Farmers need not venture into futures trading: FMC

The commodities market regulator Forward Markets Commission (FMC) believes it is not necessary for farmers to take part in futures trading.

“Farmers can reap the benefits without entering into futures trading. They need not be active participants in the market. Even in the US, farmers are not active in forward markets,” said FMC member DS Kolamkar during an awareness programme on ‘agriculture products versus futures trading’ organised by the Rajkot Commodity Exchange recently.

Stating that the farmers should be aware of the price that they receive for their agri produce, he said futures trading would help them get good price for their commodity and strengthen their bargaining power. He advised farmers not to make previous year’s price a base for new crop as it would lower their profits.

Kolamkar also agreed that the frequent ban on commodities could harm futures market. According to data given by him, during the last five years, the share of agriculture products in the total turnover of futures market has come down from 68.40 percent to 11.95 percent, while bullion trading increased to 62.65 percent from 31.32 percent. The total turnover increased about ten times in five years to Rs 52.49 lakh crore.

“Awareness on futures market is needed. Many people do not know about the commodity futures trading. Marketing is one of the biggest questions. Farmers are not getting enough price for their products because of improper marketing,” said Mahesh Joshi, head, economics department, Saurashtra University.