4 Reasons Why A Farmer Should Trade Agricultural Commodities

Agriculture is one lucrative and legit way of making money if you have the right information and follow the right steps. Unfortunately, despite 1.3 billion farmers and increased demand for food and food products, farmers are often regarded as poor because of the low income derived from the sales of agricultural products.

However, with the emergence of digital agriculture and investment platforms such as Viable X, sales of agricultural products and commodities have become easy and more profitable. As a result, agricultural commodity trading is making waves in the sales of agricultural products, and farmers should not be left out.  Here are some reasons.

1.Price risk mitigation

Farmers are always exposed to the risk of low commodity sales and have been victims of disorganised markets. Their engagement in commodity trading will create access to real-time price information, which would help them in sales negotiation. Commodity exchange does not include price bargaining; the farmers can sell their commodity at spot prices without losing the low buyers.

2. Price discovery

Commodity exchange presents farmers with the opportunity to discover spot prices of goods and disseminate the information among themselves. Even when farmers are not trading on the commodities directly, being aware of the prices will help them bargain in the market. Agricultural commodity trading provides farmers with the opportunity to sell their products through means other than local or international markets. They can sell directly in the futures market or indirectly to middlemen that buy physical commodities and sell in the futures market. Upon discovering the commodity prices, farmers can decide which crop to cultivate and the right time to sell their produce.

3. Increased production

Commodity exchange allows farmers to increase production due to better alternative markets for the sale of produce. It provides small scale farmers with the opportunity to cultivate more, access better markets and thus, increase incomes. In addition, farmers enjoy the privilege of price discoveries and transparency through commodity trading, possible financing and production assistance. Many agricultural trading platforms like Viable X provide financing opportunities for farmers to increase their production and make sales through commodity exchange.

4. Increased economic growth

Price risk mitigation, price discovery and increased production are geared towards increased economic growth. The commodity exchanges bring about a large volume of sales, large networks, multiple traders who have piles of produce in their shop as selling in futures at the back terminal. Farmers are encouraged to produce in higher quantity which most of the time are financed for exportation. This provides a means of foreign exchange, which is a major source of national revenue.

Commodity trading introduces increased demand for agricultural products such as grains, livestock and soft commodities, increasing farmers’ productivity, sales and income in the local, international and commodity markets. Viable X provides an opportunity for farmers to utilise every benefit of agricultural commodity trading.

Image by photoAC from Pixabay

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