Transparent derivatives mechanism proposed to arrest onion price volatility
newsdepo.com
With onion price volatility every year, experts suggest futures trading with an action plan based on a price band and forward trading with delivery-based settlement. At times, farmers have thrown away their onion produce due to excess supply making the cost oTransparent derivatives mechanism proposed to arrest onion price volatility
With onion price volatility every year, experts suggest futures trading with an action plan based on a price band and forward trading with delivery-based settlement. At times, farmers have thrown away their onion produce due to excess supply making the cost of taking this to the wholesale market higher than the prevailing price. It happened in Madhya Pradesh last year. And, on the other hand, consumers sometimes suffer due to soaring prices , due to supply shortage or trader cartelisation. Both situations occur frequently. Annual production is 19-20 million tonnes, concentrated in a few states; the consuming states are many. Several sowing cycles and intermittent gaps between sowing and harvesting usually create ripples and prices go up sharply and fall as sharply. A 40-50 per cent price movement in a month is no surprise. Some years before, the retail price touched Rs 100 a kg, raising fear of unrest. A need was felt for a long-term solution by introducing derivatives trading, to ... Read more