Commodity exchange and volatile kitchen market
VOL 20 NO 157 REGD NO DA 1589 | Dhaka, Saturday, June 22 2013
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Commodity exchange and volatile kitchen market
Published : Saturday, 22 June 2013 Changing economic environment, increasing commodity uses through value addition at different stages, raising the number of market participants, evolving demand and supply positions of agricultural commodities and growing international competitions require wider roles for futures markets in an agrarian economy, writes M S Siddiqui
Agriculture contributes 20 per cent of the Gross National Product (GNP) and 50 per cent of employment in Bangladesh. The prices of essential commodities have an impact on budgets of most of the citizens having fixed income. Rice constitutes a major share of expenditures for the poor. For example, rice accounts for nearly 40 per cent of expenditures for the poorest three-fifths of the urban population in Bangladesh. Farmers get benefit from stable rice prices because most of them are poor. The farmer is an investor in an uncertain biophysical environment where risk markets are imperfect and cannot guarantee access to credit when needed. These volatile conditions are often the result of inadequate storage facilities or a lack of standardised marketing agreements. In contrast, during 1990s the economic liberalisation in many countries led to increasing withdrawal of the government's intervention from the agricultural commodity sector, which made the agricultural prices dependent on domestic and international market forces.
A higher volatility results in an overall welfare loss; this is to some extent an issue of equity, as is the case with consumers.
Bangladesh's agriculture-dominated economy is facing yield risks and prices of commodities are mostly dependent on nature by way of its production. The price fluctuation can occur for a number of reasons, that is, due
Top of Form Bottom of Form
http://www.fe-bd.com/index.php?ref=MjBfMDZfMjJfMTNfMV8yN18xNzM5MDE=
Commodity exchange and volatile kitchen market
Published : Saturday, 22 June 2013 Changing economic environment, increasing commodity uses through value addition at different stages, raising the number of market participants, evolving demand and supply positions of agricultural commodities and growing international competitions require wider roles for futures markets in an agrarian economy, writes M S Siddiqui
Agriculture contributes 20 per cent of the Gross National Product (GNP) and 50 per cent of employment in Bangladesh. The prices of essential commodities have an impact on budgets of most of the citizens having fixed income. Rice constitutes a major share of expenditures for the poor. For example, rice accounts for nearly 40 per cent of expenditures for the poorest three-fifths of the urban population in Bangladesh. Farmers get benefit from stable rice prices because most of them are poor. The farmer is an investor in an uncertain biophysical environment where risk markets are imperfect and cannot guarantee access to credit when needed. These volatile conditions are often the result of inadequate storage facilities or a lack of standardised marketing agreements. In contrast, during 1990s the economic liberalisation in many countries led to increasing withdrawal of the government's intervention from the agricultural commodity sector, which made the agricultural prices dependent on domestic and international market forces.
A higher volatility results in an overall welfare loss; this is to some extent an issue of equity, as is the case with consumers.
Bangladesh's agriculture-dominated economy is facing yield risks and prices of commodities are mostly dependent on nature by way of its production. The price fluctuation can occur for a number of reasons, that is, due