Rice experts have discouraged Singapore from setting up an international futures trading market on the Asian staple,saying it will not help in price management.
The experts had discussed the rice futures trading in Singapore on the invitation from the Centre for Non- Traditional Security Studies at the S Rajaratnam School of International Studies.
“Rather than supporting the proposal outright,many rice sector experts advocated a cautionary approach to considering an international rice futures market in Singapore,” said the centre in its reports on the findings of the experts who met in March this year.
“Some experts indicated that a rice futures market would reflect rather than improve current market conditions,including price volatility and complex trade dynamics,” it said in the report released this week.
The experts were concerned about the impact of rice futures on the region’s food security,said the report,adding that they were uncertain about how such market would affect the security of the poor in terms of food and livelihoods.
Many experts had argued that a rice futures market should not be seen as a stand- lone tool to improve the sector,and called for considering incremental steps and alternatives to the futures market.
The experts called for tangible steps to improve the existing cash market for rice functions and pointed out that some of the Asian governments’ control on rice trading would be one of the obstacles to futures trading.
Most of the Southeast Asian governments control rice trade to ensure stable supply of the staple.
Rice imports are regulated in Indonesia and the Philippines,while the governments in Thailand and India are regular buyers of the grains to ensure subsidised distribution among the poor,experts said.
The National Security Coordination Secretariat of the Singapore Prime Minister’s Office had asked the centre to seek views on the futures market from international experts,traders and futures exchanges.
Industry observers said Singapore aims to be a major agri-product trading centre having established as an Asian financial hub.
Black pepper is one of the agri-products currently traded in Singapore’s futures market.