Letters: Usher in better future

It started in early 2002 after the National Agriculture Policy laid the formation of FPOs

With reference to Vimukt Dave's article “With corporate push, more farmers get active on futures platform” (April 17), linking farmers with the market-based risk management instrument can be a positive policy push. It started in early 2002 after the National Agriculture Policy laid the formation of Farmer Producer Organizations (FPOs). While a few FPOs have so far been enabled to connect with futures platform complying with nuanced futures trading rules and regulations, many are still left in the lurch as past efforts by cooperatives or NGOs failed on account of market access and managing farm risks. Real-time price information to the non-participants can therefore be useful to influence their decision making in agricultural investment and marketing. Futures may be an effective financial instrument in price risk management, say through hedging (or taking a buy or sell position in futures to offset the price risk in underlying cash market). However, it cannot mitigate production or pre-harvest risk that compels small farmers to attain sub-optimal returns from farming or makes it unprofitable. Weather or rainfall insurance can offer a cushion to this pre-harvest risk to some extent. If FPOs want to usher in better future for farmers, they should be trained to adopt an inclusive risk management practices to manage on- and off-farm risks. Policy support is must to create an enabling environment for farmer welfare and development.

Kushankur Dey | Bhubaneswar

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