Important Commodities - International Commodity Management - Lecture Slides, Slides of International Management

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International Commodity

Management

An Overview and brief on

Important Commodities

Definition of Commodity

• A good that has a physical attribute and must

offer a convenience

• A commodity has same physical properties

and are freely interchangeable

• Basic goods which are uniform across

producers. Slight variations do not change its

fundamental properties

• Normally produced in large quantities and are

not differentiated by branding

Types of commodities

• In India, Agricultural commodities are

important since they affect the livelihood of

large population

• Important Agricultural commodities- Wheat,

Rice, Maize, Chana, Tur, Sugar, Soy Complex,

Rapeseed, Palm oil, Pepper, Jeera, Turmeric,

Guar Seed

• Non-Agricultural - Gold, Silver, Crude, Copper

and Power

Markets

• Markets were common place for determining

prices based on supply and demand factors

• Historically, brokers or intermediaries have

played an important role in commodity

markets

• The basics of commodity trading have become

sophisticated but the essentials remain the

same

• Agricultural products trading was a foundation

on which markets have evolved to its present

dynamic operations

Agricultural Marketing

• Important component of Indian Economy
• Challenges in finding markets for surplus
• Response needed to challenges and

opportunities of global markets

• Internal Agricultural Marketing System requires

to be strengthened

• Maximum benefit to Producers
• Globally competitiveness is also a pressing

requirement

• Agricultural Marketing Reforms and Market

Infrastructure

Government Agencies

• Central Government Organisations are involved in Agricultural Marketing
• Commission for Agricultural Costs and Prices, Food Corporation of India, Cotton and Jute Corp
• NAFED is an important organisation and is an apex body of state marketing federations and handles domestic and export marketing
• Central Warehousing Corporation is one of the biggest warehouse operators and provides logistical support
• Directorate of Marketing and Inspection of Ministry of Agriculture administers laws and coordinates with the States
• Network of Cooperatives at local, State and National Levels who assist in Agricultural Marketing

Indian marketing operation – APMC

Act

• State governments have State Agricultural Boards which set up Mandi Boards
• The Mandi Boards have representation of both farmer and trade committees
• Mandis serve as delivery point for commodities either by farmers or agents
• Agricultural Produce Market Regulation Acts of various States ensure regulations for providing efficient system of buying and selling the commodities
• The Mandis serve as delivery points for commodities and charge basic transaction fees and other fees in the form of taxes
• An inter-ministerial group will be reviewing the Act to prevent cartelisation by traders and allow free movement of essential commodities

Contract Farming & Commodity

Exchanges

• A new concept for cultivating and harvesting on

behalf of large organisations

• Prices are pre-determined and offer a higher

price to the contracted farmers

• Success stories include NDDB and PepsiCo
• Commodity Exchanges have set up national level

electronic spot markets

• These provide a platform for competitiveness and

provide value added services

• Indian farmer has still to match the returns that

the farmers in developed world are able to obtain

Guargum

• A white to creamy coloured, free flowing powder and free from extraneous matter
• Ability to suspend solids , bind water by hydrogen bonding, control viscosity of aqueous solutions, form strong tough films
• Utilised in various applications like food, paper, textile, oil drilling, mining, ore flotation
• Harvested in late October, early November, main areas of cultivation are Rajasthan, Gujarat, Haryana
• World demand is 150,000 Mt/ year and India produces 80 - 85 % of global supply
• Pakistan, Sudan are other major producers
• USA is the world’s largest importer followed by Germany and China

Applications of Guargum

• Ice Cream/ Dairy Products – provides smooth and creamier texture and prevents meltdown
• Bakery Products – Improves texture and increases shelf life
• Pet Foods, Soups – as a viscosifer
• Cosmetics – as conditioner cum viscosifer
• Pharmaceuticals – As a water binding agent
• Explosives – Water binding agent for aqueous slurry explosives
• Textiles – as thickener for direct as well as discharge printing
• Oil Well Drilling – as fluid loss controlling agent

Non-Basmati Rice

• Rice other than basmati rice is generically called

non-basmati rice

• India’s export of non-basmati rice was Rs.365.

crores in 2009-10 & Rs.222.21 crores in 2010-

• Major export destinations in 2009-10 were Saudi

Arabia, Maldives, UAE, Nepal, Malaysia, Sri Lanka

• Major exporting countries in the world are

Thailand, USA, India, Vietnam, Pakistan, Italy,

Brazil, China, Uruguay, Spain

• Major importing countries are Saudi Arabia, USA,

Japan, CA’te d’Ivoire , UK, Malaysia, France,

Nigeria, South Africa, Germany

Basmati Rice

• Long grain aromatic rice with distinct flavour
• Agro-climatic conditions and harvesting process

ensures the special appeal

• Major growing states are J&K, HP, Panjab, Haryana,

Uttarakhand and Western UP

• Major export destinations are Saudi Arabia, UAE,

Iran, Kuwait, UK

• 2183501 MT valued at Rs.10,578 crores was

exported in 2010-

• Total basmati crop production is estimated at 7

million tonnes for 2010 - 11cropyear

Wheat - Indian Scenario

• Wheat cultivation areas are UP, Punjab, Haryana, Rajasthan, MP, Gujarat and Bihar
• UP, Punjab and Haryana are the major growing States
• Wheat is a Rabi crop grown in winter season
• India produces distinctly superior variety of Durum wheat
• India’s wheat production during crop year 2009-10 was 80.71 million MT as compared to 80.68 in previous year. In 2010 -11 estimated at 85.93 million MT
• Wheat and wheat flour play an important part in India’s economy
• India is the second largest producer of wheat

Wheat - Trade

• Global wheat production and global trade was 680 million MT and 134 million MT in 2009-10.
• Global wheat production in 2010-11 is estimated at 648.19 million MT
• Ban of export of wheat was lifted in Septembe
• Major producing countries are China, India, Russia, USA, France, Canada, Germany, Pakistan
• Major exporting countries are USA, Canada, France, Australia, Germany, Russia, Ukraine
• Major importing countries are Algeria, Italy, Japan, Spain, Brazil, Nigeria, Netherlands, Rep. of Korea, Turkey and Germany