Livestock may be traded in futures market

New Delhi, May 30 | Updated: May 31 2007, 05:30am hrs
The Centre is planning to allow trading of livestock in the futures markets, to tap the vast untapped resources in the agricultural sector.

The total value of livestock output was Rs 1,64,509 crore in 2003-04, which was 25.9% of that of agricultural output, with leather accounting for Rs 2,660 crore and meat and meat products Rs 1,720 crore. Also cumulatively, livestock, poultry and other related products brought in total revenue of Rs 5,120 crore in 2004-05.

In addition, the timeframe for execution of contracts in the futures market will be extended to 12 months from 6. When the policy is put in place, the timeframe for physical delivery in the futures market could be increased from the current level of 6 months to at least 12 months, to cover the full crop-marketing year. Restrictive futures trading on livestock products could also be withdrawn, government source said.

Considering that futures trading is a risk mitigating instruments both for buyers and sellers, it requires a conducive and effective regulatory mechanism. In all likelihood, the Forward Contracts (Regulation) Act would be amended for granting more teeth to the Forward Market Commission (FMC) for effective regulation, sources added.

The Centre may also augment private partnership to help in achieving the targeted 4% growth in the agricultural sector. Accordingly, the government may consider transferring of management of market yards/sub-yards and rural periodic markets to the private sector under the public-private-partnership mode for efficient and competitive marketing.

Futures Bright

The timeframe for execution of contracts will be extended to 12 months from 6
The total value of livestock goods was Rs 1,64,509 cr in 2003-04, which was 25.9% of that of agricultural output
Livestock, poultry and other related products brought in Rs 5,120 crore in 2004-05

In this regard, a stable and long-term approach is essential to promote the role of the private sector on a large scale and promote quantum investments for development of infrastructure and technology, sources added. Around 70% of the livestock market is owned by small and marginal farmers (67%) and by the land less (3%). Rajasthan, Jammu, Kashmir, Uttar Pradesh, Gujarat, hilly regions of North and Eastern Himalays have the maximum livestock population.

According to statistics compiled by the Food and Agriculture Organisation of the United Nations (FAO), the total number of animals slaughtered for meat in India rose from 66,299,600 in 1980 to 106,239,000 in 2000.