The agriculture futures market ought to deal with much less delicate commodities comparable to oilseed complicated (oilseeds, meals, and oils), feed (maize), cotton, basmati rice and spices, it stated.
The commodity futures market can successfully contribute to cost discovery solely when many customers, producers, merchants, and aggregators use these markets to hedge their danger. The interaction of those members, speculators and arbitrageurs gives liquidity and helps worth discovery for longer durations.
Countering inflation
Nonetheless, given that the majority farmers are marginal with fragmented land holdings, they’re typically left with out the mandatory wherewithal to take part in these markets successfully, resulting in decreased depth within the commodity futures market.
Additional, the survey stated it is usually noticed that the requirement of standardised change contracts with specified high quality parameters and supply necessities has additionally impeded nearly all of farmers from successfully partaking within the commodity futures market since farmers produce totally different types of commodities in broadly various qualities resulting from different geographical, climate and soil circumstances.
Moreover, periodic bans imposed by the Authorities of India on futures buying and selling on agri commodities as one of many measures to counter meals inflation have additionally had implications on the traded worth and worth quantity in commodity and spinoff exchanges, stated the survey.
FPOs position
As soon as the regulators present clear path concerning the selection of commodities for derivatives buying and selling, they have to keep the course by adopting a steady coverage with minimal interventions.
Farmer Producer Organisations (FPOs) can play a big position in successfully linking small, dispersed farmers and the Commodity markets eco-system. The position of Authorities, SEBI, and Commodity Exchanges in selling FPOs in numerous segments of agri-commodities throughout the nation is pivotal.
Because the depth and liquidity within the agri-derivative market will increase within the lengthy -run, banning futures buying and selling could now not be required to stabilise costs except there may be information backed proof of futures buying and selling driving up worth volatility.
The regulator ought to carefully watch the futures market and undertake common opinions given the fluctuations in home manufacturing, consumption and world commerce, stated the survey.
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