By Binu Alex
When I put here with deliberate intentions of how Google operations could have inspired Indian commodity players (read commodity bourses), there could be some eyebrows raised and some may term it as absurd. I accept both with all humility.

Yes, it could be absurdity at its best, but there is enough wisdom for a few intellectual souls to fathom, at least a minority few. Let’s see how wise or absurd my arguments are.

When Google started its search engine, every one in this world laughed at it because they believed there was no space for yet another search engine since the internet space was flooded with search engines. But Google not only proved they can be different but in the process they also erased all other search engines from the arena.

But how and why did Google succeed? Many of us do not realize that by searching a key word in Google, we are contributing to its revenues and there are billions of us who make this revenue model work. Now this can be replicated in commodity exchanges too but with a little twist.

My interaction with farmers in both prosperous regions as well as the suicide prone areas of India revealed one point and that is total ignorance of Futures market prevailing in India. They haven’t even heard of electronically traded exchanges. For the record, the exchange authorities – both MCX and NCDEX – claims farmers don’t come even close to Futures trading anywhere in the world. Could be true but let’s follow Google.

Google was also not a necessity when it was launched. There were other search engines to cater to the Internet population that existed then. What is interesting here is that Google turned an entire generation to search what they need in their day-to-day life. Now they don’t search, they Google.

Competition is something that could have done wonders in Indian commodity scenario unlike what you see between Internet giants. (My Microsoft Office doesn’t even have Google in its dictionary) But may be because of regulatory issues, the exchanges have competed themselves to abstain themselves from the countryside and concentrate on the second level of agriculture players – traders who purchase agri products from farmers – instead of targeting the farmers themselves.

Tokenism has no alternatives in Indian sub continent. That is the reason why some exchanges have put price tickers in post offices in rural areas to disseminate price information from the exchange. But this price info is of no use to the farmers since they do not have help on the ground that can synchronize the ground realities with the information they receive.

Commodity exchanges are not merely for speculators. Farmers should also have equal participation in these exchanges. Ironically the very motto of any commodity exchange is to have a better price discovery mechanism. But then why are the farmers kept away from this very objective?

Yes, a small and marginal farmer cannot participate in exchanges directly. But they can always form a body and participate. Who will help the farmers to build such a body? Will the agriculture ministry help them? Will the exchanges extend their helping hand? Will the banks enter into this arena? The plain answer is that no one is interested.

Being perishable item, the farmers have to compulsorily do away with their produce within a stipulated time. Since they don’t have storage facilities, they cannot store it either. So the powerful traders come in the picture. They purchase the produce at cheaper rates, store it and play in the exchanges or sells at premium when there is a supply demand gap.

If traders can do this, why cant the farmers – original owner of the produce – carry out the same activity? Absurd again? Not really. They can do this with ease. Just compare how Google did this to their business.

Google developed Android – open source operating system for mobile phones. It is distributed free to the manufacturers of phones. Already more than a dozen companies have grabbed this OS and have put it on to their smart phones and 32 carriers in 26 countries are already using it. What is that Google is going to benefit from this? On the face of it nothing but Google is looking not at you and me but generations ahead – a reason why they are so successful and our traditional companies so dreadful.

Mobile search is the future. Shortly more and more people will search on mobile than they do on their larger screens. Google saw mobile searches increase 30 percent on the service in the third quarter as Google CEO Eric Schmidt puts it, “Android adoption is about to explode.” Now imagine what our Indian commodity bourse bosses say, “Farmer cannot participate in commodity Futures”.

Indian companies always adopt what I call as Sabeer Bhatia approach. Success of Hotmail has not helped Bhatia to succeed in his next ventures all of which miserably failed. They failed because he built on ideas, which were of no use to the people.

Likewise, commodity bourses comes out with ideas which helps no one but waste some more space in the newspapers as news items. On the ground, they are of no use just like Bhatia’s ventures.

Agreed that the duty of MCX or NCDEX is not to help the farmers. Their primary duty is to operate and innovate electronic trading platform. By that logic, Google shouldn’t be doing all what they are doing in their labs. If you build great cars, you should have roads to drive. If you manufacture rail coaches, there should be railway lines to run. Similarly, if you have electronic trading platform, you should have the real people to participate in it. It is with this conviction that Google developed maps spending millions of dollars.

One company, which saw a great potential amongst the Indian farmers, is not an Indian company but a multinational – Thomson Reuters. Its service that brings commodity prices, crop and weather data to Indian farmers via mobile phone is gaining momentum and popularity. Why is that the Indian commodity exchanges didn’t attempt to get its hand to such a service?

So when will the commodity exchanges follow Google? Your thoughts on this absurdity are welcome. Write to news@commodityonline.com and if found worth publishing, we will put it on.
Happy Diwali

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