The problems are ticklish. First, you deal with commodities and not seductive consumer brands. Second, you don?t interface with the end consumer. Last but not the least, you don?t even determine the final price. You are, simply put, a humble facilitator.

So how would you go about marketing yourself? Or for that matter, build a sustainable brand equity?

This is exactly the question that rankled commodity exchanges in the country when they started their operations in late 2002. Over the years, the three national exchanges?the Mumbai-based Multi Commodity Exchange (MCX), the National Commodity & Derivative Exchanges (NCDEX), and the Ahmedabad-based National Multi Commodity Exchange of India (NMCE)?have worked hard to promote themselves as a concept, win-win for all involved. For the discovery of real prices of agricultural produce by farmers on the one hand, and for ensuring that the exchanges are used by corporates and traders to hedge raw materials, such as food items and metal and bullion.

The need to establish strong commodity exchange platforms is difficult to overlook. Farmers have traditionally been victims of poor information?on crop selection and about the time for selling. ?Their access point is the nearest mandi, which may not be the genuine representation of the overall demand and supply of a crop. This is where MCX plays a critical role,? Setu Shah, vice-president, marketing and communication, MCX, points out.

Simply put, the prices quoted at the three national exchanges along with 22 regional exchanges for specific commodities are based on actual demand and supply. This helps in ?price discovery? (arriving at the right price for a commodity) and for ?hedging? against future price fluctuations (since buyers and sellers lock in the future prices of the produce).

As many as 146 commodities are traded in all the 25 exchanges in the country. ?We provide a neutral electronic trading platform for buyers and sellers in the commodities listed on the exchange to lock in ?future? prices,? Joseph Massey, managing director, MCX, points out. These commodities include bullion, energy, base metals as well as agri commodities. ?Through the futures platform, a farmer would get an indication of future prices arrived from the demand-supply economics,? he adds.

According to an Associated Chambers of Commerce and Industry in India (ASSOCHAM) study on commodities futures market, the average cumulative daily turnover of commodity exchanges have been rising steadily and is estimated atRs 15,000 crore currently.

When compared with global standards, however, the commodity futures trading markets are underdeveloped despite the country?s long history of commodity derivatives trade. To give credit, the three national exchanges have taken the problem head on. In their first five years, they took innovative measures to first sell the concept to stakeholders, explain to them the advantages of getting on to the platform, and now, through mass media advertising they are focusing on building the exchanges as brands to reckon with.

Of course, the hurdles were not easy to clear, and there seemed to be one at every stage.

To begin with, free trade in many items remains restricted under the Essential Commodities Act (ECA), 1955, and forwards as well as futures contracts are limited to specific commodity items listed under the Forward Contracts (Regulations) Act, 1952.

Also, getting the farmers onto the commodity exchange platform is easier said than done, says Madan Sabnavis, chief economist, NCDEX. According to an NCDEX official, farmers get involved with futures trading of commodities in three stages. The first stage focuses on awareness programmes carried out by the Forward Markets Commission (FMC). ?The approval of the FMC is key to winning the trust of the farmers as it is a government appointed body,? an official with MCX said.

In the next stage, the farmers are made aware of the price trends so that they can use the knowledge to bargain for better prices in the local spot market. ?Here, they are still not participating but are using the prices indicated,? says Sabnavis of NCDEX. In the final stage, they actually trade and hedge their produce. ?We are doing the first and the second simultaneously and admit that it is a long journey and will take time,? says a MCX official. According to industry sources, MCX controls close to 75% of the total futures trading market.

NCDEX has set aside a substantial budget for its awarness programme. ?The challenge is in getting more people to trade,? says Sabnavis.

The exchange has made considerable headway in its efforts to reach end users such as processors and traders. ?They are brought to the platform through awareness programmes and one-on-one meetings. We approach corporates and encourage them to hedge in out exchange,? says Sabnavis. For investors, the approach is simple. They are told how commodities are good portfolio diversifiers driven as they are by fundamentals. The fact that they are related to the securities market helps.

The results are for all to see. FMCG companies such as Dabur and ITC have been using NCDEX platform to source raw materials.

What has been a key driver to the change is technology.

The NMCE, for example, is a frontrunner in using technology to disseminate information and to ensure that speculators don?t use the exchange. When an order is placed on the exchange, the central server at NMCE scans the orders posted on it from all its trading terminals. It then locates and matches the best counter-offers or bids while maintaining anonymity of the counter-parties. ?Anonymity helps is eliminating the possibility of cartels and other unfair practices, thereby protecting the efficiency of price-discovery at the exchange,? says an NMCE official. In fact, the NMCE was the first commodity exchange to provide trading facility via internet through Virtual Private Network.

MCX is no less innovative. Back in 2006, it tied up with India Post (the national post offices network) to establish the Gramin Suvidha Kendra (GSK) to provide critical inputs to farmers such as spot and futures prices of agricultural commodities. Initially launched at Jalgaon in Maharashtra, and later extended to Itarsi in Madhya Pradesh, Unjha in Gujarat and Dhamangaon (Amravati) in Maharashtra, GSK today has more than 2,200 farmers on its roll. ?This model has the potential to operate as an efficient marketing network reinforced by the wide coverage and trust that India Post commands in the rural areas,? says Shah of MCX.

MCX and other exchanges have managed to rope in telecom service providers in their efforts. Together, MCX, BSNL and MTNL have launched a service to deliver real-time commodity futures and spot prices via SMS. ?A farmer can find out the future prices of his produce on his mobile phone,? says Shah. Even Tata Tele Services has a toll-free number to communicate with farmers.

MCX has also tied up with NGOs such as Rotary International, Tata Energy Resources Institute, MS Swaminathan Research Foundation, Indian Society for Agri-business Professionals, among others. In the last two years, more than 70 farmer awareness programmes have been organised with the help of these partners that reach out to 11,000-plus farmers across 14 states.

In metros and mini metros, the target audience for commodity exchanges are corporates, small and medium enterprises and traders affected by fluctuating prices. MCX ran a television campaign recently that focused on the advantages of using the exchange to hedge against price volatility. ?This campaign was not ?promotional? in the strictest sense of the term since it also had generic content about commodity exchanges,? says Shah of MCX.

Shah reiterates that the MCX brand has been positioned as one that equates corporate social responsibility with its core business. ?The ultimate aim is to bridge the urban-rural divide and deliver the benefits of the markets to the bottom of the pyramid,? says Massey of MCX. In the same vein, an NMCE official says that the exchange is leading the transition of the highly fragmented, controlled and restricted commodity economy to a globally integrated, efficient and competitive environment.

It?s quite a challenge, but as they say, well begun is half done.