Firms operating in environments with erratic supplies of agricultural commodities face high implicit transaction costs in operations. Ghana opened the first full-service commodity exchange in West Africa in late 2018. We have begun to look into the impact of the Ghana Commodity Exchange (GCX) on farmers, traders, and firms in the agricultural marketing ecosystem. In performing this research, we have discovered the importance of what we call “nano commodity exchanges.” These are local markets with small numbers of traders and farmers brought together in a central location in their own villages to engage in structured intermediated trade of maize, cassava, and plantains.
Our goal is to understand how improved markets for commodities can transform the agricultural value chain from farmers and farming systems to firms and purchasing and planning systems.
There are a number of intellectual questions associated with this nano commodity project. On the policy level, there is a question as to whether these can be a steppingstone to the uptake of the full national commodity exchange. The nano commodity exchange may enable lower threshold levels of output and of understanding of markets to encourage smallholder farmers to participate. This project also suggests a number of very important economic questions. If we can show through our pilots a keen interest in these nano exchanges, then we need to ask what these nano exchanges are doing that the existing market structures are not? Our primary role as experimenters in this nano exchange project is to search for willing buyers and sellers and match them in our trading sessions.