Benefits of Commodity Exchange In Nigeria
(i) Commodity exchange has helped to enhance and promote large scale agricultural production.
(ii) It has helped to stabilize the price of agricultural products. Prices are fixed to be executed in trading at a pre-determined period in order to mitigate the risks of fluctuation in price.
(iii) It has helped to ensure an adequate supply of tradable commodities at the right time and quantities in the world market.
(iv) It has contributed to the increase in supply and availability of raw materials to manufacturing industries both locally and internationally.
(v) It serves as a source of revenue to the government, as income to individuals and firms.
(vi) The economic growth, development, and stability of some countries have been guaranteed through an increase in the gross domestic product (GDP).
(vii) It has helped to create employment opportunities for a larger percentage of citizens in a country.
(viii) It has helped to bring about the existence of an organization of a standardized market where participants can exchange tradable commodities.
Constraints to Commodity Trading In Nigeria
(i) Inexperienced Personnel: The trading is confronted with the problem of unskilled and inexperienced agents and contractors which leads to low trading activities.
(ii) Problems of Price fixing: The idea of fixing price ahead of the trading period often suffer certain fluctuations due to shortage or over production which may warrant a change in already fixed prices of commodities.
(iii) Inadequate Finance: Agricultural and mining operations are not carried out in expected large-scale because of shortage of funds to the farmers and miners.
(iv) The World Market Constraint: The unpredicted fluctuation in prices of commodities in the World markets has also served as a limitation to effective commodity trading in Nigeria.
(v) Unorganized Market: The Market in Nigeria is not well organized and dedicated to commodity trading. The dealings are often unreliable.
(vi) Natural factors: Tradable Commodities especially agricultural products, are subjected to climatic or weather conditions, shortage in supply of agricultural tradable commodity-trading.
(v) The Problems of Middlemen: The presence of middlemen or agents cause artificial scarcity.
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