COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

Two more agencies join race for copra futures centre

D Jose in Thiruvananthapuram

The task of identifying the city/town for setting up the proposed coconut oil and copra futures exchange has become contentious. The number of aspirants has been steadily increasing.

The latest to join the race is the Indian Pepper and Spices Traders' Association and the Alleppey Oil Millers' and Merchants' Association. The Cochin Oil Merchants' Association, coconut trade bodies in Tamil Nadu and Bombay city oil merchants have been lobbying the government to set up the centre in their own territory.

The entry of two more agencies has made the task difficult for the Forward Markets Commission, the regulator of futures trade.

The IPSTA has been running the world's first International Pepper Exchange at Kochi for the past 18 months. The AOMMA had run the futures trading in coconut oil and copra in collaboration with the COMA from 1956 to 1971.

The former has pinned its hopes on its experience and the vast infrastructure it has built up for the IPE. The trading halls, online system and the clearing exchange are definite advantages the IPSTA has over others.

The IPSTA has made a strong case for the exchange during the visit of a high-level team of the FMC led by its chairman V K Agarwal to Kerala recently. The former plans to convert the pepper exchange into a multi-commodities exchange so that they can attract more commodity exchanges in future.

However, the FMC team, which reviewed the functioning of the IPE, is said to be unimpressed by its claim.

Sources said that the FMC team questioned the IPSTA's capacity to manage the coconut oil exchange when its has failed to make the IPE fully operational in 18 months.

Pepper trade through the IPE has been negligible. Neither domestic nor foreign players have shown interest in the exchange. There has been only one foreign member in the exchange ever since its inception.

The team found lacunae in the management of the IPE and has asked it to identify the causes and take remedial measures immediately. These will help the exchange to become the nerve-centre of global pepper trade, it opined.

The IPSTA's claim has come as a big surprise for the COMA. The latter has been lobbying for the exchange citing its experience in futures trading from 1956 to 1971.

COMA president P V Alexander feels that the IPSTA will not be able to manage the proposed exchange since they have no experience in the coconut trade. Coconut and pepper are entirely two different commodities, he said.

The talk is ridiculous that lack of infrastructure goes against the COMA's efforts to set up the exchange, he said. "We have enough funds and space to build the necessary infrastructure. We are in a position to build up the necessary infrastructure in no time, once the exchange is allotted to us," Alexander said.

He claimed that the rates provided by the COMA during the time it conducted the futures trading had acceptance throughout the country.

The COMA is prepared to associate with the AOMMA in running the exchange, in view of its past experience and the importance of Alappuzha (aka Alleppey) as a major trading centre of copra.

Sources at the COMA said that if the AOMMA were interested, they would submit a joint bid.

The Tamil Nadu and Bombay lobbies are not prepared to give up their claim easily. The coconut traders in Tamil Nadu have made a strong case in view of the emergence of the state as a major coconut producing state.

The TN traders claimed that Kamgayam has more trade volumes than Kochi.

The traders in Kamgayam have been trying to move out of Kochi's sphere of influence in determining prices and assert itself as market leader. The Kangayam traders have been upset with the wide fluctuation in prices in Kerala, which worked out to the detriment of coconut oil trade in Tamil Nadu.

The Bombay lobby's claim is that all the commodities' exchanges should be located at one place, which will make it a centralised and thus convenient operation.

RELATED REPORT:

Three cities vie for coconut futures centre

Business news

Kerala