COMA President Quits Over Charges Of Price Rigging

Kochi, Aug 25: | Updated: Aug 26 2002, 05:30am hrs
Charges of price rigging at the coconut oil market here reached a flash point with the Cochin Oil Merchants Association (COMA) president Talat Mahmood submitting his resignation last week.

Mr Mahmood told FE that there was no problem as such and issues, if any, would be settled at the next executive committee meeting. Sources said Mr Mahmood was likely to withdraw his resignation as his term of office ends next month.

The Kochi price used to be considered the benchmark for retail trade. However, this rate came under dispute after the trade rules were amended on July 19 whereby member-to-member trade was introduced. Earlier, delivery was done here at the buyers godown in Kochi. It is alleged that the new rule was introduced just before Onam to help traders here make a neat sum in the retail market. Trade has been controlled by a handful of members who are mere traders and not millers, the sources allege. There have been charges that the rate fixed did not reflect the actual price and was a shade higher.

Sources in COMA said that the three-member rate-fixing committee fixing the Kochi price had a member from down south Kollam and another from Thrissur in the north. The third member from Kochi has been out of station for quite sometime now. This committee had little role to play.

The charge was that after the introduction of the new rule, with hardly 10 drums of trade taking place daily, the select few traders put out a higher price so that they could manipulate the retail trade here. In Thrissur, where at least 30-40 drums of trade took place daily, the price was less by Rs 100 a quintal. This posed problems for the traders there as the price of copra shot up the next day based on the oil price put out from Kochi.

Traders there were forced to buy copra at a higher price and sell oil at a cheaper rate. This led to charges and counter-charges, ultimately forcing the COMA president to submit his resignation.

Mr Talat Mahmood while denying that there was any price rigging, however said the new rule had been cause for concern among traders and the issue would be settled at the next executive committee meeting. There had earlier been a suggestion to link the trade with the First Commodities Exchange of India (FCEI) which has been running the coconut oil and copra futures. Sources added that such price rigging was rampant earlier too and the upcountry buyers were aware of this. Traders from the North shifted the market to Tamil Nadu where even the tax rate was low.