Commodities Exchange: Options for Addressing Price Risk and Price Volatility in Rice

Abstract

In this paper, Framroze Pochara, a capital markets veteran with over 25 years of experience in the industry, takes off from the differing views of two prominent authorities about rice futures in the Association of Southeast Nations (ASEAN) and tackles various options at the country and regional levels to foster price discovery and price risk management. He presents examples of countries successfully using commodities exchanges and different hedging instruments and posits that there is no reason why these very same instruments cannot be used in the ASEAN region to manage the risks of rice price volatility and help address food security. The message is that there are tools that can work but these need to be tailored to local conditions. Stakeholders, including the public and private sectors and ASEAN, need to lay down the essential infrastructure that can help bring in price stability and better price realization to farmers.