MANILA, Philippines - The Philippine Stock Exchange (PSE) and the Department of Agriculture (DA) sealed Friday a partnership that will lay the foundation for a commodities trading platform in the country.
PSE president and chief executive Francis Lim and Agriculture Secretary Arthur Yap signed the agreement in a ceremony held at the PSE Ayala Boardroom in Makati City.
“We are very thankful to the DA for its support to this milestone project for the study of an organized commodities market in the Philippines. We are likewise pleased to know that the DA and PSE share a common goal in helping our people realize their wealth potential as we expand investment opportunities,” Lim said.
He said that an organized commodities exchange can help relieve the pressure on commodity prices due to supply and demand conditions. Price transparency allows farmers to get better prices for their produce as intermediation costs are reduced.
“A growing population and increasing urbanization will increase demand for food commodities but climate change and urbanization pose threats to land supply, one of the most critical inputs for food production. This combination tends to put tremendous pressure on food prices. An organized commodities exchange can help address this problem by enhancing price transparency and minimizing risks in the trading of commodities,” Lim added.
Yap, meanwhile, said: “This partnership is beneficial not only for investors and other market players but for the economy as a whole. A strong agricultural sector means a strong economy, considering that agriculture accounts for one-fifth of this nation’s GDP.
“The way to accelerate agri-fishery expansion is through innovative financing mechanisms. Having the PSE study a mechanism of selling commodities for forward or current basis is a step towards that direction, Secretary Yap added.
The agreement states that the PSE and DA will work on a trading system that will link Filipino agriculture farmers to profitable markets for their products.