There is a need to build a database of all agricultural produce in the country in order to get an accurate picture of the availability of crops and take measures accordingly. Lack of adequate data and poor coordination among the different Ministries are some key constraints in getting a clear picture of the crop availability and ensuring better price discovery.
According to Arun Raste, CEO, NCDEX, the commercial interest and the interest of the government are usually at loggerheads when it comes to the assimilation of data. So achieving a perfect data point might be difficult, but getting something “near perfect” could help bring better efficiency in the system.
“In terms of policy, what we require is building a database of all agricultural produce in the country and then looking at what could be surplus, what could be processed, what could be exported, and what could be held back for next year as our resource,” Raste said during the panel discussion on Policy hurdles in agricultural exports and commodities sector at the businessline Agri-Business and Commodities Summit on Friday.
The summit is powered by Bayer with NCDEX as exchange partner and Tata Chemicals, Rallis India Ltd, APEDA, Olam Agri, NSE and SSVM Institutions, and Department of Agriculture, Government of Karnataka as associate partners. State Bank of India is the banking partner of the event, Casagrand the Realty Partner, and Tamil Nadu Agricultural University the knowledge partner.
Talking about the difficulty in getting perfect data, he said, the people involved on the commercial side might not want to show huge numbers as that would suppress prices, however, the government’s intention would be to show huge numbers so as to be able to be in a position to export. Moreover, showing lesser numbers could create panic in the markets.
“Based on the situation, data keeps going up and down and that is the general trend. We will never reach to a data point that is perfect but something that is near perfect,” he said.
Highlighting the importance of data and data analysis, Rajesh Paharia, Chief Manager, Business Development, Kribhco Agri, said there is a need for numbers to be “realistic” as even a 5-7 per cent variation might cause problems.
No relationship between futures market and current inflation
While guarding against inflation has been a legitimate rationale, that should not make us concerned about hedging instruments, said Ravishankar Cherukuri, Leads, Marketing, Bayer Crop Science IBSL.
“For farmers, the biggest enemy is not low productivity or weather but the volatility in prices. So getting a clear signal (on prices) from derivatives or price insurance could change things for farmers,” he said.
However, the lack of adequate depth in the market could pose a challenge, he added.
According to Raste, if government agencies like FCI, Nafed, and others could be brought into futures market, then it would not only lead to a better depth and wider reach but will also give an opportunity to all market players to gauge what could be the prices in the future and the government will get better indicators in terms of prices and availability.
“We should encourage participation of all government entities in futures market as that will help solve the problem of the entire value chain,” he pointed out.
Greater opportunity in horticulture exports
There is greater opportunity in export of horticultural produce rather than grains from India, said Cherukuri.
“From a policy perspective, if we can have rules of the game stating that the interventions that will happen in these parameters and equalize the playing field, bring in predictability and clear price signal or price insurance hence providing ability to take risks…..if we can address these then, we can be a major power house,” he said.