Enigma of the Indian agricultural sector that is contributing towards the larger portion of the Indian economy. Still, it has to suffer lots whether from the low yield (as per World bank statistics FY2014, per hectare yield in India is amongst the lowest in the world. India stands at 3tonn/hectare as compared to compare to the global average of 4tonn/hectare. Developed countries like the USA(7), UK(7)and Germany(7) are achieving higher than India due to better practices)to the maximum profit margins and price discovery
The future is market-based instruments for managing and analyzing the risks which help in the efficient agricultural market establishment. The main aims of Futures markets enable the farmers to deliver the crop at a specified price at some future date. The clearing houses of the commodity exchanges guarantee the performance of these contracts. A farmer, who is uncertain about the prices of his produce, can cover his risk by selling a futures contract sometime before the harvest day. Also, farmers are not able to sell there product directly to ultimate buyers, on account of APMC. As the production, supply, and distribution of many Agri commodities are still governed by the state. These are forces to sell their commodity to the local aggregators. This is increasing the interference of a number of Intermediaries. Problems of standardized costs are boosting up higher. This is the main reason for the price variation of commodities among different trading centers. Commodity exchanges are playing a significant role by facilitating the integration of agriculture credit, securitization of Agricultural production, and Future market leading the more efficient for the farmer to predict there earning and Future Investment plans. This is possible mainly due to major reforms in the field of the exchanges present, there are 2 nationalized exchanges viz NCDEX and MCX.NCDEX is the leading future trading of Agri commodities. Exchanges like NCDEX'S electronic mode of grading and conformance both the parameters of futures that is quality and quantity have helped to the established amalgamation of the market place that is accessible to market participants, on time, ignoring the barrier of locations crossing the country.Reinforcement of future market has explored the logistics and warehousing development. Farmer's problem of price Fluctuations has been offsets the price risk by hedging. Hedging is insurance against abnormal or unusual price changes or minimizing price risk. Hedging is a way to reduce risks exposure by taking an offsetting position in closely related commodities. The future effectively locks in the price of a commodity today even if it will be bought or sold in physical form in the future.NCDEX future like mustard seeds, Guar/Guar Gum, cotton oil, soya oil, and Chana best hedging tool available is highly correlated to spot prices and that makes future perfect tools. Correlation between the spot price and price of future contracts (Basis risk is the difference between future and spot price For better participation in future trading and efficient hedging, liquidity of future commodity is an important feature for farmers.
The future is market-based instruments for managing and analyzing the risks which help in the efficient agricultural market establishment. The main aims of Futures markets enable the farmers to deliver the crop at a specified price at some future date. The clearing houses of the commodity exchanges guarantee the performance of these contracts. A farmer, who is uncertain about the prices of his produce, can cover his risk by selling a futures contract sometime before the harvest day. Also, farmers are not able to sell there product directly to ultimate buyers, on account of APMC. As the production, supply, and distribution of many Agri commodities are still governed by the state. These are forces to sell their commodity to the local aggregators. This is increasing the interference of a number of Intermediaries. Problems of standardized costs are boosting up higher. This is the main reason for the price variation of commodities among different trading centers. Commodity exchanges are playing a significant role by facilitating the integration of agriculture credit, securitization of Agricultural production, and Future market leading the more efficient for the farmer to predict there earning and Future Investment plans. This is possible mainly due to major reforms in the field of the exchanges present, there are 2 nationalized exchanges viz NCDEX and MCX.NCDEX is the leading future trading of Agri commodities. Exchanges like NCDEX'S electronic mode of grading and conformance both the parameters of futures that is quality and quantity have helped to the established amalgamation of the market place that is accessible to market participants, on time, ignoring the barrier of locations crossing the country.Reinforcement of future market has explored the logistics and warehousing development. Farmer's problem of price Fluctuations has been offsets the price risk by hedging. Hedging is insurance against abnormal or unusual price changes or minimizing price risk. Hedging is a way to reduce risks exposure by taking an offsetting position in closely related commodities. The future effectively locks in the price of a commodity today even if it will be bought or sold in physical form in the future.NCDEX future like mustard seeds, Guar/Guar Gum, cotton oil, soya oil, and Chana best hedging tool available is highly correlated to spot prices and that makes future perfect tools. Correlation between the spot price and price of future contracts (Basis risk is the difference between future and spot price For better participation in future trading and efficient hedging, liquidity of future commodity is an important feature for farmers.
Thoughtful 🍁🌱
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