Benefits Of Commodity Derivative Market To The Indian Farmers Prospects And Challenges

Abstract

newline India has a long history of trading in commodity derivative, the history of commodity market can newlinebe found since nineteenth century, when the Cotton Trade Association was established in the year newline1875. However, it was very unfortunate that the commodity market shut down, with the newlinegovernment intervention in 1960 s. Earlier it was apprehended that the speculative trade would newlinebring unpleasant consequence to the Indian economy, also during that time dearth in the supply of newlinecommodity and natural disaster added fuel to the fire. After the resurgence of economic reform in newline1992, when the entire nation was swiped by the wave of globalization. The commodity market newlinesaw Renaissance in the year 1993 and in the year 2002 government allowed trading in commodity newlinefutures again. newlineIndia is an agricultural economy and 70% of the population in rural India subsists on agricultural newlinesector. In this regard, it prudential to have a strong commodity market in our country. It is also newlineworth noting that commodity market is a platform where the farmers can sell their future crops newlinedirectly without any intermediary. The commodity market also provides hedging machinery for newlinethe farmers against unfavorable price fluctuation. The non-participating farmers can use the market newlinequotations for price discovery mechanism. The Indian farmers every year sustain losses due fall in newlinethe price of their crops, adding more to the agony the long chain of supply and middle man eat newlineaway their profit margin. In most of the case, the farmers are not aware about the market rate of newlinetheir produce. newlineIn such a condition, it is very logical to hypothesize that commodity market is the utmost need of newlinethe hour. However, the fact is quite surprising, the commodity market has experience very little newlinegrowth since 2002. The broking houses do not have farmers trading in their centers, and the entire newlinecommodity market is been run by speculator, and the real traders are absent. This brought me to newlinethe need of deciding to conduct a research in this area. newlineAft