InvestorQ : How do commodity markets also facilitate financing of commodities?
tanvi Patel made post

How do commodity markets also facilitate financing of commodities?

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Dia Deshpande answered.
3 years ago
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The big challenge in Indian agriculture is that farmers are too small and hence too dispersed. The need of the hour is of an aggregator. Currently, the middlemen play the role of aggregators but then it is not exactly a transparent mechanism. An organized commodity market can play the role of an aggregator of agricultural products more efficiently and more effectively. The market provides an organized and guaranteed mechanism for aggregating and selling agricultural products and small and dispersed farmers can make the best of it. Financing is the second aspect of commodity markets. The commodity markets have an organized and institutional mechanism to raise financing against warehouse receipts. Hence the agriculture sector does not have to depend on unorganized financing.

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