Forward Trading: a False Economy for Indian Poultry Farmers

INDIA - The National Egg Coordination Committee (NECC) of India has reiterated its call to ban soya and maize futures because they believe that the majority of Indian farmers do not possess holding capacity to derive benefit from forward trading.
calendar icon 28 May 2008
clock icon 3 minute read

According to the news agency Sify, the committee, a known opponent to commodity futures trading, has blamed it for the unbridled rise in the prices of maize and soya – the two key commodities widely used in poultry feed manufacture.

The NECC, in a communication to the Union Government, has pointed out that the system of forward trading may work in developed economies such as the US where the farmers by virtue of their large holdings do enjoy capacity to hold foodgrains. But the same is not the case in India where majority of maize or soya growers are marginal farmers and do not have the capacity to hold their produce and they sell away their harvest at low prices to the traders who taking advantage of the forward trading to jack up their prices.

Sify has reported that Indian poultry farmers were hit by the “unprecedented” increase in the maize and soya prices in the past two years and the maize which was ruling in the price band of Rs 500-525 a quintal rose to Rs 900 and in some places the price has gone up to Rs 1000. Soya meal prices more than doubled from Rs 7000-8000 a tonne to Rs 19,000. This is despite the increase in the domestic production of maize this year to 16.8 million tonnes from last year’s 14 million tonnes. The main reason for the price increase is the speculative trading provided by the forward trading.

View the Sify story by clicking here.
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