Dr. Madhoo Pavaskar, seeks to answer these critical questions, and attempts to bridge the gap existing in the literature. The volume is published by Takshashila Academia of Economic Research (TAER), an independent, non-partisan academic group for undertaking economic, environmental, and social research, set up by Financial Technologies (India) Limited (FTIL). The volume entails a collection of speeches and select papers presented at the seminar on Agro-Commodity Futures in India: Impact on Production and Prices, organized by erstwhile MCX Academia of Economic Research (now TAER). The contributors are leading economists, regulators, policy makers and stakeholders associated with futures markets. In its attempt to informing policy makers, stimulating research thinking, as well as to creating a general awareness of the various economic issues related to the agricultural futures markets, this book is the first of its type. It will be of interest to economists, scholars, academicians, regulators, policy makers, and various market functionaries alike.