DA, PSE move towards agricultural commodity trading

October 30, 2009 11:45 pm 

By Lilybeth G. Ison

MANILA, Oct. 31 — The Department of Agriculture (DA) and the Philippine Stock Exchange (PSE) on Friday sealed a partnership that will lay the foundation for a commodities trading platform in the country.

PSE President and Chief Executive Officer Francis Lim, in his speech, said that this partnership "allows the country to respond actively to the changing landscape in the financial and commodities markets."

"We are very thankful to the DA for its support to this milestone project for the study of an organized commodities market in the Philippines," he said.

Lim said that an organized commodities exchange can help relieve the pressure on commodity prices due to supply and demand conditions. Price transparency allows farmers to get better prices for their produce as intermediation costs are reduced.

"A growing population and increasing urbanization will increase demand for food commodities but climate change and urbanization pose threats to land supply, one of the most critical inputs for food production. This combination tends to put tremendous pressure on food prices. An organized commodities exchange can help address this problem by enhancing price transparency and minimizing risks in the trading of commodities," he pointed out.

Under the agreement, the PSE and DA will work on a trading system that will link Filipino agriculture farmers to profitable markets for products such as rice, corn, sugar, coconut, among others.

It also stated that the assistance to be provided by the DA will include support for the enactment of laws, rules and regulations and circulars necessary to create an enabling environment for an organized commodity market for agricultural commodities.

"Bringing in additional investment products through the proposed commodities exchange presents a whole new motive for the public to boost investments in our stock market," said Lim.

"With the commitment of PSE and DA in this endeavor, we are hopeful that we should be able to see one day, a successful commodities exchange that will serve not only the interest of the key players in the agriculture sector and the needs of the capital market, but the aspiration of our country to provide food on the table of every Filipino," he said.

For his part, Agriculture Secretary Arthur Yap said the government, through the DA, welcomes the creation of an agricultural commodity exchange (ACE) as initiated by the PSE Inc.

"This development dovetails and supports the DA's goal of creating a critical mass of techno-based, self-reliant and market-driven food and agri-business entrepreneurs," he said.

Yap said that the establishment of a commodities market for agricultural products such as rice, corn, sugar and coconut "is something that should have been done a long time ago."

"We need real-time price and market information if we are to create an environment conducive for growth of agri-fishery enterprises for these commodities," he noted.

An ACE provides market players (buyers and sellers), particularly the small ones, "with improved price discoveries and greater transparency hopefully at all times across the country — allowing them to scan for the best prices in a broader market to better manage positions, risks, investments and ultimately, profitability," said Yap.

It also equips smallholders agri-fishery producers and entrepreneurs with the ability to intelligently decide when and where to sell their products and at what price.

As such, Yap said, ACE will bring clear motivation for agri-fishery producers and entrepreneurs to pursue benchmarking against the best agricultural practices in terms of supply reliability, quality consistency, cost efficiency and commercially viable innovations.

"In these challenging times, we need to have the private sector and the government work together even more closely, complementing each other's actions to keep our country on the path of market competitiveness and sustained growth," he said.

The DA chief hopes that this initiative "will graduate into a forward and futures market so farmers, entrepreneurs and other players could hedge the potential costs of commodity price volatility."

"Through this agreement, we are laying the groundwork for a strong agricultural commodities market in the Philippines," he said. (PNA)

scs/LGI

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2 Responses to “DA, PSE move towards agricultural commodity trading”

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    […] DA, PSE move towards agricultural commodity trading – Balita NewsMANILA, Oct. 31 — The Department of Agriculture (DA) and the Philippine Stock Exchange (PSE) on Friday sealed a partnership that will lay the foundation for a commodities trading platform in the country. PSE President and Chief Executive Officer […]

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    […] DA, PSE move towards agricultural commodity trading – Balita NewsMANILA, Oct. 31 — The Department of Agriculture (DA) and the Philippine Stock Exchange (PSE) on Friday sealed a partnership that will lay the foundation for a commodities trading platform in the country. PSE President and Chief Executive Officer […]