7. Emerging Commodity Markets
7.1. Introduction Presently, the Indian farmer has a well defined system of functioning,
wherein the commission agent or ‘adathiya’, provides the linkages needed for cultivation as well as buyback. While the system has been in vogue fora longtime, the cost to the farmer is high, as he loses between 10-15% of the value of his produce to the agent.
Certain services provided by the adathiya in the form of credit, insurance, fixed price,
transportation, storage and buyback, have however kept this system going in the villages.
The question is whether or not we can replicate the same facilities with greater efficiency.
Thereby lowering transaction costs, such that the farmer receives abetter price, along with the accompanying benefits, within an institutional set-up.The answer lies in the use of commodity exchange platforms to deliver these benefits. This can beat two stages of the farmer’s income time-frame i.e.pre harvest and post harvest.
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