ISLAMABAD (August 06 2007): The Planning Commission has cleared introduction of future trading in different agricultural commodities at the local level, proposed by the Ministry of Food and Agriculture (Minfal), sources told Business Recorder on Sunday.
They said that the idea of introducing the futures trading would be made possible through the establishment of agriculture markets for every 10 to 15 villages all over the country and this would cost about Rs 8 billion.
The establishment of markets had been made part of `Crop Maximisation Project II (CMP II), which would be implemented from next month, according to sources. The CMP II has already been approved by the Executive Committee of the National Economic Council (Ecnec). However, Minfal was asked to clarify certain issues regarding establishment of markets across the country, after they were made part of the project.
The proposed markets will provide opportunity to farmers to market their agriculture produce locally with the guarantee that they would get fair price. The farmers would have the facility of selling their commodities with a contract with the buyers that the latter would provide money at a latter stage if the farmers desire so, sources said.
For instance, sources said, the farmers can sign a deal with the buyer that he (buyer) would provide money after three months of the sale. The payment would be made according to market prices at the time of payment and not at the time of selling, which had been done three months back.
According to sources, this system would discourage hoarding by farmers, and would also help the government to keep the prices of commodities in check, as the proposed markets would provide accurate information about their stocks.
The government, sources said, would also look into the prices of these commodities in the international market. If the prices are higher in the international market, the market would provide information to exporters so that the latter could export some of the commodities and earn foreign exchange for the country.
Besides this, the farmers would also have the facility to purchase all agricultural inputs, including seeds, fertiliser, pesticides etc, from these markets, sources said.
As far as the implementation of CMP II is concerned, Minfal has selected 1000 villages, throughout the country. The project will be completed in five years. In this project, small farmers having less than 20 acres land would be provided loans by Minfal through a bank. Minfal has short-listed some banks and selection would be made from among these banks. The bank will provide credit to the farmers and the latter would pay the money back after selling the crop in the market.
Minfal is of the view that CMP II would be of no use if the farmers remained deprived of fair market price. The middle man influence has been increasing day by day and the former exploit the growers when they bring their crop to the market for selling. The proposed markets, which will be constructed on around one acre land, would play a major role in enabling the farmers to get fair prices.