The role of commodity derivatives and risk management especially in black pepper
India, a commodity based economy where a two/third of the more than one billion population depends on agricultural commodities, surprisingly has an under developed commodity market. Commodities actually offer immense potential to become a separate asset class for investors, arbitrageurs and speculators. A commodity may be defined as an article, a product or material that is bought and sold. The commodities markets are one of the oldest prevailing markets in the human history. Commodity market is a place where trading in commodities takes place. It is similar to an equity market, but instead of buying or selling shares one buys or sells commodities. Risk management is the process of identification, analysis and acceptance or mitigation of uncertainty in investment decisions followed by coordinated and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events or to maximize the realization of opportunities. India is the most important producer of Pepper accounting for about 50 percent of the world production. Black pepper is the most important spice of India and world due to its day — to-day use. Black Pepper (Pipernigrum linn), known as the "King of Spices" had remained the most precious and valuable form of spice in the world. It is also called as "Black Gold" due its durability and value. Black Pepper is the 3rd most added ingredient in food among the all range of spices.