The domestic agricultural sector will maintain last year’s growth rate of 4 per cent, Sharad Pawar, Union Minister of Agriculture, Consumer Affairs, Food and Public Distribution, said in his inaugural address at the 7th National Conference of Commodity Exchanges here on Sunday. However, he expressed concern that the share of agricultural commodities in futures trading was falling.
While part of the fall could be explained in terms of suspension of trade in some commodities that were generating huge volumes, it was not the whole story, Pawar explained. Hence, it is important that special efforts be made to allow the benefits of the market to flow to the agriculture sector and farmers.
From a modest beginning in 2003, after a 40-year ban on commodity derivatives, the turnover of commodity exchanges has surged phenomenally by 6,000 per cent till October 2008.
The three national commodities exchanges — the Multi Commodity Exchange (MCX), the National Commodity & Derivatives Exchange (NCDEX) and the National Multi Commodity Exchange (NMCE) — which represent over 95 per cent of the country’s commodity futures space, recorded a total turnover of Rs 397,236.72 crore in October this year as compared to Rs 323,182.44 crore last year, recording a growth of over 22 per cent. But, the share of agri commodities has declined 34.31 per cent to Rs 34461.19 crore in October this year as against Rs 52462.31 crore in the comparable month last year.
“It is a stupendous task and the Forward Markets Commission (FMC) and exchanges cannot do much unless a mechanism is created by which state governments take interest in this programme. This should be one of the items of their extension services,” the minister said. The success of agriculture markets also depends on creation of cheap warehousing and institutional credit facilities near villages so that farmers can reap benefits of this information.
Pawar said the price dissemination project, which envisages placement of electronic display boards with price details of agriculture commodities in locations such as APMCs, rural post offices, KVKs and BDOs with high farmers footfalls, needs to be implemented vigorously. Farmers will thus be more aware of prices.
About other issues such as non-participation of institutional players such as banks, legal inadequacies of regulation, pending amendments to the Forward Contracts (Regulation) Act, Pawar said he hoped the Forward Contracts (Regulation) Amendment Bill would be passed in the Parliament.
