Commodities are in the blood for a few communities

Commodity markets are routinely regarded as fundamental economic institutions and the long-standing and quite varied ethnic and linguistic perspectives on traders are often overlooked.

In market yards, one often encounters enquiries about one’s community and the place of origin after the initial introduction. Further, on exploring the softer dimensions of trade, one can observe a subtle ‘in-group’ favouritism. It seems to point towards a tacit understanding or norms about how to treat members from the same community.

Traditional trading communities in India have been dominated by Aggarwals and Guptas of the north, Chettiars and Nadars of the south, Gujarati Jains and Baniyas, Muslim Khojas and Memon in the West and Marwaris all over India. People from these trading communities are not only seen to be very good at getting the best deal in negotiations but are also known to honour a contract since they know the importance of business more than any professional in the trade. 

The commodity market exists on the cusp of informal sectors of society and regulated markets. In many countries around the world, specific subgroups of the population carry a reputation for being particularly adept at running commodity trading. For example, the Jews in the bullion trade.

While a large number of communities are part of the market, one can always find trading traditions in India finding its roots in the practices of the Baniya and Vaishya communities. The predominance of a community can also be observed in a particular geography. One should not be surprised to see a large number of Kutchies (from Gujarat) trading pepper in the heartland of Cochin’s Jewish Town. They are a vibrant community which has managed to assimilate fully with the local culture while retaining its identity. The ethnic and linguistic identity continues to determine the basis of trade, albeit in a different way. Commodity traders also operate in mutually interactive community networks with ethnic, religious, family or linguistic ties with an opportunistic concentration towards profit. In this respect, the trading habits of Indians are not very different from those of Chinese and Arab traders. The Nadars are expert traders mainly located in south India. In Calicut, they have a belief that whatever they earn in Calicut is spent their itself. This is expressed in their saying in Tamil: Kallikkottai kaashu Kallai paalam thaandaathu(money earned in Calicut will not cross Kallai bridge.) It may not always be the case.

There is a possibility that different ethnic groups might disproportionally adopt commodity trading not because of a comparative advantage in that occupation but because of differential access to other opportunities (or lack thereof) for the group. At times, these trading communities pay for protection and market access and have found conducive freedom to trade. Whenever the protection becomes too expensive, they usually have the leeway for moving elsewhere (for example, Assam and Bihar).

Approaches to commodity markets have often focussed on the formal properties of transaction systems as frameworks for organising behaviour. However, within wider ethnographic contexts characterised not only by economic exchanges, ‘community arenas’ act as nodes of information flow. The transfer of trust is crucial to minimise transaction costs in a market that is characterised by moving commodities over long distances and delayed payment (seller’s credit).

Sometimes, the specificity of the market environment equally facilitates the use of ethnicity for commercial purposes such as the delimitation of market niches. 

Published in The Economic Times