The way forward for hedging price risk in maize: A price discovery mechanism Singh Gurlal*, Kaur Gurleen, Sharma V. K Department of Economics and Sociology, Punjab Agricultural University, Ludhiana, Punjab, India *Corresponding author email: gurlal-aes@pau.edu
Online Published on 26 February, 2024. Abstract Maize is a highly versatile cereal crop that finds extensive use in feed, food, and industry. The period of the study is 1950-51 to 2021-22. The impressive growth rate of maize production, which has increased at a compounded annual growth rate of 4.3 per cent from 12 million tons (mt) in 2000-01 to 33.6 million tons in 2021-22 is a testament to its importance in the agricultural sector. Globally, 54 per cent of the maize produced is mainly used as feed, mainly for poultry and cattle, 33 per cent of the produce is used for food, seed and industrial use. Thus, it is rightfully referred to as the ‘Queen of cereals’. Farmers tend to receive lower prices as they flock to the APMC mandis just after the harvest season. Maize has the highest volatility with a coefficient of variation of 43.3 per cent, compared to egg (37.1 per cent), chicken (25.3 per cent), and its competing crop, soybean (41.7 per cent). This high volatility not only affects farmers’ earning but also consumers. The study firmly suggests that farmers in their significant maize-producing regions must have access to the best markets and should be able to hedge their price risks through futures markets. Out of all agricultural commodities traded at NCDEX, Maize has been the largest commodity traded since 2016. The integration of negotiable warehouse receipt systems with e-NAM can further help them overcome liquidity constraints immediately after harvest. The study strongly urges to implement reforms in the APMC markets, e-NAM, warehouse receipt system, futures markets, and contract farming laws to hedge price risk in the maize market. Top Keywords Maize, Marketing, Price risk, Reforms. Top |