Food Security in India: Does the Futures Market for Wheat Meet the Bill?

Abstract

The thrust of agricultural policy during the sixties and seventies was towards restriction on trade. While this might have been the justified in the years of shortages the present trend towards surplus production of foodgrains necessitates a review of such restrictive policies. Also agricultural policy needs to tap the potential of the market by creating the necessary price incentive and the information processing mechanism of the market so as to ensure long-term food security. An efficient commodity futures market along with removal of restrictions may be the right long term strategy for India's food security.

In this context this paper seeks to analyze the long term trends in area, production, yield and prices of Wheat. It dwells upon the question of whether futures' trading in wheat is integrated with the long-term trends and relationships in Indian Agriculture.

Keywords: Agricultural Markets, Food Security, Commodity Futures Market, Restrictions on internal trade

JEL Classification: Q11, Q13, Q18, Q19