The Intergovernmental Team (IGG) of FAO has advised the probability of introducing efficient futures marketplace for tea trade.
In its track record paper, the IGG has noticed, “With espresso as a precedent, tea futures contracts seem to be achievable. And, while not a panacea to all of the producers and exporters challenges, futures provides an efficient way of dealing with the price tag and earnings fluctuations.”
It expressed surprise that while there is a lively futures marketplace for cocoa and espresso, there is no futures marketplace for tea.
“One cause is that cocoa and espresso are seasonal with greater hazard of marketplace disruptions and a increased need for shortage and consequently publicity to the hazard of price tag falls for individuals proudly owning saved generate,” the paper pointed out.
“The tea marketplace is additional segmented. Yet, the variations are a make a difference of degree. Cocoa and espresso are also segmented but tea is additional segmented. Therefore, it would seem to be that the procedures adopted in, say, espresso to match the need for standardised futures contracts with hugely assorted physical solution are a excellent starting up level for tea futures,” the IGG has noticed.
It has, nonetheless, cautioned that further more work is expected in shifting in advance towards tea futures contracts.
“This involves setting up the awareness base on tea buying and selling and marketplace procedures, obtaining market settlement on what kinds or grades can kind the basis for a standardised futures deal,” it has pressured.