A commodity is any sort of essential product; no matter agricultural or non-agricultural, that can get exchanged or traded. If you speak of India, commodities are forked into two categories: soft commodities as well as hard commodities. Soft commodities are the ones that include agricultural products, such as wheat, sugar, rice, soyabean, corn and more. Whereas hard commodities are characteristically mined. For example, oil minerals, etc. Fall in the category of hard commodities.
If you are in the agriculture business you might have heard about commodity finance. Well, maybe the need for consumer products enhances, production does not always keep up. The loan against the commodity is something that a type of export trade supports. The purpose of the same is to maintain production.
Things you should know
Collateral is at the centre of every loan and the value it has determines an individual’s borrowing capacity. In the realm of agriculture, the ancient practices have thought ‘land’ as the most dependable alternative. However, the mechanism is operated by informal local type of lenders that charge much interest rates. As a result, tiny -scale farmers have not been in a position to produce substantial profit and instead, fallen quarry to the loan-debt trap. Here, these days the concept of loans against commodity is there that is provided on a reasonable rate. Hence, the farmers or small sized agriculture firms can be at ease and peace. The point is also that opting for warehouse storage and even Warehouse Receipt financing has diverse perks for you.
Advanced warehousing techniques
The implementation of dedicated and devoted warehouse management systems permits them to store huge amounts of produce without even compromising the quality of the crop. Regulate temperatures, proper timely quality checks, real-time warehouse monitoring, and even continuous contact with warehouse personnel through calls and even video calling apps allow the farmers to simply avoid the immediate sale of the crops at a lower price.
On the contrary, they may sell the goods at a higher cost in the off-season to reap the utmost benefit on each harvest. With the correct profit margins, farmers can easily manage the liquid cash flow required for agriculture inputs in the absence of even depending upon unregulated financial sources as well as climate disruptions.
Combating the unexpected Climate Change
Once the crop is the collateral, it is imperative to factor the overall climate susceptibility. Largely, farming and even associated agricultural practices follow a recurrent cycle relying upon seasons. A good service can empower farmers to utilize this reliance via proper warehouses storages and helps them evade any sort of situations that result in land mortgage. With crucial market study, farmers can even gauge the expected normal prices and hence, they can select the right crop that yields its overall value and worth in cash flow. So, it sets the overall wheels of maintainable agriculture in motion, wherein the farmer own enough financial capital to do investment in disruptive agriculture technologies and even educate themselves related to the modern advancements in the field.
Conclusion
So, if you are a farmer or a small sized agriculture firm, you should consider farmers warehouse options and similar ones.
