eChapters

7.1. Summary of Findings

This study dealing with the examination of various advantages of commodity futures market to farmers, RMC traders and RMC officials along with the level of awareness about this market among these selected beneficiaries is presented in brief. This chapter summarizes the findings. It begins with the interpretation of the significant findings derived from both secondary and primary analysis. This is followed by suggestions, the section on major contributions of the present study to the existing body of knowledge, on the role of commodity futures market in agricultural development of the state.

6.1. Introduction

This chapter deals with the sample survey conducted on cotton, turmeric and castor seed farmers and recorded various benefits observed by them by using Futures market as a platform for price information. Further, it tries to examine the price discovery efficiency of commodity futures market with the help of secondary data.

It is often believed that future price is a forecast of the price of a commodity during the maturity month of its futures contracts. It is far from true. The futures price of a commodity traded at an exchange market is not so much determined by the anticipated supply of and demand for that commodity in the maturity month of its futures contracts as by the cost of carrying the commodity till the maturity of such contract. That means the spot and future prices of any commodity are always determined by the same basic forces of the present and prospective demand and supply. The difference between the two prices represents merely the cost of carrying the commodity from the present to the future. Such cost may be positive or negative depending on whether the current (not the future) supplies are abundant or scarce respectively when the price of futures contracts of any commodity is in reality relied upon by the physical market functionaries in that commodity as a “reference” price for executing their forward transactions in either the domestic or export market, that price may deem to be “discovered” in the true sense. The application of such reference price for transacting a forward transaction in the physical market in that commodity, in fact facilitates the use of the same future contract for managing price risk for such forward transaction. Hence, the price discovery and price risk management are the two sides of the same coin and efficiency of price discovery is directly related to the price risk management. A commodity exchange or a derivative market is not a mechanism for controlling prices. An efficient futures market is one that discovers prices and provides effective mechanism for managing price risk arising from unavoidable price variations owing to shifts in demand and supply schedule. Prices are determined by the basic demand and supply forces and not the market. Markets reflect the supply and demand conditions from time to time through variation in prices.

5.1. Introduction

This chapter deals with the sample survey conducted on cotton, turmeric and castor seed farmers and RMC traders and Officials and recorded the awareness level about futures, user status, the reason for not using futures and perception about futures.

The research work was planned to understand the level of awareness of agri-commodity futures market among the farmers, RMC traders and Officials of Odisha. The methodology adopted for the awareness assessment was to collect related answers to the questions which helped to evaluate the level of awareness among the beneficiaries i.e. farmers, RMC traders and officials. Quantitative and qualitative data was collected from sample respondents. The study has been completed by collecting data from farmers, RMC traders and officials of Kalahandi and Kandhamal districts which are the highest producers of three sample commodities i.e. cotton, castor seed and turmeric in Odisha. The research was conducted with 150 farmers (50 each for cotton, turmeric and castor seed), 30 RMC traders and 30 RMC officials of Kalahandi and Kandhamal districts of Odisha. The profile of sample farmers is depicted below.

4.1 Introduction

The present chapter starts with a brief description about the history of commodity futures market and emergence of commodity futures market in India. There after it highlights various functions of commodity futures market and their impact on farmers and various other stake holders in the supply chain. Finally, it tries to evaluate the utility of futures from the platform of commodity exchanges especially from MCX and NCDEX of India.

A simple definition of a commodity is a physical substance that can be extracted directly from the environment, processed and sold commercially. Natural resource is another term often used to describe commodities which occur naturally in or on the ground. Commodities fall into three main categories such as energy, metals and agriculture. As commodities can be sold, they have a price which is governed by supply and demand. Compared to many manufactured items, for example flat screen TVs, the question of supply and demand is paramount to how commodities are priced. The commodities that have always been a part of our day-to-day existence are also one of the finest investment avenues available. The wheat in our bread, the cotton in our clothes, our gold jewels, the oil that runs our vehicles etc are all traded across the world in major exchanges. Commodities can be traded on either spot markets, or in the form of futures. Spot markets are those in which the commodity is traded immediately in exchange for cash or some other good. In the form of futures (or options), what is traded is not the goods itself, but a contract to buy or sell the commodity for a certain price by a stated date in the future. Over the ages, commodities have been the basis for trade and industry. They have prompted commerce, encouraged exploration and altered the histories of nations. Today, they play a very important role in the world economy with billions of dollars of these commodities traded each day on exchanges across the world. Commodities today have become an attractive investment vehicle. In the current investment scenario, it is increasingly getting difficult for individuals and institutions to create a well-balanced investment portfolio. With uncertainty in interest ratio, it is tough for the investor to beat the ever-rising inflation. Averse to being over exposed to equity markets, the investors are left with limited choices… well no more!

3.1. Introduction

This chapter intends to examine the economic importance of cotton, turmeric and castor seed in the agricultural economy of Odisha. Given the fact that Odisha is one of the major producing states of the country for these three crops, their physical markets have national level relevance in terms of determining prices. The chapter presents a brief profile of the agricultural economy of Odisha with a focus on these three crops and their supply conditions including cropping season, pattern, area under cultivation and productivity. Secondly, it tries to investigate the market structure, supply chain and marketing practices in cotton, turmeric and castor seed based on the data obtained from the secondary sources.

Indian economy is agro-based and agriculture is its mainstay as it constitutes the backbone of the rural livelihood security system. Agriculture has been and still continues to be the life line of the Indian economy since economic security is essentially predicted upon the agricultural and allied sectors. The agriculture sector encompasses crop production, animal husbandry, fisheries, agri-business, etc. Crop production depends upon crucial inputs such as good seeds, fertilizers, pesticides, irrigation, human labour, machinery and management.

As the largest private enterprise in India, agriculture supports more than 60% of the population, contributes nearly 19% to India’s Gross Domestic Product (GDP) and 11% to the total exports. Around 51% of the geographical area in India is already under cultivation as compared to 11% of the world average¹. Agriculture is also a social sector where non-trading concerns like food and nutritional security, employment and income generation, poverty alleviation, ecological and environmental concerns play a significant role.

2.1. Introduction

There are few studies on the performance and efficiency of Indian commodity derivatives market. Despite a considerable amount of empirical literature, there is no general consensus on whether or not the markets are efficient. As far as the role of futures contract in agricultural commodity is concerned, several studies have been attempted to examine their contribution towards agricultural development of any state and/or country. This chapter presents the review of existing literature on the concerned topic based on interrelationship among the spot and futures market in agricultural sector, role of futures market in discovering spot prices, futures market and commodity price volatility etc.

1.1. Prologue

In present era, agriculture is a cause of global concern in the context of price volatility with a rising trend growing concerns for food security and resultant trade restrictions, global economic conditions in the recent past, the forecasted rate of reduction of growth of agricultural land over the next two decades, increasing mismatches between supply of agricultural products in relation to growing demand and the climatic changes which are wielding pressures on agricultural production. Thus, enhancing agriculture production and productivity have emerged as a global challenge. India, with 2.4 per cent of the world’s geographical area, is the largest producer of pulses, tea, and milk and second largest producer of fruits, vegetables, wheat, rice, groundnut and sugarcane in the world but supports about 16.2 per cent of the world’s population. Coupled with small scale land holdings and deep rooted poverty in rural areas, the magnitude and dimensions of challenges for agriculture policy-makers have increased manifold. So far as the agriculture sector in Odisha is concerned, it contributes only 15.6 percent in 2013-14 towards State Gross Domestic Product (SGDP), but provides employment and sustenance to more than 60 percent of the total workforce of the State. In this sense, the agriculture sector is still the mainstay of the economy of Odisha. According to the Economic Survey 2013-14 of Odisha, despite wide annual variations in its growth, the agriculture sector had grown at a rate of 12.72 per cent in 2012-13. However, a negative growth of 3.53 percent is anticipated during 2013-14 due to cyclonic storm Phailin and flash floods in the State in October 2013. The real per capita income of Odisha was Rs. 25,891 in 2013-14 which was around 65 per cent of All-India real per capita income of Rs.39, 961. According to the 68th round of National Sample Survey Organization (NSSO), the monthly per capita consumer expenditure (MPCE) for rural and urban Odisha is below the respective national averages. In the food and non-food consumption behaviour, an average Indian spends more than an average person in Odisha. In short, the above parameters pinpoint that the State of Odisha has been lagging behind the national economy & highlights the necessity of achieving higher growth on a sustainable manner across the sectors particularly the agriculture sector in order to uplift the society from underdevelopment & poverty. Though the contribution of agriculture to Net State Domestic Product (NSDP) has declined, the percentage of workforce engaged in agriculture has remained somewhat unchanged. This implies that there has been an overcrowding in agriculture without any noticeable increase in production.

a. Balance Sheets or Net worth Statement

Balance sheet is the list of assets and liabilities owned by a business. It helps to calculate the growth in net worth of the business by calculating the change in assets less the change in liabilities. They represent the financial foundation on which the business is built.

The term ‘balance sheet’ implies some sort of balance as part of the document. That balance represents the relationship between assets on one side, and liabilities on the other, and the basic accounting principle that assets always equal liabilities plus equity. Since it is simply a list of assets owned and debts owed, at a given time, with monetary values attached, we must understand the concepts of assets and liabilities.

Assets are resources owned by or owed to the business such as dairy, equipment, real estate, and notes receivable. Assets are those parts of the business that are owned or controlled. They include any property/resource owned by a person or business e.g. cash, land, buildings, dairy, farm equipment and dairy-related share. Assets are usually listed on the top or on the left hand side of the balance sheet. They are classified in following ways

The functioning of the Women Dairy Cooperative Societies depends upon the variations in managerial capacity leading to profit and loss of different WDCS. To make an in-depth analysis, the study was undertaken in undivided Cuttack and Dhenkanal district of Odisha covering 22 randomized WDCS with a sample of 110 women respondents.

The analysis of the findings after statistical treatment have been presented objective-wise as follows;

Socio-economic profile of the members of WDCS involved in dairy production activities.

Gap between procedures prescribed and followed in formation and functioning of WDCS.

Identification and analysis of key performance areas in the WDCS.

Determination of management practices and milk production profiles of WDCS members.

Extent of participation of women members in dairy activities.

Entrepreneurial characteristics of members of Women Dairy Cooperative Society.

Impact of WDCS on socio-economic status of the members.

Correlating variables and their interrelationship in predicting smooth functioning of WDCS.

Constraints faced by the WDCS members.

Suggestions of members for improvement in functioning of WDCS

The major focus of the study was to critically analyse the overall performance of Women Dairy Cooperative Societies (WDCS) in two districts of Odisha. The methodology used in carrying out investigation has been outlined in eight sections as mentioned below.

1. Selection of problem
2. Research design
3. Plan of work
4. Locale of the study
5. Sampling procedure

The study was undertaken in the state of Odisha. The state lies in between 17^o-31’ to 22^o-27’ North latitude and 81^o-27 to 87^o-30’ East longitude. It is bounded by West Bengal in the north east, Jharkhand in the north, Chatisgarh in the west, Andhra Pradesh in the south and Bay of Bengal in the east. The main features of the state is appeared inTable 3.1.

Status of Women

As per 2011 Census, women account for 586.46 million, and represent 48.5% of India’s total population. However, from global perspectives, they constitute half of global population, and 1/3^rd labour force, but receive only 1/10^th of world income, and own less than 1% of world’s property. Further from national point of view as Reddy et al. (1994) in his study opined that “although women constitute 50 percent of India’s population, perform two-thirds of the work and produce 50 percent of food commodities consumed by the country and they earn only one-third of the remuneration and 10 percent of the property or wealth of the country.

The vast majority of working women are uneducated cultivators and agricultural labourers residing in villages. Most of the women, working on the family farm are unpaid labourers. 63 percent of all educated women with at least a high school certificate are unemployed, and of the 37 percent who are employed 15 percent are clerks, 5 percent teachers, 7 percent nurses and 10 percent are other professionals. Only 6 percent of Government employees are women (Jain, A.K. 2004). Rural Women form the most important productive work force in the economy of majority of the developing nations including India. Agriculture, the single largest production endeavour in India, contributing about 18% of GDP, is increasingly becoming a female activity. Agriculture sector employs 4/5th of all economically active women in the country. 48% of India’s self-employed farmers are women. There are 75 million women engaged in dairying as against 15 million men and 20 million in animal husbandry as compared to 1.5 million men.

Despite progress in several key indicators, a gender analysis demonstrates that women continue to be relatively disadvantaged in matters of survival, health, nutrition, literacy and productivity. Further, more than 90 percent of rural women are unskilled, restricting them to low paid occupations. Women generally have no control over land and other productive assets which largely exclude them from access to institutional credit. Further, agricultural wages for women, on an average 30-50 percent less than those for men. Though they work for longer hours under inhospitable conditions, their participation in decision making process is less than desirable.

Livestock Population and it’s Economic Contribution

According to 18th Livestock census of India (2007), India has about 199.1 million cattle, which constitute 44.29 per cent of Asian and 12.7 per cent of the world cattle population. The current buffalo population is 105.34 million which accounts 57 per cent of Asian and 55 per cent of the world buffalos. The major output of the entire livestock sector is from the milk, which is the second most agricultural commodities next to paddy. According to the annual report of the Ministry of Agriculture and Cooperation, during 2006-07, the contribution of milk alone (Rs.1,44,386 crore) was higher than paddy (Rs.85,032 crore), wheat (Rs.66,791 crore) and sugarcane (Rs.28,488 crore). The value of output from meat group animals as per estimates of Central Statistical Organization (CSO) at current prices was Rs. 34, 310 crore during 2006-07. Total export earnings from livestock, poultry and related products were Rs.5,213.80 crore during 2006-07. Eighty percent rural households keep livestock for their subsidiary income, important for employment, livelihood, nutrition, constant flow of quick and fast income, reduces the vulnerability of agricultural production. Trends indicate that animal protein consumption would rise proportionately with increase in income. The 18th Livestock Census (2007) has placed the total livestock population at 529.698 million and total of poultry birds at 648.830 million.

Abstract

This paper studies the role and status of Indian Agricultural Market Intelligence System (IAMIS) in improving the economic returns of agri-sector in India. Marketing intelligence makes agricultural marketers, including agri-entrepreneurs, aware and updated and reduces risk in decision making. India produced 275.112 million tonnes of food grains in 2016-17 and the projected requirement is 311million tonnes in 2030. Income of farmers has increased at a CAGR of 10.61% and number of farmers has declined at a CAGR of -0.25% from 1993-94 to 2014-15. Acreage remains stagnant. Given this background, to exploit full potential of agricultural production, market intelligence has a great role. The DES and Department of Food with their 435 market information systems (MIS) units transmit daily information through public media. The essential prerequisite of ensuring farmers’income is that they need credible information about “likely price situation”. Agriculture Marketing Intelligence System (AMIS, 2011) has emerged with the aim to provide services in agriculture and allied sectors. ICAR (1991) took initiatives under World Bank to assist National Agricultural Innovation Project (NAIP) and Export Market Intelligence Cell (EMIC) was set up in Tamil Nadu with ten State Agricultural Universities. This paper uses globally available price forecasting models (ARIMA, GARCH, etc.)on 20 crops to provide an idea of the existing status and policies in agricultural market intelligence.

Abstract

Entrepreneurs take responsibility of their ‘business’ tad differently than their counterpart, the traditional businessman. A businessman walks on the pre-defined route whereas the entrepreneur creates his own alley-way, which if successful, becomes the rulebook for that trade. Lately, ecological issues have taken centre-stage as climatic changes have endangered the sustainable growth of the business. A new breed of entrepreneurs, alias ecopreneurs, functions in this ‘new’ space and endeavour to frame an innovative business landscape. Ecopreneurs possess singular focus on the safe-keep of the ecology. But in order to sustain the efforts of businesses in ecology, it is imperative that they remain economically viable too. Thus, ecopreneurial process is not only about fulfilling the business’ responsibility towards ecology, but also about the marketability of the product or service. In order to evaluate the ecopreneurial process, organic farming is considered as a case. In this paper, selected organic farms are analysed in an environment - market continuum, developed particularly for this study which is in tandem with the works of Schaltegger (2002) and Blake and Mouton (1964).The study reveals inadequacy of market performance of the individual and farm level ecopreneurs in the state of West Bengal, in spite of their strong inclination towards care for the environment.

Abstract

Agricultural development in India provides support to a large section of farmers who operate on small holdings and have very limited risk bearing capacity. Farmers are often exposed to natural vagaries, which adversely affect their agricultural production and farm income. Moreover, there is huge financial exclusion in rural sector of the nation. If there is a crop failure, farmers are crushed under the burden of debt. Farmers seek to avoid risk in terms of various managerial and institutional mechanisms. But it is widely believed that ‘Crop Insurance’ is the only institutional mechanism available against production risk in farming. Unfortunately, penetration of crop insurance schemes in India has been low in terms of the area of land insured and the number of farmers covered. There are the problems of low risk awareness and lack of insurance culture among the farmers. In this backdrop, the paper documents the findings of a survey of 140 farmers, which was taken up in some selected villages of North 24 Parganas district of West Bengal. The study shows that likelihood of this awareness increases with increase in landholding size, education level, borrowing history and social participation of the farmers, whereas it decreases with the non-farm income and livestock of the farmers. The author proposes measures to promote and spread awareness of crop insurance among the farmers as a risk mitigation tool in farming, which will increase farm production and stabilize the fluctuation in farm income. The study provides valuable policy measures to the government in better designing of their crop insurance products and will also help the private agro-insurance business, which is recently taking off in the country.

Abstract

India is the second largest food producing country in the world. Food processing is one of the key industries in the country and a sector that has direct linkage between agriculture and industry. Being the second largest producer of fruits and vegetables along with its strategic geographic location and proximity to food importing nations, India is in an advantageous position in terms of exporting processed food. As per estimates, Indian food processing sector stood at USD258 billion in the financial year 2015. The growth and development of this industry have direct impact on the Indian economy. The aim of the present study is to discuss about the growth of the food processing industry, analyse its strengths and weaknesses and generate possibilities of entrepreneurial development towards the expansion of the sector. This study has been a secondary data analysis based on data collected from journals, magazines, web searches and reports from various government and private agencies.

The study has identified the main drivers aiding to the growth of the sector. It includes strong domestic demand, rising export opportunities; supply side advantages for exporters due to rising global demand and strong policy support from the Government. On the other hand, fragmented market, infrastructure support, namely cold chain, innovation and skill development are the major hurdles that have to be overcome. This article makes an attempt to explore entrepreneurial opportunities and few areas where new business could be initiated. The entrepreneurial opportunities highlighted in this paper are based on Drucker’s opportunity construct that entrepreneurs have an eye more for possibilities created by change than the problems.

Abstract

Out of 1.37 billion populationof India 67 % lives in rural areas whose major source of income is agriculture and allied activities (World Population Review, 2019). In simple words, the livelihood of this vast majority is closely related to rural enterprises. Fostering rural entrepreneurship may be affected by several issues, infrastructure being one of them. This paper attempts to examine the relationship between infrastructure investment by the state and rural entrepreneurship in India, with ‘Gross Fixed Capital Formation’ and ‘Agriculture, Forestry, and Fishing, Value Added’ considered as proxy variables. Time series econometrics is compiled with the data collected from World Bank Database for the period of 1961-2017. The study has established evidence in support of greater investment in infrastructure enhancing rural entrepreneurial opportunities in India.

Abstract

Agriculture is the backbone of India’s economic development and has experienced immense growth in the past few decades. Agriculture not only involves the participation of male workers but also experiences active participation of all family members, as well. Women, as part of the family, take up agricultural activities as an extension to their household chores. The Government and voluntary agencies have also recognised the need for women in the farming community to become self-reliant and active participants in the agricultural sector. Increasing awareness and educating themselves with the passage of time, farmers have made themselves aware of new techniques of farming and growing and established themselves as agricultural entrepreneurs in the long run. Many initiatives supporting women entrepreneurs and creating a supportive ecosystem for women to become agricultural entrepreneurs have been initiated by the state. The case of Anita Devi popularly known as the Mushroom Lady of Bihar has been taken up in this paper to substantiate with evidence how government initiatives have helped her gain success and grow as an agricultural entrepreneur. This study aims at disseminating how such initiatives help in creating an ecosystem that motivates agricultural entrepreneurs in general and women in particular.

Abstract

This paper is rooted in the issue of the failure of Green Revolution which was intended to achieve self-sufficiency in the agriculturally dominant country of India, following its independence. However five decades later, the current focus of the country is on engaging in a sustainable and economically feasible agricultural practice using principles of agro ecology. This paper tries to explore the potential of application of organic farming in a vast country like India. The author posits that organic farming can help India reverse the damage caused by Green Revolution by allowing for natural methods of agriculture rather than a severely mechanical form. This paper focuses on the modern concept of organic farming combining tradition, science and innovation, and the debatable issues surrounding organic farming particularly dealing with its economic feasibility and sustainability prospects. It is acknowledged that for the successful implementation of organic farming there has to be appropriate matching of the supply and demands the organic products. However, there is a need to address the challenge of adoption of organic farming in a diverse country like India because of its huge variance in education, income, living standards and health of the existing and potential consumers. The prospect of organic farming is discussed from the perspective of consumer awareness and state initiatives, in this paper.