Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Proposal for Studying the Structure of Commodity Futures Market in Rice and Soybean and Also the Impact on the Income and Production of the Farmers Vishwa Ballabh & Prantik Ray XLRI Presentation Plan • Problems of Agriculture Sector in India • Objective and Scope of the Proposed Study • Rice and Soybean Futures Markets in India Macroeconomic Trends in India Economy 198092 1992-01 1993-94 1998-99 1999-00 2000-01 2004-05 Agriculture 3.9 3.3 4.1 7.1 0.7 0.0 0.7 2.3 Industry 6.3 6.5 5.2 3.4 6.4 6.3 8.6 9.0 Services 6.4 8.2 7.6 8.2 9.6 5.6 9.9 9.8 Total GDP 5.4 6.4 5.9 6.6 6.4 4.4 7.5 8.1 Source: Economic Survey, 2000-01,2005-6 2005-06 Growth Rates of Yield 6 5 4 3 2 1 0 Source: Ballabh (2007) ll Cr op s A oo d on F N ot to n C ee ds O ils ne ga rc a n Su od gr ai at Fo W he Ri c e 81 to 91 91 to 01 Capital Formation in Agriculture (at 1993-94 prices) (Rs. Crore) Total Public Private Year Percent Share Public Private Total GCF in Agriculture as % of Total GDP Total GCF in Agriculture as % of GDP from Agriculture (At 1980-81 Prices) 1960-61 1668 589 1079 35.3 64.7 2.7 5.1 1970-71 2758 789 1969 28.6 71.4 3.1 6.7 1980-81 4636 1796 2840 38.7 61.3 3.8 9.9 (At 1993-94 Prices) 1990-91 14836 4395 10441 29.6 70.4 1.9 6.6 1991-92 13389 3871 9518 28.9 71.1 1.7 6.1 1992-93 14508 4076 10432 28.1 71.9 1.8 6.2 1993-94 13523 4467 9056 33.0 67.0 1.6 5.6 1994-95 14969 4947 10022 33.0 67.0 1.6 5.9 1995-96 15690 4848 10842 30.9 69.1 1.6 6.2 1996-97 16176 4668 11508 28.9 71.7 1.5 5.9 1997-98 15942 3979 11963 24.9 75.1 1.4 5.9 1998-99 14895 3870 11025 26.0 74.0 1.3 5.2 19992000 17304 4221 13083 24.4 75.6 1.4 2000-01 16906 3927 12979 23.2 76.8 1.3 5.9 2001-02 17328 4127 13201 23.8 76.2 1.3 5.7 2002-03* 18657 4538 14119 24.3 75.7 1.3 6.4 6.0 Source: Ballabh (2007) Lack of Infrastructure and High Transaction cost • Scale of production is small • Production is risky • Information and credit cost is also very high • Lack of proper transportation and warehouse further increases the transaction cost Objective of the Study • To assess the efficiency and performance of the commodity futures market with reference to rice and soybean • It will include studying the structure in the spot and future markets and mapping out the functioning of the markets in these commodities. • To study the entire supply chain of these commodities which will help in identifying value addition, marketing cost and areas of intervention to improve the value chain efficiency • To study the impact of government policies and interventions on the supply chains in these commodities • To study effect of commodity futures in these commodities on the production, productivity and the income of the farmers. Why Rice ? Importance of Rice in India • Rice is the most important and extensively grown food crop in the world. • Around 90% of all rice grown commercially is used directly for human consumption. • Rice is the staple food of more than 60 percent of the world population and will remain as lifeline for the people in Asia and Pacific regions where 90% of it is produced and consumed. • International trade in rice is relatively very small – only about 5%. It is estimated that 50% of the world crop is consumed on the farms where it is grown. • India has the largest area under rice in the world and ranks second in the production after China. India has also emerged as a major rice consumer and exporter. Source: MCX Source: MCX Source: NCDEX Structure of Rice Futures in NCDEX • Four types of Rice Futures are traded: Grade A Raw rice, Grade A Parboiled Rice, Common Raw rice, Common Parboiled Rice • Contract Size: 10 MT • Primary Delivery Centre: Delhi • Spot Price Determination by Polling (CMIE) • Risk Mitigation by NCDEX by Margin Collection Why Soybean? Source: MCX Source: NCDEX Source: MCX Source: MCX Source: MCX Source: MCX Source: MCX How We Will Go About the Study • Collection of Primary Data through interaction with all concerned parties like the farmers, middlemen, brokers, exchange authorities and government officials • Studying the historical secondary price data from the exchange and market • Correlating the production and farmers’ income with the participation in the futures market • Suggesting policy changes required