A commodity is defined as a raw material or a primary agricultural product that can be bought, sold or exchanged. There are various commodities that are in use all over the world. The key difference is their type. Hard commodities that need to be mined or extracted, like gold, oil or rubber and soft commodities that are grown or reared, like tea, corn, coffee, sugar, soybeans or pork and beef.
Most commodities are part of the agricultural supply chain and an integral part of the Agri Tech value chain. There are various markets where each of these commodities are sold and traded and a some of these commodities are sold in auctions. These auctions are a popular means of ensuring that the farmers get the right prices for their produce. Auctions are also the most efficient means to sell large volumes of agricultural commodities and are widely prevalent across the world. Countries like Ethiopia, Uganda and Tanzania for Coffee, Ivory Coast & Ghana for cocoa and Sri Lanka and India for Tea are a few examples.
Auctioning as a platform was undertaken by most of these countries to ensure the farmers get their monies on time and are not dependent on middlemen who earlier managed the commodities and drove prices downwards, leading to farmers not getting the right price.