29/09/2022 - Agriculture

KEY POINTS

·        The central problem that various policies in the agriculture sector strive to solve is the risk associated with the enterprise of farming.

·        Futures and options are derivative instruments that derive their value from an underlying asset, and derivative contracts involve an agreement to buy or sell the asset at an agreed price on a future date.

·        Put options can be of great use to lock onto a minimum price for farmers at the time of sowing itself while also allowing them to gain from the open market in case prices rise.

·        This means if the price of the commodity falls in the future, the farmer can sell at the pre-decided price to the seller, but if the price rises, the farmer can sell in the open market.

·        The government must consider creating an AgriPut Fund to pay fully or partly the initial premium. CSR activities can also be utilised for the same.

·        In the case of perishable items like tomatoes, there have been instances of farmers dumping their produce on roads due to the low prices.

·        A healthy derivatives market can disseminate reliable price signals to help both farmers and other stakeholders take more informed decisions.

·        The market has the potential to turn the farmers’ fortunes and enable them to become entrepreneurs, Atmanirbhar in the true sense.

Pls review

Kindly review

Kindly evaluate

Please review