If prices anticipate crop and commodity production there is no valid reason for not having a price discovery mechanism. In a `borderless world', assuming that a government can manipulate the market place to safeguard its constituents is a self defeating philosophy. People want choices, they are well informed and they will pay for quality goods and services. Discovering price is a service that the market place provides to its constituents.

Positive fallouts can be new warehouses who issue receipts for banks to finance, forcing increased investment in infrastructure, transparent figures of production, consumption and stocks, cheaper cost of funds in long term, a bigger market for general insurance, hedging tools allowing for long term planning, weather-related services, data providers, organised transportation for coastal, rail and ship movements.

It is amazing how an, "illusion of resources",allows the government to misread the direction of world trade flows. The Internet, print media and cable television reach news, views, options and choices on a real time basis in a cost effective way to 50 per cent of India's population. Old orders' of manipulation and control have gone. Transparency and value addition are the new mantras. For example, as farmers have seen the returns in basmati rice they have migrated to sowing this variety, supported by traders but lured by the anticipation of profit. No state subsidy is needed to think about value addition.

If the cultural need is to innovate and find value, the stake holders in the market place will create this value in competitive ways. The USP here will be strategic focus to deliver value to customers. The perspective of this `power shift' is lost on the planners as they remain rooted to a semi-socialist era. The agrarian revolution or the industrial revolution have come and gone. In an age where the communication revolution and information technologyhave put the mind worker on the spotlight, depriving the farmer of legitimate tools in trade seems like a strange whim. It will not work and can only destroy initiative. All this because the government in its wisdom will not unlock and create a catalyst for the market -- a Commodity Futures' Exchange.

Due to lack of an integrated infrastructural platform, the vital issues of logistics and supply chain management are ignored. Since there is no transparent platform the problems do not get isolated or fixed in time.

Inventory versus receivables take on a lopsided look in various primary commodities, from season to season. Enabling managers to concentrate on the "smallest number of activities that will produce the largest revenue" then moving your produce in time will save your actual receivables. Wastage of material and space in one part of the country actually means that demand in certain parts is not met on time.

The best example lies in the agricultural production and distribution channels, whereoutdated practices throw up numbers which are absolutely diversed from reality.For example with 169 million hectares of arable land and some of the lowest yields, India produces 13 per cent of world sugar, 12 per cent of wheat and the largest producer of tea, spices, jute, one of the largest in rice (20 per cent), cotton , milk, vegetables, fruits and flowers. It could be a myth but 20 per cent of all produce is wasted due to lack of infrastructure and other support services. There is lack of cold storage in all corners', packing houses, organised transport systems and procedural systems. Thereafter, comes lack of quality standardisation, obsolete testing facilities, non-use of information technology, non-existence of brand building and pesticide problems. Non-value addition in human resources and poor management compound the problems.

The entire agro resources (farm) sector fall under the unorganised sector, yet constitutes one third of the GDP, while employing directly and indirectly two thirds of thepopulace. The sugar scenario is a case in point.

India started 1990-91 with a 12-million tonne production and is expected to produce about five per cent more this year 1996-97. Yet, in 1991-92 production was up to 13.4 million tonne in 1992-93 and 1993-94 down to 10.6 million tonne and 9.8 million tonne respectively. In 1994-95, production was 14.6 and in 1995-96 up to 16.4 million tonne. Incredible swings!

Its no better in oilseeds where India cultivates 15 per cent of world crop area and produces less than 10 per cent of world oilseeds at a yield per hectare of 800 kg-almost half of world average area of approximately 25 million hectares and production 23 million tonne only. This somehow props up the per head consumption of 7.5-8.5 kgs per annum. Again, half of the world consumption average at 15 kgs per annum.

Indian production of vegetable oils is approximately 7.5 million tonne annually requiring almost 1.5-1.7 million tonne of soft oil import. This is likely to go up sharply over next five yearsunless scientific breakthroughs are brought to the farm quickly and produce protected by better logistics management.

The best way as agreed earlier in this article is to create and support a catalyst like a Commodity Futures Exchange. This not only performs as a Chinese wall forcing the market to creates information but also helps to induce the market place in creating an effective logistics support function.

Ultimately, everybody gets better informed and with knowledge comes power.

As the knowledge helps the market participants reduce or transfer their risk, the power of bargaining allows service users to demand specific products suited to their niches. Products also include various forms of infrastructure whose viability can only be underlined by its reference and use. Ultimately the strategy changes and evolves. Information, logistics and service focus are all ultimately niches in a trading strategy. Trading being the lifeblood of economics not only of those dependent on primary resources but alsoof those in matured markets using cutting edge technologies.

(The author is a commodity futures and physicals trader at Adani Exports Ltd.)