Speeches and Remarks 2006
Remarks By George Deikun
USAID/India Mission Director
ASSOCHAM'S 2nd Annual Commodities Conference
New Delhi, June 8, 2006
As Prepared For Delivery
June 9, 2006
Good morning and welcome. I am pleased to be here with you all today and would like to especially acknowledge the Minister of State from the Ministry of Consumer Affairs, the Chairman of FMC, Mr. S. Sundareshan, Managing Directors Mr. Shah, Mr. Ravikumar and Mr. Gupta. Finally, I would like to commend the team at ASSOCHAM and President Agarwal for their initiative in bring us together here today
I know I don't have to say a lot to participants in this conference about the principles behind and importance of commodity or futures markets. There are many experts in the room from all dimensions of the business.
I would like to start with some observations about markets in India and why they interest the agency I represent - the United States Agency for International Development (USAID).
India has a rural majority that is largely dependent on growing, consuming and selling a range of agricultural commodities. Globally, India is a leading producer - and consumer - of many of these products. Commodities available in India's markets - some of which are produced across Southeast Asia - have attracted buyers from countries to the east, north and west for at least two millennia. In the past, India was a known leader in international commodity markets, and is now seeking to regain that status.
A number of current Government initiatives are indicative of the concerted effort to improve these markets. Marketing regulations are now changing and new arrangements and forms of organization are being encouraged. Commodity futures trading has opened up and is gaining support. Interstate restrictions on food movement have been lifted. This is a key step toward realizing India's new goal of an internal common market.
USAID believes that these initiatives help to create new opportunities to re-engage in the agricultural sector. We have chosen to focus some of our work in the area of marketing in the agricultural sector for a variety of reasons.
A thriving agricultural sector will help to spur economic growth and reduce poverty. Thriving will mean increased rural income. Farmers will have better information about what consumers want and they will have a greater ability to meet these demands in a more productive way. Alternative venues and arrangements for selling, storing and financing will help the sector to grow. Giving producers access to more information about current and predicted prices, more storage and financing options, helping them to more directly access consumers or retailers and processors will all contribute to this growth.
Such changes will also improve efficiency. Giving farmers better options for buying and financing inputs and selling produce will lead to lower production costs and higher and more stable income. This will all lead to a more secure household food supply.
Finally, as the sector becomes more productive and efficient subsidies will become redundant and there will be a positive impact public finances.
In India USAID has started several initiatives to test how we can improve market chains in agriculture and inject more productivity and efficiency into the sector. We have helped to develop and funded partnerships between U.S. land grant universities and Indian state agricultural universities to improve agribusiness and marketing capacity.
Currently, we support a partnership between Michigan State University and the Maharasthra State Agricultural Marketing Board, to find better ways for farmers themselves to add value to their produce and market their products so that they can capture more of final selling prices.
USAID has also arranged for cooperation between the U.S. Department of Agriculture and the Union Ministry of Agriculture through the National Institute of Agricultural Marketing. This effort has two major objectives -- improving the quality and timeliness of market information to farmers and creating market-serving product grades and standards.
Currently we are developing a program to assist the Forward Market Commission in the Department of Consumer Affairs and with the national exchanges to strengthen commodity futures market regulation. This program will help to build awareness and appreciation of those markets among potential users. It will also help to create the mechanisms that make it possible for farmers to use those markets.
Our approach in India has been and still is to look for niches where U.S. advantages - things Americans do best - can contribute successfully to India's economic growth and also help the poor who are often left behind. Increasingly, we rely on partnerships that leverage human capitol and intellect, technology and financial resources. These partnerships often bridge the public-private divide and build on and use the strengths of all parties to tackle common problems.
It is our feeling that there is room for greater cooperation in the area of agricultural marketing. There can be more cooperation and partnerships among the people and organizations represented that are here today. I anticipate that this program, and others like it, will go far in defining the issues and developing the understanding and appreciation of working together for change.
Thank you.