Trading Agricultural Products through Commodity Exchange

Last time we discussed on how the gradual process of agriculture commercialization can be initiated. Along with the strategy of farm-area, we also looked into the Agricultural Information System (AIS) that can be established and the usage of which can help us know, in general, about the total production and consumption status; besides that also about what are the challenges being faced at the grass-root level and what could be possible issues that need to be taken care of while designing the policy for escalating the commercial trade of few viable agricultural commodities through the commodity exchanges contributing significantly to the market price and overall economy.

 
There are few factors that need to be addressed well for giving the commercialized trade a better direction. The following flowchart will try to demonstrate few of those factors:

Looking into the simple flowchart above, there are few major things that need to be addressed. The service delivery mechanism that the exchange has to ensure is an important factor. There must be such environment where the traders and local level farmers can believe that their money and their products, simultaneously, will create sufficient value for them and that it will help magnify the significant improvement in their livelihood status. One major issue that we see these days are the low income generation by the farmers and the small-holders. Especially, people in our country are engaged in agriculture just as a seasonal occupation which is neither helping them improve their livelihood status nor earning them a good income. This is a purely demotivating factor.

When we look into the export portfolio of the country, we can easily find that the products are primary products- not even first phase processing is done. This decreases the value of the product significantly unlike at least processed at first phase. The product and destination diversification is also very poor. We have very similar types of products and India is predominantly the trade partners of more that 80 percent of the trade. This gives monopoly to our trading partner and our points on negotiation come down. Similarly, private sector participation can enhance the scale of production as well as the marketing and promoting strategies which can contribute highly to the commercial trading.