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Wednesday, July 11, 2012
Thursday, July 5, 2012
SEMINAR ON “INDIAN COMMODITY MARKETS AND FCRA AMENDMENT BILL, 2010”
INAUGURAL SPEECH OF PROF. K.V. THOMAS, MINISTER OF STATE (I/C) OF CONSUMER AFFAIRS, FOOD & PUBLIC DISTRIBUTION AT THE SEMINAR ON “INDIAN COMMODITY MARKETS AND FCRA AMENDMENT BILL, 2010” ORGANISED BY FEDERATION OF INDIAN CHAMBERS OF COMMERCE AND INDUSTRY (FICCI) AT NEW DELHI ON 4TH JULY, 2012:
Shri Rajiv Agarwal, Secretary, Department of Consumer Affairs, Shri Ramesh Abhishek, Chairman, Forward Markets Commission, Dr. Arbind Prasad, Director General, FICCI, Shri Venkat Chary, Chairman, MCX, Mr. Nick Ronalds, Executive Director, FIA Asia, President, Asia Markets, friends from the media, ladies and gentlemen:
I am happy to be here today amongst you at the Seminar organized by the Federation of Indian Chambers of Commerce and Industry (FICCI) under the title of “Indian Commodity Markets and FCRA Amendment Bill 2010.” This is indeed a very welcome initiative of FICCI. I congratulate FICCI on their pro-active efforts in organizing such an event as they help in generating a healthy debate on a crucial subject of commodity futures trading and its contributions to the economy.
The commodity futures markets in India have come a long way since 2003, the year when three on-line electronic trading exchanges came into existence and futures-trading in over 100 commodities was allowed. It is a matter of great satisfaction that over the years, the volume of trade has increased considerably with the number of members and clients and contracts traded on the exchanges having increased significantly.
While there is an understandable excitement regarding the significant growth of this market, it cannot be denied that there are also apprehensions in equal measure among some quarters whether the market is truly achieving its objective of price discovery and price risk management and helping farmers and hedgers. We need to take a balanced view and address the apprehensions as well as the challenges before us to enable the market to live up to the expectations of farmers and hedgers. It is well known that hedgers transfer their risk in this market which is assumed by the speculators who bring in the liquidity and that greater participation and volumes lead to a more efficient price discovery, thereby reducing the possibility of price manipulation. An analysis of the trade volumes on futures market indicates that in case of some commodities, the volumes are much higher than the open interest, thereby indicating that the extent of hedging is much less than the speculative volumes generated. It is also seen that in respect of a number of commodities, the volume of participants is not very significant. It is a matter of concern for us, as this will result in poor quality of price discovery in such contracts. There are also apprehensions in some quarters that these markets are contributing to, if not leading to, price rise and price volatility of commodities.
A number of studies and reports do indicate that futures trading in commodities cannot be said to be responsible for price rise. It is, however, possible that if futures-market is not aligned properly with the physical market, price discovery in the futures platform may become distorted which may be misused by vested interests. Such a situation can only be avoided when hedgers and potential hedgers are encouraged to participate in this market in large number.
The Forward Markets Commission (FMC) has been taking a number of initiatives to address the above challenges. To improve hedging which is reflected in higher open interest, the Commission has asked all the commodity exchanges to prepare a road map for improving the volume open interest ratio by increasing hedgers’ participation. We need to create awareness among the hedgers and industry associations about these critical issues – it is here that I would expect and request industrial bodies such as FICCI to play their important role in creating such awareness among the potential hedgers for using the commodity futures market as an effective tool to manage their commodity price risk.
I am told that the FMC has also started a comprehensive exercise for alignment of futures market with the physical market. A staggered delivery system has been introduced in a number of agricultural commodities. This has already resulted in significant reduction in excessive speculation in the near month and in reduced price volatility in these commodities. The FMC is also reviewing all the futures contracts traded in the market to examine if those are suited to the needs of the physical market participants. The feedback of physical market participants and other stakeholders has been sought and it is proposed to review these contracts and make suitable modifications as required.
The Government is also considering constituting an Advisory Committee to provide an institutional mechanism for the Government and the Commission to consult all the stakeholders regarding the regulation of commodity futures market. I have no doubt that these measures are bound to bring about much needed changes in the working of these markets by bringing down excessive speculation, improving hedging and better aligning with the physical market.
One of the primary objectives of Commodity Markets is to help farmers to get best possible price for their produce. The farmers, especially small and marginal, are not able to participate in the market directly. They do so through aggregators. Therefore, the FMC has asked the exchanges to promote aggregators on a pilot basis in the agricultural commodities so that the market benefits the farmers much more. The Price Dissemination Project of the Commission is being implemented across the country with 1400 ticker boards already have been installed and 7500 proposed to be installed during the next 5 years. The price signals coming from futures market also help farmers to take important sowing and marketing decisions. Farmers would be benefited far more by introduction of options which would be possible after the amendment of the FCR Act.
The participation of institutions such as Banks is also necessary to bring adequate liquidity to this market. Introduction of investor protection measures will instill a sense of confidence in the retail clients encouraging them to participate in large number. Investor Protection Fund has been set up in each exchange with over Rs. 65 crores and a trust is being set up to operate the fund. The clients are now getting SMS and Email alerts every day regarding the trade done in their account. A uniform KYC norm has been introduced and quarterly settlement by members with clients has also been done. In the last one year FMC has proactively taken several such measures. There is also a need to undertake a major media campaign in collaboration with the Exchanges to increase investor education in all the States on a sustained basis.
The need for strengthening regulatory mechanism through Amendment of FCR Act has been discussed over the years and it is certainly necessary to strengthen this mechanism. The proposed amendment of FCRA would enable the FMC to play a more effective role in regulation of these markets. The amendment would also bring in much-needed new products such as options. However, there is also a need that all the stakeholders appreciate the need to take this market to a new level where the hedgers and farmers would be the primary beneficiaries and this market would play its rightful role of providing price discovery and price risk management functions to the physical market participants. This would provide necessary confidence to the policy makers as well as law makers to bring about the necessary changes in the legislative structure of the commodity futures market.
With these words, I have great pleasure in inaugurating this Seminar.
AGRIBUSINESS & COMMODITY MARKETS STAKEHOLDER AWARENESS AND EDUCATION SEMINAR” ON 30TH JUNE, 2012 AT KOCHI,
INAUGURAL ADDRESS OF PROF. K.V. THOMAS, HON’BLE MINISTER OF STATE (I/C) OF CONSUMER AFFAIRS, FOOD & PUBLIC DISTRIBUTION AT THE “AGRIBUSINESS & COMMODITY MARKETS STAKEHOLDER AWARENESS AND EDUCATION SEMINAR” ON 30TH JUNE, 2012 AT KOCHI, BEING ORGANISED BY THE HINDU BUSINESS LINE, FMC AND NCDEX:
Chairman of Forward Markets Commission, M.D of National Commodities and Derivatives Exchange (NCDEX), G. Chandrasekhar from Hindu Business Line, other dignitaries on the dais, Ladies and Gentlemen: It gives me great pleasure to inaugurate the “Agribusiness & Commodity Markets Stakeholder Awareness and Education Seminar” being organised in Kochi by The Hindu Business Line, Forward Markets Commission (FMC) and the National Commodity and Derivatives Exchange (NCDEX). I especially would like to thank The Hindu Business Line for taking the initiative as a confidence building measure, in association with the FMC and the NCDEX, in bringing about awareness amongst all the stakeholders of the commodity markets such as producers, processors, trading houses, importers, exporters and others operating in the physical market about the importance of reducing/controlling commodity price risks arising out of volatile market conditions.
Agriculture occupies an important role in Indian Economy and importance of Agri-business and commodity trading in present times cannot be underestimated. Indian Commodity markets have been in place since historical times. It is heartening for me to note that in just about 9 years since liberalization, commodity futures market has emerged as one of the fastest growing segments of our economy. At present there is permission for trading for more than 100 commodities. Out of these 100 permitted commodities, about 27 Agri-commodities and 20 Non-Agri-Commodities are actively traded on exchange platforms. Price volatility of essential commodities has great significance to developing countries like India as it has been found to be contributing to poverty, social unrest and other negative economic and welfare impacts. Price volatility also affects the business environment in that the uncertainty that it creates undermines investors’ confidence in the business, ultimately affecting the economic development of the nation. It is therefore essential that public-private effort is encouraged to address price volatility of food and other agriculture commodities in an effective manner. I take this opportunity to congratulate The Hindu group of publications for their proactive efforts in attracting the attention of policymakers to areas that need urgent and prompt attention.
India has always been adopting a cautious approach when it comes to its finance and economic policies. India is a democratic and a socialistic country. The need to take along all sections of the society as we strive to ensure a better future for all the citizens of the country is of utmost importance. However, adopting caution can never be considered lacking in courage. The principle of cautious approach holds true in all spheres of economic policy of the Government including the sensitive commodity markets. We believe that the fundamentals of demand and supply in the physical market decide the prices of commodities and that futures market only acts as a platform for price discovery and price risk management for the physical market participants.
However, I must admit that the rise in prices of certain agricultural commodities, including some essential commodities in recent months, has been attributed as contributory, in some quarters, to excessive speculation in futures market. I may add that in the first quarter of 2012, prices of mustard seeds, chana, potato, mentha oil, soya bean, cardamom, black pepper, etc. increased by more than 100% which was a matter of grave concern to the government. Although FMC is an independent regulatory, it acts in close coordination with the Government and is keeping a close watch on the situation and will make use of all the regulatory tools available to keep a check on the excessive speculation in the futures trading in commodities, specifically the agricultural commodities. The FMC has already implemented higher margin requirements for trading in agri-commodities and has also reduced position limits for essential commodities. This is in addition to advisory committees being formed for all commodities including agri-products which would consist primarily of physical market participants such as representatives of farmers, producers, processors, exporters, domain experts and other stakeholders to advise the Government and the FMC. These advisory committees will guide the government on how to bring about better alignment between the physical markets and the futures market so that farmers and hedgers are substantially benefitted from the futures trading which is its primary purpose. An advisory committee has already been constituted to study various issues in rubber futures trading. The FMC will also look into areas of hoarding and sources of finance that help hoarding. All these initiatives will definitely help us to steer clear of the pitfalls generated out of commodity price risks. AGMARKNET, the e-governance portal has been evolved for strengthening the interfaces among government organisations, farmers, industry, policy-makers, academic institutions and other beneficiaries.
But I must also share with you our concern that our attempts in cleansing the system should not result in weakening our commodity markets which are still under-developed with huge scope for progress. Development in the sector is expected to contribute significantly in strengthening Indian economy and the agricultural field in particular and enable it to face the challenges of globalization. Commodities today account for 48% of the Indian GDP and are on the path growth even beating equities. Demands from developing economies like India have a sure share in developing economies sustaining global growth which is a good sign for India as a developing country. Commodity Spot Exchanges are helpful for farmers to sell their small lots through Commodity Exchanges. Farmers who cannot directly take part in this area due to various reasons can benefit from the price signals emanating from the exchange platform. For example, farmers of Kerala have gained a lot through the Commodity Spot Exchanges: especially the rubber growers benefited a lot in realising over 90 per cent of the final prices through participation in the future markets. So what is needed in a balanced and cautious approach as our aim is to ensure that the benefits of commodity markets are reaped while the loopholes leading to counterproductive effects on the people are plugged.
All developing countries including India are dependent on primary commodities for the precious foreign exchange. But we must beware risks and instabilities that come on the way. But with increasing awareness of such risks, the potential of commodities for India’s economic growth, role of futures exchange, regulatory functions, etc. we can learn to use financial instruments to our advantage, to improve our economic management, and to the betterment of the people of the country.
The Forward Markets Commission along with National exchanges is implementing price Dissemination Project for disseminating spot and futures prices of agriculture commodities by installing Electronic Price Tickers Boards at all prominent locations frequented by farmers and other stakeholders. Am happy to note that 1400 price Tickers Boards have been installed in the 11th Five Year Plan and another 7500 price Ticker Boards would be installed in the 12th Five Year Plan. Large scale presence of Price Tickers Boards and information display about Agri-commodities prices would go a long away in checking Information Asymmetry and benefit farmers in Price Risk Management.
Indian Commodity markets have to come to terms with many challenges. Efforts to effectively deal with them will strengthen these markets further. One of the pressing needs of the time is better alignment of Physical and Futures markets. Commodity futures markets in India are about 3 times the size of physical markets but more than 10 times the size of physical markets in other developed countries hence physical markets are precious for our economy. If I may say so Physical markets are tied to the soil of the land and alignment of physical markets with futures markets will benefit farmers most. Futures markets can serve as adjunct to the physical commodities markets.
Warehousing facilities is another dire requirement of farmers and other participants of commodities markets. Warehousing system and warehouse receipts act as the chain, connecting farmers with the future market and credit financing. But compared with the growth of futures trading in India, there are not sufficient numbers of warehouses. Small and marginal farmers do not have a storage capacity and hence are forced to sell their crops at whatever price is offered to them and cannot wait to get better prices. Effective warehouse facilities would provide necessary storage support to farmers and they can hold the commodity for future profit can make money for giving inputs and make day to day expenditure. Effective warehousing is also essential for facilitating effective delivery mechanism on exchange platform. There are wide differences among different states in terms of storage capacities for commodities and there is a need to smoothen these differences. There is a need to work on the reliability and efficiency of current warehouse systems in the country. The warehousing system also helps in the better integration of ready market for commodities across time and places, thereby facilitating better integration of spot and futures markets. This in turn improves efficiency of futures market in price discovery and price risk management functions. Starting of new warehouses would be very useful for the further development and increasing participation of all kind of players in the commodity futures market.
Instruments like warehouse receipts are very important for the transition to well functioning markets. Current methods of physical settlements can be replaced with settlement using warehouse receipts over a period of time. Eventually physical receipts would be completely replaced by electronic receipts. Warehouse receipts also help in availing credit financing. Loan facility against warehouse receipts is useful for farmers and traders and they can use this money for inputs for crops and sowing. Commodity markets are expected to serve as a hedging platform. At present there are institutional as well as other constraints for effective hedging. There is a need to broaden the participation of hedgers like banks, SMEs and corporate houses. Primary role of banks would be to facilitate hedging. Participation of Cooperative Societies also needs to be encouraged as they also are a strong agency to play the role of “Aggregators”. States like Kerala have an effective experience at “aggregation” and I am confident that participants from other states would benefit by that experience. Hedgers’ participation will also enable market deepening as they can act as agents and aggregators for retail participation, thus leading to market inclusion of millions of potential investors. At the same time, their participation will bring in high amount of liquidity in the
I am sure, the seminar which is going to have suggestions and opinions of a cross section of society from the industry, government agencies and the experts, will prove to be an excellent opportunity to understand such a critical and sensitive issue as the “commodity markets” so that we could make the best use of them to the overall economic development of the nation.
THANK YOU!
Chairman of Forward Markets Commission, M.D of National Commodities and Derivatives Exchange (NCDEX), G. Chandrasekhar from Hindu Business Line, other dignitaries on the dais, Ladies and Gentlemen: It gives me great pleasure to inaugurate the “Agribusiness & Commodity Markets Stakeholder Awareness and Education Seminar” being organised in Kochi by The Hindu Business Line, Forward Markets Commission (FMC) and the National Commodity and Derivatives Exchange (NCDEX). I especially would like to thank The Hindu Business Line for taking the initiative as a confidence building measure, in association with the FMC and the NCDEX, in bringing about awareness amongst all the stakeholders of the commodity markets such as producers, processors, trading houses, importers, exporters and others operating in the physical market about the importance of reducing/controlling commodity price risks arising out of volatile market conditions.
Agriculture occupies an important role in Indian Economy and importance of Agri-business and commodity trading in present times cannot be underestimated. Indian Commodity markets have been in place since historical times. It is heartening for me to note that in just about 9 years since liberalization, commodity futures market has emerged as one of the fastest growing segments of our economy. At present there is permission for trading for more than 100 commodities. Out of these 100 permitted commodities, about 27 Agri-commodities and 20 Non-Agri-Commodities are actively traded on exchange platforms. Price volatility of essential commodities has great significance to developing countries like India as it has been found to be contributing to poverty, social unrest and other negative economic and welfare impacts. Price volatility also affects the business environment in that the uncertainty that it creates undermines investors’ confidence in the business, ultimately affecting the economic development of the nation. It is therefore essential that public-private effort is encouraged to address price volatility of food and other agriculture commodities in an effective manner. I take this opportunity to congratulate The Hindu group of publications for their proactive efforts in attracting the attention of policymakers to areas that need urgent and prompt attention.
India has always been adopting a cautious approach when it comes to its finance and economic policies. India is a democratic and a socialistic country. The need to take along all sections of the society as we strive to ensure a better future for all the citizens of the country is of utmost importance. However, adopting caution can never be considered lacking in courage. The principle of cautious approach holds true in all spheres of economic policy of the Government including the sensitive commodity markets. We believe that the fundamentals of demand and supply in the physical market decide the prices of commodities and that futures market only acts as a platform for price discovery and price risk management for the physical market participants.
However, I must admit that the rise in prices of certain agricultural commodities, including some essential commodities in recent months, has been attributed as contributory, in some quarters, to excessive speculation in futures market. I may add that in the first quarter of 2012, prices of mustard seeds, chana, potato, mentha oil, soya bean, cardamom, black pepper, etc. increased by more than 100% which was a matter of grave concern to the government. Although FMC is an independent regulatory, it acts in close coordination with the Government and is keeping a close watch on the situation and will make use of all the regulatory tools available to keep a check on the excessive speculation in the futures trading in commodities, specifically the agricultural commodities. The FMC has already implemented higher margin requirements for trading in agri-commodities and has also reduced position limits for essential commodities. This is in addition to advisory committees being formed for all commodities including agri-products which would consist primarily of physical market participants such as representatives of farmers, producers, processors, exporters, domain experts and other stakeholders to advise the Government and the FMC. These advisory committees will guide the government on how to bring about better alignment between the physical markets and the futures market so that farmers and hedgers are substantially benefitted from the futures trading which is its primary purpose. An advisory committee has already been constituted to study various issues in rubber futures trading. The FMC will also look into areas of hoarding and sources of finance that help hoarding. All these initiatives will definitely help us to steer clear of the pitfalls generated out of commodity price risks. AGMARKNET, the e-governance portal has been evolved for strengthening the interfaces among government organisations, farmers, industry, policy-makers, academic institutions and other beneficiaries.
But I must also share with you our concern that our attempts in cleansing the system should not result in weakening our commodity markets which are still under-developed with huge scope for progress. Development in the sector is expected to contribute significantly in strengthening Indian economy and the agricultural field in particular and enable it to face the challenges of globalization. Commodities today account for 48% of the Indian GDP and are on the path growth even beating equities. Demands from developing economies like India have a sure share in developing economies sustaining global growth which is a good sign for India as a developing country. Commodity Spot Exchanges are helpful for farmers to sell their small lots through Commodity Exchanges. Farmers who cannot directly take part in this area due to various reasons can benefit from the price signals emanating from the exchange platform. For example, farmers of Kerala have gained a lot through the Commodity Spot Exchanges: especially the rubber growers benefited a lot in realising over 90 per cent of the final prices through participation in the future markets. So what is needed in a balanced and cautious approach as our aim is to ensure that the benefits of commodity markets are reaped while the loopholes leading to counterproductive effects on the people are plugged.
All developing countries including India are dependent on primary commodities for the precious foreign exchange. But we must beware risks and instabilities that come on the way. But with increasing awareness of such risks, the potential of commodities for India’s economic growth, role of futures exchange, regulatory functions, etc. we can learn to use financial instruments to our advantage, to improve our economic management, and to the betterment of the people of the country.
The Forward Markets Commission along with National exchanges is implementing price Dissemination Project for disseminating spot and futures prices of agriculture commodities by installing Electronic Price Tickers Boards at all prominent locations frequented by farmers and other stakeholders. Am happy to note that 1400 price Tickers Boards have been installed in the 11th Five Year Plan and another 7500 price Ticker Boards would be installed in the 12th Five Year Plan. Large scale presence of Price Tickers Boards and information display about Agri-commodities prices would go a long away in checking Information Asymmetry and benefit farmers in Price Risk Management.
Indian Commodity markets have to come to terms with many challenges. Efforts to effectively deal with them will strengthen these markets further. One of the pressing needs of the time is better alignment of Physical and Futures markets. Commodity futures markets in India are about 3 times the size of physical markets but more than 10 times the size of physical markets in other developed countries hence physical markets are precious for our economy. If I may say so Physical markets are tied to the soil of the land and alignment of physical markets with futures markets will benefit farmers most. Futures markets can serve as adjunct to the physical commodities markets.
Warehousing facilities is another dire requirement of farmers and other participants of commodities markets. Warehousing system and warehouse receipts act as the chain, connecting farmers with the future market and credit financing. But compared with the growth of futures trading in India, there are not sufficient numbers of warehouses. Small and marginal farmers do not have a storage capacity and hence are forced to sell their crops at whatever price is offered to them and cannot wait to get better prices. Effective warehouse facilities would provide necessary storage support to farmers and they can hold the commodity for future profit can make money for giving inputs and make day to day expenditure. Effective warehousing is also essential for facilitating effective delivery mechanism on exchange platform. There are wide differences among different states in terms of storage capacities for commodities and there is a need to smoothen these differences. There is a need to work on the reliability and efficiency of current warehouse systems in the country. The warehousing system also helps in the better integration of ready market for commodities across time and places, thereby facilitating better integration of spot and futures markets. This in turn improves efficiency of futures market in price discovery and price risk management functions. Starting of new warehouses would be very useful for the further development and increasing participation of all kind of players in the commodity futures market.
Instruments like warehouse receipts are very important for the transition to well functioning markets. Current methods of physical settlements can be replaced with settlement using warehouse receipts over a period of time. Eventually physical receipts would be completely replaced by electronic receipts. Warehouse receipts also help in availing credit financing. Loan facility against warehouse receipts is useful for farmers and traders and they can use this money for inputs for crops and sowing. Commodity markets are expected to serve as a hedging platform. At present there are institutional as well as other constraints for effective hedging. There is a need to broaden the participation of hedgers like banks, SMEs and corporate houses. Primary role of banks would be to facilitate hedging. Participation of Cooperative Societies also needs to be encouraged as they also are a strong agency to play the role of “Aggregators”. States like Kerala have an effective experience at “aggregation” and I am confident that participants from other states would benefit by that experience. Hedgers’ participation will also enable market deepening as they can act as agents and aggregators for retail participation, thus leading to market inclusion of millions of potential investors. At the same time, their participation will bring in high amount of liquidity in the
I am sure, the seminar which is going to have suggestions and opinions of a cross section of society from the industry, government agencies and the experts, will prove to be an excellent opportunity to understand such a critical and sensitive issue as the “commodity markets” so that we could make the best use of them to the overall economic development of the nation.
THANK YOU!
Food Safety – Role of Standards”
“Food Safety – Role of Standards”
Prof. K.V. Thomas
Minister of State (I/C)
Consumer Affairs, Food & Public Distribution
"God comes to the hungry in the form of food” is a famous quote by Mahatma Gandhi. Food is essential to nourish any living being. Our physical and mental health also depends on the food we eat. For human beings, the journey from hunter-gatherers to that of a connoisseur of cuisine has been a long, long one. Like in any other civilization, food and eating habits in India are influenced by various aspects such as geography and climate and have contributed their share in the overall development of Indian cultural identity in its present form.
Access to good quality and safe food has been man's main endeavour from the earliest days of human existence. By definition, Food Safety is the condition that ensures that food by itself causes no harm to the consumer when prepared and/or eaten according to their intended use. It implies absence or acceptable and safe levels of contaminants, adulterants, naturally occurring toxins or any other substance that may make food injurious to health. Consumers are taking unprecedented interest in the way food is produced, processed and marketed, and are increasingly calling for strong initiatives from government and industry for food safety and consumer protection. As an awareness of food safety among our citizens is showing an upward trend, the need for an assurance about the safety and quality of food is also greatly felt.
Today the commonly used phrase ‘farm-to-fork’ has taken a different dimension from earlier times. Earlier, farm produce was consumed locally with the effects of pollutants and contaminants being minimal. Now the situation is different – the phrase ‘farm-to-fork’ does not remain local any longer since the farm may be located hundreds of kilo-meters away or perhaps in a different continent altogether. Ever-increasing presence of pesticides and preservation methods in conjunction with other variables such as contamination during transportation and storage add to our concerns about safety of farm produce.
Food and agricultural products constitute an important segment of world trade. India has made significant strides over past several decades in food production as well as in exports of food products. India is in fact numero uno in the production of milk, sugarcane, cashew and spices and the second largest producer of rice, wheat, pulses, fruit and vegetables in the world today. It possesses the largest share of cattle and buffaloes in the world, the second largest share of sheep and goats, the third largest of marine landings, and occupies the fifth position in poultry production - placing India among the 15 leading exporters of agricultural products in the world. During 2010-11, exports of agricultural and allied products registered a robust growth rate of 39.3 per cent.
The globalization and the resultant international trade has a two-fold benefit: it introduces a wider variety of foods into the diet by providing consumers with a bigger and better choice of products; and it provides food exporting countries with foreign exchange, which is indispensable for the economic development of any country, and thus for an improvement in the standards of living of the people. However, Globalization is also adding a new external dimension to the issue of food safety. In order to be a successful food exporter, a country must produce food that is not only acceptable to consumers in other countries, but also comply with the regulatory or statutory requirements of the importing countries.
In this scenario, the inevitable effects of globalization on issues of food safety should be seen more as a challenge and not just as an impediment to a nation’s march towards reaching a bigger international market share. Standards, I believe, are powerful tools in our hands to respond to this challenge. Role of standards in the domain of food safety is immense. Standards promote public health by reducing the risk of food-borne illnesses. They protect consumers from unsanitary, unwholesome, improperly-labeled or adulterated food, and provide a sound regulatory foundation for domestic and international trade in foo
The Bureau of Indian Standards (BIS), the National standards body of India, is engaged in standards formulation and conformity assessment. The main objectives behind formulation of standards include:
Promoting public health by reducing the risk of food borne illness;
Protecting consumers from unsanitary, unwholesome, mislabeled or adulterated food; and
Providing a sound regulatory foundation for domestic and international trade in food.
The BIS has made significant contribution by way of formulating a number of Indian Standards in various fields in accordance with the needs and priorities of our country and adopting various International Standards to suit our national conditions. BIS has formulated about 18700 Indian Standards, covering various technological areas. About 88% of Indian Standards have already been harmonized to International Standards where such International Standards exist. BIS has been promoting these Indian Standards through organization of seminars, like this one.
BIS has also formulated about 1000 Indian Standards in the area of food products and food safety. This includes IS/ISO 22000: 2005 ‘Food Safety Management Systems – Requirements for any organization in the food chain’. IS/ISO 22000: 2005 is an internationally harmonized standard and has emerged as the international bench mark for food safety. The retail sector in India is booming now and food sector is no exception to it. The importance of hygiene in food preparation and the responsibility of the food manufacturing industry need no emphasis. Three newly released Indian Standards in food safety concerning (i) food retail management; (ii) good hygiene practices; and (iii) organizations in the food processing sector are expected to give the necessary fillip to safeguarding and increasing food standards as prevailing now, in addition to acting as foundations of Food Safety Management System. They delineate the basic conditions and activities that are necessary to maintain a hygienic environment throughout the food chain suitable for the production, handling and provision of safe end products for human consumption, leading to a better and safer food management system in the country.
Another area that merits special attention is that of street food. This sector has shown phenomenal growth recently. Readily accessible and affordable to urban populations, street food provides the energy and nutrient needs to large segments of workers and their families in the cities. This sector is also a source of livelihood for a large number of people, the street vendors. However, it cannot be denied that food safety is a major concern with street foods prepared and sold under unhygienic conditions posing a high risk of food-borne diseases due to microbial contamination, improper use of food additives, adulteration and environmental contamination, etc. The customers are also found to be having limited access to clean water, sanitary services, or garbage disposal facilities. BIS has recently finalized an Indian Standard on basic requirements for street food vendors which is praiseworthy. These Indian Standards have immense potential to safeguard public health and also promote the confidence of the consumer over the entire spectrum of food industry.
These Indian Standards have immense potential to safeguard public health and also promote the confidence of the consumer on entire gamut of food industry, if implemented efficiently. Implementation of these standards can give rise to exceptional improvements in food safety performance, but requires high level of commitment and full functional involvement of all stakeholders, particularly the industry.
***
Prof. K.V. Thomas
Minister of State (I/C)
Consumer Affairs, Food & Public Distribution
"God comes to the hungry in the form of food” is a famous quote by Mahatma Gandhi. Food is essential to nourish any living being. Our physical and mental health also depends on the food we eat. For human beings, the journey from hunter-gatherers to that of a connoisseur of cuisine has been a long, long one. Like in any other civilization, food and eating habits in India are influenced by various aspects such as geography and climate and have contributed their share in the overall development of Indian cultural identity in its present form.
Access to good quality and safe food has been man's main endeavour from the earliest days of human existence. By definition, Food Safety is the condition that ensures that food by itself causes no harm to the consumer when prepared and/or eaten according to their intended use. It implies absence or acceptable and safe levels of contaminants, adulterants, naturally occurring toxins or any other substance that may make food injurious to health. Consumers are taking unprecedented interest in the way food is produced, processed and marketed, and are increasingly calling for strong initiatives from government and industry for food safety and consumer protection. As an awareness of food safety among our citizens is showing an upward trend, the need for an assurance about the safety and quality of food is also greatly felt.
Today the commonly used phrase ‘farm-to-fork’ has taken a different dimension from earlier times. Earlier, farm produce was consumed locally with the effects of pollutants and contaminants being minimal. Now the situation is different – the phrase ‘farm-to-fork’ does not remain local any longer since the farm may be located hundreds of kilo-meters away or perhaps in a different continent altogether. Ever-increasing presence of pesticides and preservation methods in conjunction with other variables such as contamination during transportation and storage add to our concerns about safety of farm produce.
Food and agricultural products constitute an important segment of world trade. India has made significant strides over past several decades in food production as well as in exports of food products. India is in fact numero uno in the production of milk, sugarcane, cashew and spices and the second largest producer of rice, wheat, pulses, fruit and vegetables in the world today. It possesses the largest share of cattle and buffaloes in the world, the second largest share of sheep and goats, the third largest of marine landings, and occupies the fifth position in poultry production - placing India among the 15 leading exporters of agricultural products in the world. During 2010-11, exports of agricultural and allied products registered a robust growth rate of 39.3 per cent.
The globalization and the resultant international trade has a two-fold benefit: it introduces a wider variety of foods into the diet by providing consumers with a bigger and better choice of products; and it provides food exporting countries with foreign exchange, which is indispensable for the economic development of any country, and thus for an improvement in the standards of living of the people. However, Globalization is also adding a new external dimension to the issue of food safety. In order to be a successful food exporter, a country must produce food that is not only acceptable to consumers in other countries, but also comply with the regulatory or statutory requirements of the importing countries.
In this scenario, the inevitable effects of globalization on issues of food safety should be seen more as a challenge and not just as an impediment to a nation’s march towards reaching a bigger international market share. Standards, I believe, are powerful tools in our hands to respond to this challenge. Role of standards in the domain of food safety is immense. Standards promote public health by reducing the risk of food-borne illnesses. They protect consumers from unsanitary, unwholesome, improperly-labeled or adulterated food, and provide a sound regulatory foundation for domestic and international trade in foo
The Bureau of Indian Standards (BIS), the National standards body of India, is engaged in standards formulation and conformity assessment. The main objectives behind formulation of standards include:
Promoting public health by reducing the risk of food borne illness;
Protecting consumers from unsanitary, unwholesome, mislabeled or adulterated food; and
Providing a sound regulatory foundation for domestic and international trade in food.
The BIS has made significant contribution by way of formulating a number of Indian Standards in various fields in accordance with the needs and priorities of our country and adopting various International Standards to suit our national conditions. BIS has formulated about 18700 Indian Standards, covering various technological areas. About 88% of Indian Standards have already been harmonized to International Standards where such International Standards exist. BIS has been promoting these Indian Standards through organization of seminars, like this one.
BIS has also formulated about 1000 Indian Standards in the area of food products and food safety. This includes IS/ISO 22000: 2005 ‘Food Safety Management Systems – Requirements for any organization in the food chain’. IS/ISO 22000: 2005 is an internationally harmonized standard and has emerged as the international bench mark for food safety. The retail sector in India is booming now and food sector is no exception to it. The importance of hygiene in food preparation and the responsibility of the food manufacturing industry need no emphasis. Three newly released Indian Standards in food safety concerning (i) food retail management; (ii) good hygiene practices; and (iii) organizations in the food processing sector are expected to give the necessary fillip to safeguarding and increasing food standards as prevailing now, in addition to acting as foundations of Food Safety Management System. They delineate the basic conditions and activities that are necessary to maintain a hygienic environment throughout the food chain suitable for the production, handling and provision of safe end products for human consumption, leading to a better and safer food management system in the country.
Another area that merits special attention is that of street food. This sector has shown phenomenal growth recently. Readily accessible and affordable to urban populations, street food provides the energy and nutrient needs to large segments of workers and their families in the cities. This sector is also a source of livelihood for a large number of people, the street vendors. However, it cannot be denied that food safety is a major concern with street foods prepared and sold under unhygienic conditions posing a high risk of food-borne diseases due to microbial contamination, improper use of food additives, adulteration and environmental contamination, etc. The customers are also found to be having limited access to clean water, sanitary services, or garbage disposal facilities. BIS has recently finalized an Indian Standard on basic requirements for street food vendors which is praiseworthy. These Indian Standards have immense potential to safeguard public health and also promote the confidence of the consumer over the entire spectrum of food industry.
These Indian Standards have immense potential to safeguard public health and also promote the confidence of the consumer on entire gamut of food industry, if implemented efficiently. Implementation of these standards can give rise to exceptional improvements in food safety performance, but requires high level of commitment and full functional involvement of all stakeholders, particularly the industry.
***
LAUNCH OF KENDRIYA BHANDAR BRAND AGMARK ATTA ON 23RD MAY 2012:
SPEECH OF PROF. K.V. THOMAS, HON’BLE MINISTER OF STATE (INDEPENDENT CHARGE) OF CONSUMER AFFAIRS, FOOD & PUBLIC DISTRIBUTION AT THE LAUNCH OF KENDRIYA BHANDAR BRAND AGMARK ATTA ON 23RD MAY 2012:
It gives me immense pleasure to be here amongst you on the occasion of launch of Kendriya Bhandar Brand Agmark Atta. Set up in 1963 as a welfare project, the Kendriya Bhandar renders a useful service to the general public by making available essential commodities and thereby keeping a check on their price rise. Agmark Atta is a new addition today and, I am sure, this will be welcomed by the public.
One could see similarities between the utility of the Kendriya Bhandars and the Public Distribution System (PDS). If Kendriya Bhandars make available essential commodities to all at a price range that cannot be breached by neighbourhood shops, the PDS, the single largest retail chain existing in the country, offers essential food items to the public, especially the poor and the downtrodden, at a price that is affordable by even the poorest of the poor.
The Targeted Public Distribution System (TPDS) was launched in 1997 with a focus on the poor. Strengthening and streamlining of TPDs is being undertaken as a continuous process in partnership with States/UTs. Timely distribution of commodities to the beneficiaries, door step delivery of food-grains to fair price shops, effective monitoring of PDS items through social audit are our priority areas. In addition, States have been making full use of technology for tracking TPDS vehicles and redressing grievances of consumers through toll free call centres. Creation of awareness among the public about the PDS, Market Intervention for strengthening financial capabilities of State agencies like Civil Supply Corporations enabling them to intervene during price rise by providing non-PDS items at reasonable rates to consumers are some of the other important actions being taken by us. Cooperation of Gram Panchayats and self-help groups of women are also being sought to make the PDS system more vibrant.
Under the Open Market Sale Scheme (OMSS), the Government has allowed retail sale price of wheat and rice by States at MSP compared to earlier years when freight charges were also included. Under the OMSS bulk scheme for sale of wheat through tender to bulk consumers, while in wheat procuring States the reserve price has been kept at MSP, in other States only 50% freight will be charged compared to full freight which was being charged earlier.
Retail is being hailed as India’s industry of the future, incited by the country’s huge urban middle class population. Food and grocery is the second-largest segment of the retail industry. Growing at the rate of 30%, the Indian food retail is going to be the major driving force for the retail industry. Traditionally, Indians were used to buying their sugar, wheat, pulses, rice etc. from their neighbourhood stores. With changing lifestyle there is scarcity of time; therefore one-stop retail format is emerging as an important driver of growth that can offer consumer 'value for time' in addition to 'value for money.’
In the present era of competition, when organized sector is entering retail trade, the cooperatives must respond to the challenges by adopting technology & professionalism. They need diversification and should adopt market driven strategies for its sustenance. I understand that in line with latest trend in retailing, Kendriya Bhandar has taken up immense efforts to modernize the existing stores in term of its ambience, display system, computerization etc. in a phased manner. Concerted steps are also being taken for computerization of godowns and installation of the latest Point of Sales (POS) Machines at retail stores for ensuring better supply chain management. About 52 per cent of the Bhandar’s sale of consumer and grocery items is to general public while only 48 per cent of its sale is to government employees. Keeping this in view they should develop new strategies for a quantum increase in its sales.
Kendriya Bhandar and similar cooperative Societies should be able to anticipate and gear up to this situation of market transformation and consumer awareness and should be able to introduce innovative ideas in marketing, bringing in more clientele into their fold. I am sure, the introduction of professionalism and better quality products with trust marks like Agmark will generate consumer confidence in sourcing products from Kendriya Bhandar.
THANK YOU!
It gives me immense pleasure to be here amongst you on the occasion of launch of Kendriya Bhandar Brand Agmark Atta. Set up in 1963 as a welfare project, the Kendriya Bhandar renders a useful service to the general public by making available essential commodities and thereby keeping a check on their price rise. Agmark Atta is a new addition today and, I am sure, this will be welcomed by the public.
One could see similarities between the utility of the Kendriya Bhandars and the Public Distribution System (PDS). If Kendriya Bhandars make available essential commodities to all at a price range that cannot be breached by neighbourhood shops, the PDS, the single largest retail chain existing in the country, offers essential food items to the public, especially the poor and the downtrodden, at a price that is affordable by even the poorest of the poor.
The Targeted Public Distribution System (TPDS) was launched in 1997 with a focus on the poor. Strengthening and streamlining of TPDs is being undertaken as a continuous process in partnership with States/UTs. Timely distribution of commodities to the beneficiaries, door step delivery of food-grains to fair price shops, effective monitoring of PDS items through social audit are our priority areas. In addition, States have been making full use of technology for tracking TPDS vehicles and redressing grievances of consumers through toll free call centres. Creation of awareness among the public about the PDS, Market Intervention for strengthening financial capabilities of State agencies like Civil Supply Corporations enabling them to intervene during price rise by providing non-PDS items at reasonable rates to consumers are some of the other important actions being taken by us. Cooperation of Gram Panchayats and self-help groups of women are also being sought to make the PDS system more vibrant.
Under the Open Market Sale Scheme (OMSS), the Government has allowed retail sale price of wheat and rice by States at MSP compared to earlier years when freight charges were also included. Under the OMSS bulk scheme for sale of wheat through tender to bulk consumers, while in wheat procuring States the reserve price has been kept at MSP, in other States only 50% freight will be charged compared to full freight which was being charged earlier.
Retail is being hailed as India’s industry of the future, incited by the country’s huge urban middle class population. Food and grocery is the second-largest segment of the retail industry. Growing at the rate of 30%, the Indian food retail is going to be the major driving force for the retail industry. Traditionally, Indians were used to buying their sugar, wheat, pulses, rice etc. from their neighbourhood stores. With changing lifestyle there is scarcity of time; therefore one-stop retail format is emerging as an important driver of growth that can offer consumer 'value for time' in addition to 'value for money.’
In the present era of competition, when organized sector is entering retail trade, the cooperatives must respond to the challenges by adopting technology & professionalism. They need diversification and should adopt market driven strategies for its sustenance. I understand that in line with latest trend in retailing, Kendriya Bhandar has taken up immense efforts to modernize the existing stores in term of its ambience, display system, computerization etc. in a phased manner. Concerted steps are also being taken for computerization of godowns and installation of the latest Point of Sales (POS) Machines at retail stores for ensuring better supply chain management. About 52 per cent of the Bhandar’s sale of consumer and grocery items is to general public while only 48 per cent of its sale is to government employees. Keeping this in view they should develop new strategies for a quantum increase in its sales.
Kendriya Bhandar and similar cooperative Societies should be able to anticipate and gear up to this situation of market transformation and consumer awareness and should be able to introduce innovative ideas in marketing, bringing in more clientele into their fold. I am sure, the introduction of professionalism and better quality products with trust marks like Agmark will generate consumer confidence in sourcing products from Kendriya Bhandar.
THANK YOU!
NATIONAL SEMINAR ON ‘FOOD SAFETY – ROLE OF STANDARDS’
INAUGURAL ADDRESS OF PROF. K.V.THOMAS, HON’BLE MINISTER OF STATE (I/C)
OF CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION
AT THE NATIONAL SEMINAR ON ‘FOOD SAFETY – ROLE OF STANDARDS’
ON 28TH MAY, 2012 AT THE CENTER HOTEL, THE AVENUE CENTER, KOCHI:
Dignitaries on the Dias and distinguished participants:
It is a matter of great pleasure that Bureau of Indian Standards (BIS) is organizing this National Seminar on “Food Safety – Role of Standards” so as to create awareness and to provide an insight into the concept of Food safety with special focus on the role of standards for the larger benefit of public health.
We live in an age of contamination: of environment, food, water and of most other ingredients essential to human existence. For this reason this seminar, focused on one of these aspects, namely food safety, is of immense relevance to our individual and collective wellbeing.
"We are what we eat" is an old proverb. Our Scriptures say, “Annam Brahma, Raso Vishnu, Bhokta deva Maheshwara" (Food is Brahma, the essence in it is Vishnu, and the one who partakes of it is Maheshwara the lord Himself). The act of consuming food is considered to be a Yajna (sacrifice) and the offering goes to the digestive fire in the belly called Jattaragni. Our nutritional status, health, physical and mental faculties depend on the food we eat. Access to good quality food has been man's main endeavour from the earliest days of human existence. Food quality can be considered as a complex characteristic of food such as nutritional value, appearance, colour, texture and taste that determines its value or acceptability to consumers. Safety of food is a non-negotiable basic requirement of food quality.
"Food safety" implies absence or acceptable and safe levels of contaminants, adulterants, naturally occurring toxins or any other substance that may make food injurious to health on an acute or chronic basis. This definition implies that food safety goes beyond cheating on ingredients. It endangers life.
Food Safety has been a matter of concern in all ages. Kautilya’s Arthashastra has a section on the control of butchers and prescribes punishment for selling bad meat or fish. Perhaps malpractices with regard to other edibles did not exist then and until the advent of the modern age, man-made contaminants were not a serious factor.
Today, it is a matter of growing national and global concern. India has made significant strides over the past several decades in food production and in its exports. India is number one in the production of milk, sugarcane, cashew and spices and the second largest producer of rice, wheat, pulses, fruits (after Brazil) and vegetables (after China).
Although significant progress has been made in India in making food safer, millions of people still fall ill each year from eating contaminated food. Consumers are taking unprecedented interest in the way food is produced, processed and marketed, and are increasingly calling for strong initiatives from government and industry for food safety and consumer protection.
There is also an external dimension to the issue of food safety. We live in a world where food and agricultural products is an important segment of world trade. The globalization of the food trade offers many benefits to consumers, as it results in a wider variety of high-quality foods that are accessible and affordable. Global food trade also provides opportunities to earn foreign exchange, though, in order to be a successful food exporter, a country must produce food that is acceptable to consumers in other countries and which complies with the regulatory or statutory requirements of the importing countries.
Viewed from these angles, role of standards in the domain of food safety is immense. The main objectives behind formulation of standards include:
Promoting public health by reducing the risk of food borne illness;
Protecting consumers from unsanitary, unwholesome, mislabelled or adulterated food; and
Providing a sound regulatory foundation for domestic and international trade in food.
In this background, the role of Bureau of Indian Standards, the National standard body of India is significant. BIS is engaged in standards formulation and conformity assessment. It has made significant contribution by way of formulating a number of Indian Standards in various fields in accordance with the needs and priorities of our country and adopting various International Standards to suit our national conditions. BIS has formulated about 18700 Indian Standards, covering various technological areas. About 88% of Indian Standards have already been harmonized to International Standards where such International Standards exist. BIS has been promoting these Indian Standards through organization of seminars, like this one.
BIS has also formulated about 1000 Indian Standards in the area of food products and food safety. This includes IS/ISO 22000: 2005 ‘Food Safety Management Systems – Requirements for any organization in the food chain’. This is an internationally harmonized standard that specifies the requirements for a food safety management system, up to the point of final consumption. IS/ISO 22000: 2005 has emerged as the international bench mark for food safety.
Similarly, the three Indian Standards recently formulated by BIS which have been released just now, such as, Indian Standards on Good Manufacturing Practices (GMP), Good Hygienic Practices (GHP) and Food Retail Management (FRM) are also important in this respect as they act as prerequisite programmes (PRPs). And they delineate the basic conditions and activities that are necessary to maintain a hygienic environment throughout the food chain suitable for the production, handling and provision of safe end products and safe food for human consumption.
Friends, another area that merits special attention in this context is that of street foods and street food vendors. Recent growth in this sector has been phenomenal with important economic and nutritional implications in the urban context. Readily accessible and affordable to urban populations, they provide the energy and nutrient needs to large segments of workers and their families in the cities. In this scenario, BIS has recently finalized Indian Standard on basic requirements for street food vendors and I feel this is a noteworthy initiative by BIS.
These Indian Standards have immense potential to safeguard public health and also promote the confidence of the consumer on entire gamut of food industry, if implemented efficiently. Implementation of these standards can give rise to exceptional improvements in food safety performance, but requires high level of commitment and full functional involvement of all stakeholders, particularly the industry.
I wish and I am sure that this seminar will provide a good platform for mutual sharing of views to meet and resolve the challenges in ensuring and implementing Food Safety and Standardization. I wish the organizers and participants all the best in this endeavor and hope that this initiative will contribute to the ultimate objective of ensuring the food safety for our citizens. With these words, I, formally inaugurate the seminar.
OF CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION
AT THE NATIONAL SEMINAR ON ‘FOOD SAFETY – ROLE OF STANDARDS’
ON 28TH MAY, 2012 AT THE CENTER HOTEL, THE AVENUE CENTER, KOCHI:
Dignitaries on the Dias and distinguished participants:
It is a matter of great pleasure that Bureau of Indian Standards (BIS) is organizing this National Seminar on “Food Safety – Role of Standards” so as to create awareness and to provide an insight into the concept of Food safety with special focus on the role of standards for the larger benefit of public health.
We live in an age of contamination: of environment, food, water and of most other ingredients essential to human existence. For this reason this seminar, focused on one of these aspects, namely food safety, is of immense relevance to our individual and collective wellbeing.
"We are what we eat" is an old proverb. Our Scriptures say, “Annam Brahma, Raso Vishnu, Bhokta deva Maheshwara" (Food is Brahma, the essence in it is Vishnu, and the one who partakes of it is Maheshwara the lord Himself). The act of consuming food is considered to be a Yajna (sacrifice) and the offering goes to the digestive fire in the belly called Jattaragni. Our nutritional status, health, physical and mental faculties depend on the food we eat. Access to good quality food has been man's main endeavour from the earliest days of human existence. Food quality can be considered as a complex characteristic of food such as nutritional value, appearance, colour, texture and taste that determines its value or acceptability to consumers. Safety of food is a non-negotiable basic requirement of food quality.
"Food safety" implies absence or acceptable and safe levels of contaminants, adulterants, naturally occurring toxins or any other substance that may make food injurious to health on an acute or chronic basis. This definition implies that food safety goes beyond cheating on ingredients. It endangers life.
Food Safety has been a matter of concern in all ages. Kautilya’s Arthashastra has a section on the control of butchers and prescribes punishment for selling bad meat or fish. Perhaps malpractices with regard to other edibles did not exist then and until the advent of the modern age, man-made contaminants were not a serious factor.
Today, it is a matter of growing national and global concern. India has made significant strides over the past several decades in food production and in its exports. India is number one in the production of milk, sugarcane, cashew and spices and the second largest producer of rice, wheat, pulses, fruits (after Brazil) and vegetables (after China).
Although significant progress has been made in India in making food safer, millions of people still fall ill each year from eating contaminated food. Consumers are taking unprecedented interest in the way food is produced, processed and marketed, and are increasingly calling for strong initiatives from government and industry for food safety and consumer protection.
There is also an external dimension to the issue of food safety. We live in a world where food and agricultural products is an important segment of world trade. The globalization of the food trade offers many benefits to consumers, as it results in a wider variety of high-quality foods that are accessible and affordable. Global food trade also provides opportunities to earn foreign exchange, though, in order to be a successful food exporter, a country must produce food that is acceptable to consumers in other countries and which complies with the regulatory or statutory requirements of the importing countries.
Viewed from these angles, role of standards in the domain of food safety is immense. The main objectives behind formulation of standards include:
Promoting public health by reducing the risk of food borne illness;
Protecting consumers from unsanitary, unwholesome, mislabelled or adulterated food; and
Providing a sound regulatory foundation for domestic and international trade in food.
In this background, the role of Bureau of Indian Standards, the National standard body of India is significant. BIS is engaged in standards formulation and conformity assessment. It has made significant contribution by way of formulating a number of Indian Standards in various fields in accordance with the needs and priorities of our country and adopting various International Standards to suit our national conditions. BIS has formulated about 18700 Indian Standards, covering various technological areas. About 88% of Indian Standards have already been harmonized to International Standards where such International Standards exist. BIS has been promoting these Indian Standards through organization of seminars, like this one.
BIS has also formulated about 1000 Indian Standards in the area of food products and food safety. This includes IS/ISO 22000: 2005 ‘Food Safety Management Systems – Requirements for any organization in the food chain’. This is an internationally harmonized standard that specifies the requirements for a food safety management system, up to the point of final consumption. IS/ISO 22000: 2005 has emerged as the international bench mark for food safety.
Similarly, the three Indian Standards recently formulated by BIS which have been released just now, such as, Indian Standards on Good Manufacturing Practices (GMP), Good Hygienic Practices (GHP) and Food Retail Management (FRM) are also important in this respect as they act as prerequisite programmes (PRPs). And they delineate the basic conditions and activities that are necessary to maintain a hygienic environment throughout the food chain suitable for the production, handling and provision of safe end products and safe food for human consumption.
Friends, another area that merits special attention in this context is that of street foods and street food vendors. Recent growth in this sector has been phenomenal with important economic and nutritional implications in the urban context. Readily accessible and affordable to urban populations, they provide the energy and nutrient needs to large segments of workers and their families in the cities. In this scenario, BIS has recently finalized Indian Standard on basic requirements for street food vendors and I feel this is a noteworthy initiative by BIS.
These Indian Standards have immense potential to safeguard public health and also promote the confidence of the consumer on entire gamut of food industry, if implemented efficiently. Implementation of these standards can give rise to exceptional improvements in food safety performance, but requires high level of commitment and full functional involvement of all stakeholders, particularly the industry.
I wish and I am sure that this seminar will provide a good platform for mutual sharing of views to meet and resolve the challenges in ensuring and implementing Food Safety and Standardization. I wish the organizers and participants all the best in this endeavor and hope that this initiative will contribute to the ultimate objective of ensuring the food safety for our citizens. With these words, I, formally inaugurate the seminar.
INAUGURAL SPEECH OF PROF. K.V. THOMAS, MINISTER OF STATE (I/C) OF CONSUMER AFFAIRS, FOOD & PUBLIC DISTRIBUTION AT THE SEMINAR ON “INDIAN COMMODITY MARKETS AND FCRA AMENDMENT BILL, 2010” ORGANISED BY FEDERATION OF INDIAN CHAMBERS OF COMMERCE AND INDUSTRY (FICCI) AT NEW DELHI ON 4TH JULY, 2012:
Shri Rajiv Agarwal, Secretary, Department of Consumer Affairs, Shri Ramesh Abhishek, Chairman, Forward Markets Commission, Dr. Arbind Prasad, Director General, FICCI, Shri Venkat Chary, Chairman, MCX, Mr. Nick Ronalds, Executive Director, FIA Asia, President, Asia Markets, friends from the media, ladies and gentlemen:
I am happy to be here today amongst you at the Seminar organized by the Federation of Indian Chambers of Commerce and Industry (FICCI) under the title of “Indian Commodity Markets and FCRA Amendment Bill 2010.” This is indeed a very welcome initiative of FICCI. I congratulate FICCI on their pro-active efforts in organizing such an event as they help in generating a healthy debate on a crucial subject of commodity futures trading and its contributions to the economy.
The commodity futures markets in India have come a long way since 2003, the year when three on-line electronic trading exchanges came into existence and futures-trading in over 100 commodities was allowed. It is a matter of great satisfaction that over the years, the volume of trade has increased considerably with the number of members and clients and contracts traded on the exchanges having increased significantly.
While there is an understandable excitement regarding the significant growth of this market, it cannot be denied that there are also apprehensions in equal measure among some quarters whether the market is truly achieving its objective of price discovery and price risk management and helping farmers and hedgers. We need to take a balanced view and address the apprehensions as well as the challenges before us to enable the market to live up to the expectations of farmers and hedgers. It is well known that hedgers transfer their risk in this market which is assumed by the speculators who bring in the liquidity and that greater participation and volumes lead to a more efficient price discovery, thereby reducing the possibility of price manipulation. An analysis of the trade volumes on futures market indicates that in case of some commodities, the volumes are much higher than the open interest, thereby indicating that the extent of hedging is much less than the speculative volumes generated. It is also seen that in respect of a number of commodities, the volume of participants is not very significant. It is a matter of concern for us, as this will result in poor quality of price discovery in such contracts. There are also apprehensions in some quarters that these markets are contributing to, if not leading to, price rise and price volatility of commodities.
A number of studies and reports do indicate that futures trading in commodities cannot be said to be responsible for price rise. It is, however, possible that if futures-market is not aligned properly with the physical market, price discovery in the futures platform may become distorted which may be misused by vested interests. Such a situation can only be avoided when hedgers and potential hedgers are encouraged to participate in this market in large number.
The Forward Markets Commission (FMC) has been taking a number of initiatives to address the above challenges. To improve hedging which is reflected in higher open interest, the Commission has asked all the commodity exchanges to prepare a road map for improving the volume open interest ratio by increasing hedgers’ participation. We need to create awareness among the hedgers and industry associations about these critical issues – it is here that I would expect and request industrial bodies such as FICCI to play their important role in creating such awareness among the potential hedgers for using the commodity futures market as an effective tool to manage their commodity price risk.
I am told that the FMC has also started a comprehensive exercise for alignment of futures market with the physical market. A staggered delivery system has been introduced in a number of agricultural commodities. This has already resulted in significant reduction in excessive speculation in the near month and in reduced price volatility in these commodities. The FMC is also reviewing all the futures contracts traded in the market to examine if those are suited to the needs of the physical market participants. The feedback of physical market participants and other stakeholders has been sought and it is proposed to review these contracts and make suitable modifications as required.
The Government is also considering constituting an Advisory Committee to provide an institutional mechanism for the Government and the Commission to consult all the stakeholders regarding the regulation of commodity futures market. I have no doubt that these measures are bound to bring about much needed changes in the working of these markets by bringing down excessive speculation, improving hedging and better aligning with the physical market.
One of the primary objectives of Commodity Markets is to help farmers to get best possible price for their produce. The farmers, especially small and marginal, are not able to participate in the market directly. They do so through aggregators. Therefore, the FMC has asked the exchanges to promote aggregators on a pilot basis in the agricultural commodities so that the market benefits the farmers much more. The Price Dissemination Project of the Commission is being implemented across the country with 1400 ticker boards already have been installed and 7500 proposed to be installed during the next 5 years. The price signals coming from futures market also help farmers to take important sowing and marketing decisions. Farmers would be benefited far more by introduction of options which would be possible after the amendment of the FCR Act.
The participation of institutions such as Banks is also necessary to bring adequate liquidity to this market. Introduction of investor protection measures will instill a sense of confidence in the retail clients encouraging them to participate in large number. Investor Protection Fund has been set up in each exchange with over Rs. 65 crores and a trust is being set up to operate the fund. The clients are now getting SMS and Email alerts every day regarding the trade done in their account. A uniform KYC norm has been introduced and quarterly settlement by members with clients has also been done. In the last one year FMC has proactively taken several such measures. There is also a need to undertake a major media campaign in collaboration with the Exchanges to increase investor education in all the States on a sustained basis.
The need for strengthening regulatory mechanism through Amendment of FCR Act has been discussed over the years and it is certainly necessary to strengthen this mechanism. The proposed amendment of FCRA would enable the FMC to play a more effective role in regulation of these markets. The amendment would also bring in much-needed new products such as options. However, there is also a need that all the stakeholders appreciate the need to take this market to a new level where the hedgers and farmers would be the primary beneficiaries and this market would play its rightful role of providing price discovery and price risk management functions to the physical market participants. This would provide necessary confidence to the policy makers as well as law makers to bring about the necessary changes in the legislative structure of the commodity futures market.
With these words, I have great pleasure in inaugurating this Seminar.
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