FMC looks for more participants in comexes

An alternative market to sell agricultural commodities, that could scale up the income of farmers, was only possible through their direct participation in futures trading with the help of representative institutions, said B C Khatua, chairman, Forward Markets Commission (FMC).

Speaking with the representatives of farmers on Tuesday in Mumbai, Khatua said that commodity exchanges and FMC were working on various models of aggregation that would institutionalise the direct involvement of farmers in commodity futures. This could enable better price discovery and efficient risk management.

The regulator in the past had hinted that it was in the process of identifying aggregators who could participate in comexes on the behalf of farmers. Currently, a majority of agriculture commodities is sold in spot markets through intermediaries.

According to some representatives, farmers were only receiving only 30-40 per cent of what a consumer pays and nearly 60 per cent went to the intermediaries.

Even though the farmers were not participating in the futures market in large numbers, they could take advantage of the price discovery being made in comexes and fine

tune their sowing decisions and post-harvest marketing strategies, Khatua said, pointing to the setting up of price ticker boards in agricultural mandis and rural post offices to display spot and futures prices in a real-time basis.

Khatua emphasised the regulator's need for functional autonomy and called for the inclusion of commodity futures in the course curriculum offered by agricultural universities and cooperative training institutes.

The chairman, however, emphasised the need to strengthen the regulatory framework of the futures markets to improve the credibility of these markets.

The meeting, organised jointly by FMC and national commodity exchanges, was attended by around 25 representatives of farmers' associations across the country, including Shetkari Sangathan, Kisan Coordination Committee, Bhartiya Kisan Union, Federation of Farmers' Association, Kisan Jagriti Mandal and Karnataka Pradesh Red Gram Growers Association.

Representatives, meanwhile, called for reviving futures trade in suspended commodities, including wheat and rice. The restriction has not helped to check the prices in the spot market, they said.