BANGALORE, May 12: The Union Government on Monday made it clear that it had no intention of regulating the coffee market any further and that it would take whatever steps were needed to help growers get maximum realisation for their produce.

Speaking at a workshop on ‘domestic coffee futures contract’, organised by the coffee board, Deepak Chatterji, additional Secretary, Ministry of Commerce, said the results of the progressive deregualtion of the commodity, culminating in 100 per cent free sale quota last year, had so far been good.

As a result of deregulation, exports had gone up, he said, adding that last year, 170,000 tonne of coffee was exported. The government’s programmes were now aimed at improving quality and acquiring a name in international markets like Colombian coffee, he said.

Urging exporters to honour their commitment on international forward contract in the light of the proposed futures market in India, Chaterjee said the perception in international markets was that Indian exporters often did not honour their forward contracts.

In the changed scenario, where there was full freedom to growers, processors and exports, the coffee board would be transformed into an organisation for doing research, producing new varieties and promotion in new areas, he added.

The Commerce Ministry had fixed a target production of 300,000 tonne by the end of the decade, Chatterji said adding that coffee production as well as productivity had gone up. ’India is now among the top producers of the commodity worldwide’, he added.

In the last few years, the area of cultivation, quality of produce and productivity of Indian coffee had gone up. The government had been allocating bigger funds to coffee, he said and added that in 1997-98, the amount earmarked for coffee had been more than doubled.

K N Kabra of the Indian institute of public administration, who headed the Chabra committee on commodities, arguing for a futures market said spot marketing alone could not take care of the market for a commodity like coffee.

There had to be a system to know what would be the market situation in a few months’ time. Availability of an even flow of the commodity and information about the price levels were necessary for the survival of a futures market, as mooted by the coffee board, he said.

Kabra said an assurance of steady availability of the commodity and constant price information would help the traders to enter into forward contracts.

Pointing out the need to do forward contracting through an organised exchange-based system, he said such a system could assure deliveries and price realisation. ’unless there is an organised market, forward trading can create problems like non-realisation of deliveries and prices’, he said.

Without mandatory reporting to such an exchange, there could be gross misuse of forward trading and problems for the players, Kabra said, adding that it was an open secret that a number of informal future tradings took place for some commodities in the country.

On the daily, monthly and seasonal price fluctuations of the commodity he said price volatility was not the result of futures trading, but something futures trading had to face in the process.

However, he urged some sort of self-regulation by the futures exchange to keep away the non-trading, non-exporting, non-growing and non-merchandising interests to ensure least interference from external forces. ’besides, there needs to be a system to assure a minimum remunerative price to the commodity in the futures trading’, he added.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.