The government and brokers are launching the Market Risk Management Program, which will allow farmers to sell commodities using futures contracts, Mexican officials said.
The program's goal is to stabilize farm prices in Mexico and guarantee farmers' incomes via contracts that cover prices, Finance Secretary Jose Antonio Meade and Agriculture Secretary Francisco Mayorga said.
The Agriculture Secretariat will allocate 550 million pesos (about $41 million) to provide funding for farmers, who "will be able to obtain financing of up to 5 billion pesos (some $410 million) in commercial transactions," Mayorga said.
The program is being backed by the Bank of Mexico's Agricultural Trusts, or FIRA, the Mexican Stock Exchange and the Mexican Banking Association.
Producers and buyers will be able to select who they want to provide coverage for prices, "as well as the most convenient (delivery) date for them on the futures markets," Mayorga said.
The participation of brokers and other financial intermediaries will bolster credit for the industry and stabilize the market, officials said.
Producers will have access to credit via 21 commercial banks and 75 non-bank lenders, as well as through Financiera Rural, FIRA director Rodrigo Sanchez said.
Corn, wheat, sorghum, soy and rice, along with some other commodities that "are listed directly or indirectly on the markets," will be included in the first phase of the program, Mayorga said.
Mexico is "relatively guaranteed" its supply of basic foods since there is no reason for prices to rise despite the spike in commodity prices on U.S. futures markets in the wake of a severe drought in the Midwest, Mayorga said. EFE