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Like the general merchants the agricultural commodity merchants are specialize in the agricultural commodities trading process. They have the purchase stocks of the agricultural commodities and sell in the bulk quantity to the general suppliers or the retailers of the commodities. As the merchant is the king of the market and have lot of earning in this profession. They are the first person in the chain of supply who makes purchases from the crop or commodity owners or cultivators.
Agricultural merchants are responsible to take crop from the cultivators at the rate which the government has decided for the specific year or crop. The some bad impact about the merchants is also that some times they involve in black marketing and stores the commodities to get the more profit form the price difference. But with good government check on the activities of black marketing this impact can be removed.
This is also the method that agricultural commodity merchants are concern with the trade option of an agreement giving the option purchaser the right to buy or sell his or her commodity in the future for a set price. However, the purchaser is not compelled to buy or sell and may simply choose to from the alternative contract. But purchaser has to pays a fee, usually called the alternative premium, to the seller.
The usual structure for agricultural commodity merchandising involves four areas: (1) registration of agricultural commodities trade merchants (2) monetary requirements (3) conditions on contracts and on their offer and sale, and (4) revelation and reporting requirements.
Usually the agricultural commodities are: wheat, cotton, rice, corn, oats, barley, rye, flaxseed, grain sorghums, mill feeds, butter, eggs, Irish potatoes, wool, wool tops, fats and oils, cottonseed meal, cottonseed, peanuts, soybeans, soybean meal, livestock, livestock products and frozen concentrated orange juice.
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