There is a need to move agriculture sector to the market system of an economy. This requires agriculture to be organized just like the industrial and service sectors of the Madagascar economy. In addition, flow of corporate and institutional investment in this sector at present is negligible. There is, therefore, the need to facilitate the flow of easy credit to the farmers as a priority, through the use of warehouse receipts to get pledge financing from banks. In a nutshell, there is a need to integrate production, storage, transportation, trading, financing and marketing of agricultural product in Madagascar.
MEX MADAGASCAR would bring about converge of large-scale processors, traders, and farmers along with banks. MEX MADAGASCAR would provide a common ground for fixation of future prices of a number of commodities enabling efficient price discovery/forecast. In addition, the use of hedge in different and diverse commodities would also be possible with help of MEX MADAGASCAR.
Benefits to producers
- Efficient Price Discovery/Forecast made by the MEX MADAGASCAR will enable producers decide cropping pattern and investment on inputs.
- Price risk management would be possible via MEX MADAGASCAR.
- Price Stability resulting from equilibrium in supply and demand for a commodity would be possible through MEX MADAGASCAR.
- Warehouse Receipts (WRs) introduced for trading in futures on the Exchange would lead to proper grading, standardization and scientific storage of agricultural commodities resulting in value addition and better price realization to producers.
- WR's could be discounted by producers with banks and used by producers to raise finance quickly. MEX MADAGASCAR would help to provide liquidity and a viable secondary market for WR's as a better financial instrument.