How we can address agricultural price instability

What you need to know:

Archaeologist discoveries have shown that agriculture was developed during 10,000 BC when human started settlements and began farming.

The farmer makes a profit of Sh5,000 on the futures contracts and Sh75,000 selling at market price, totaling Sh80,000 net sales. The second scenario where there has been a bad harvest and demand is higher than supply and expectations are that in near future price will rise. Current market price for 100 kg rice bag is Sh100,000 and six months futures price is Sh110,000. After six months, market price rise to Sh120,000 and future price is Sh115,000. Therefore, the farmer loses Sh5,000 on futures but market price increase makes him gain Sh120,000, totaling Sh115,000 net sales. Price volatility makes big losers and winners, hence futures contract provides buffer against price swings and lock the income for farmers. If African countries can establish and use commodity futures exchange market, this will help to stabilise prices.

How we can address agricultural price instability

What you need to know:

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