To beat and survive price fluctuation, the cotton trade and industry here says it is considering the commodity future as the only alternative in the present situation.
J Thulasidharan,president, Indian Cotton Federation, said agro-climatic conditions and lack of a long-term cotton policy is the major reason for the problem faced by the cotton trade and yarn sector in India, particularly on the price front.
To protect stakeholders--buyers,sellers and consumers-- from volatility of the cotton price, the only alternative was to trade through commodity futures exchange, which would also provide a platform for risk management, he said, addressing a seminar on 'safety net against cotton price fluctuation.'
T G Senthilvelan, Assistant Vice-President, Multi Commodity Exchange of India Ltd (MCX), Chennai, said domestic demand supply scenario, inter-crop price parity, cost of production and international price situation were the major factors that influenced prices in the market.
Once cotton was traded through MCX, the third largest exchange in the world, it will ensure trade guarantee, risk management, pricing issue and transacton efficiency and liquidity, he said.
D Balasundaram, Director, Coimbatore Capital Ltd, said though cotton trade in the country was Rs 70,000 crore, hardly Rs 200 crore worth cotton was traded through exchange, which needs to be increased.
Attributing lack of awareness as the reason for low trade, he said the volume should be increased at least by 10 times, which would be beneficial to the cotton chain -- producers, buyers and traders.
