This is the middle tier of FinComEco’s involvement.  It sets up a virtuous circle which ties the farmer into a growing agri-economy:

• The local commodity exchange becomes the centre of a growing agri-economy underpinned by electronic warehouse receipts
• More and diverse products are brought to the warehouse and sold on-exchange (peas, grains, vegetables, etc.)
• Factories arise and expand because of local supplies. (E.g. tomato paste instead of just tomatoes)
• The logistics industry grows shipping finished goods and bulk grains, which…
• …helps the farmer by reducing the costs of transportation
• The Banks expand and loans and trade finance are provided to; Farmers, Dealers, Agri-businesses and Logistics companies

Some of the benefits for the Exchange as a result of successful implementation of this financial infrastructure include: electronic warehouse receipts are more easily validated and financed; banks gain large numbers of smallholder farmer customers which will gradually turn into local businesses; growth in other financial areas such as insurance; and improved tax revenues to support government investment in infrastructure.

As the farmers and dealers become more sophisticated the exchange leveraging the aggregated services FinComEco will provide can offer:

• Forward sale contracts to the farmer to get money in advance
• Futures contracts (on a very small lot size) to allow the farmer and dealers to hedge prices
• The use of derivative contracts will stimulate trading and price discovery in all commodities traded

The growth in agri-businesses will create new commodities to trade and businesses to list on the local stock exchanges. The increase in food surpluses and agri-products leads to the opportunity for exports and reduction in imports.