Transcript NABARD - NCDEX Institute of Commodity Markets and Research

Futures Commodity Market and Price Gains
in Agriculture – A Case Study of Wheat
PANKAJ KUMAR
MBA (AGRI-BUSINESS)
Faculty of Management Studies
Banaras Hindu University
Varanasi
[email protected]
Flow of presentation

Background of Project

Objective of Study

Research Methodology

Findings

Conclusion

Recommendation
Background of Project

Price risk of agriculture.

It has been realized by policy maker that
introduction and proliferation of futures trading
will benefit Indian agriculture.

NABARD trying to pass on the benefits of futures
commodity market to Indian farmers.
Objective of the Study
1.
To study the existing marketing channel of
wheat in Uttar Pradesh.
2.
To study the relationship between the spot
and future prices of wheat.
3.
To study the futures price dissemination
through different sources.
Research Design

Nature of Research
Exploratory and quantitative

Data Collection
Nature of Data
Primary
Secondary
Wheat Price
Source
Duration
Spot
Shahjahanpur
Mandi
(UP)
34 Months
Futures
www.ncdex.com
34 Months
Survey Sample Coverage
No.
Farmers
47
Commission Agent
15
Wholesaler
19
Exchange Broker
15
Questionnaire Used
Structured, open ended and non disguised.
Sampling Technique
Judgmental and Snowball Sampling
☺Study Area
Shahjahanpur, Bareilly, Hapur, Muzaffarnagar, Meerut
☺Statistical Tools
Correlation, Standard Deviation, Weighted Average,
Mean, Line Graph, Bar Graph
☺Limitations of Study
 The accuracy of the findings mostly depends on willingness
of the respondents.
 Econometric analysis futures and spot prices are not
conducted.
 Only five districts of Uttar Pradesh have been selected for
the study
Marketing Channels of wheat
Farmer
Channel 2
Channel 1
Channel 3
90%
85%
80%
Small (< 20 Hactare)
Kachha Adathiya
70%
Large (> 20 Hactare)
60%
Pucca Adathiya
50%
Government Agencies
Flour Miller
Corporate Houses
45%
40%
30%
25%
30%
15%
20%
Marketing Channel
10%
0%
Consumer
0%
Channel 1
Channel 2
Channel 3
Correlation (r) Analysis
Variable
Independent
Dependent
Spot Price
Futures Price
Duration
(Months)
r
34
+0.81
Quarterly ‘r’ Analysis of Spot & Futures Prices
Months
Correlation (r)
Sep04-Dec04
-0.23
Jan05-Apr 05
0.89
May05-Aug05
0.81
Sep05-Dec05
0.40
Jan06-Apr 06
-0.14
May06-Aug06
-0.21
Sep06-Dec06
0.46
Jan07-Apr07
-0.80
Price Fluctuation Trend
1200.00
1000.00
800.00
600.00
400.00
200.00
0.00
Average Future Price wheat
Rate /qnt Shahjahanpur
Analysis of Standard Deviation
120.00
100.00
Monthly SD of Futures Price
Weekly SD of Spot Price
80.00
60.00
40.00
20.00
0.00
Spot Price Information
Price Information
Sources
Newspaper
Price
Information
5%
Other
10%
Traders
9%
71%
Nearest Mandi
Fellow Farmer
4%
4%
Fellow Farmer
Nearest Mandi
71%
9%
Newspaper
Traders
10%
0%
Other
Price Information
5%
20%
40%
60%
80%
Access to futures Price Sources
Price Dissemination
Overview of News Papers of Uttar Pradesh
Sl.No.
News Paper
Remark
1.
Danik Jagran, Lucknow (Hindi)
Spot Price of Mandi, Share Price
2.
Hindustan Danik, Lucknow (Hindi)
Spot Price of Mandi, Share Price
3.
Rashtriya Sahara, Lucknow (Hindi)
Spot Price of Mandi, Share Price
4.
Amar Ujala, Kanpur(Hindi)
Spot Price of Mandi, Share Price
5.
The Economics Times, Lucknow
Futures Prices, Share Price,
(English)
6.
Business Standard, Lucknow (English)
Futures Prices, Share Price,
7.
The Indian Express, Lucknow (English)
Share Price, Mutual’s Fund
8.
Times of India, Lucknow (English)
Share Price, Mutual’s Fund
9.
Hindustan Times, Lucknow (English)
Share Price, Mutual’s Fund
10.
The Pioneer, Lucknow (English)
Share Price, Mutual’s Fund
Conclusion
1.
2.
3.
Farmers are at the mercy of adathiyas of
Mandi.
Futures and
correlated.
spot
market
are
highly
Spot and futures price showing similar
fluctuation trend it means that both the
markets are interrelated.
Cont…
4.
5.
Study don’t find any type of speculative
activity in relation to wheat price.
Different sources having futures price
information is not accessible by the
farmer.
1
Recommendations
1.
2.
3.
There is need to reform the marketing channel so that
farmers will get fair price of their wheat produce.
As farmers are more dependent on adathiyas from
sowing to selling, there is need to break this
relationship by providing special loan to interested
farmers.
Strengthening of warehouse receipt finance so that it
helps the farmers to become more responsive to
market opportunities.
Cont…
4.
5.
Involvement of private players as an aggregator
who can do the futures trading of wheat on behalf
of farmers.
An efficient futures market can ensure better
return to farmers, reducing the need for
government intervention through price support &
subsidies so, it must be encouraged.
Cont….
7.
8.
There is need to create awareness among the farmers
about the benefits of futures commodity market.
Easy availability of futures price movement of agri
commodities for farmers, this information helps the
farmers in making decision about which crop to grow.
Thank You