Commodity mercantile to boost farmer viability
FOR many years, Zimbabwean farmers have suffered the agony of poor prices, which in instances affected the viability of their operations and forced some to abandon farming.
In an effort to address the challenge, the Government working with partners, mooted the idea to establish a commodities exchange, which has been on the cards for a long time.
But the farmers’ decades of pain are set to end, after the Government recently promulgated regulations for the establishment of the long awaited commodities exchange to operationalise the farm produce market.
Statutory Instrument 184 of 2021, which sets out the rules and regulations of the exchange, allows the Agricultural Marketing Authority (AMA) to operationalise the Zimbabwe Mercantile Exchange (ZMX).
The rules set out the manner in which the exchange will operate and govern efficient, orderly, fair and transparent marketing of agricultural commodities while protecting the integrity of the market.
Further, SI 184 of 2021 governs the functioning of the central warehouse, issuance of dematerialised warehouse receipts, trading and settlement, thereof, and pledging of warehouse receipts.
AMA chief executive officer Clever Isaya told The Sunday Mail Business in an interview on Friday that the authority was now ready to launch the exchange, which is scheduled to go live by the second week of next month.
“We are looking at the first week of August 2021. Around that time we should be going live.
“Everything is now in place; the only outstanding item which delayed the launch was promulgation of the spot market rules.
“That has since been done, the pilot has been done and everything was successful. So from the first week to second week of August 2021, the commodities exchange will be going live,” he said.
Mr Isaya said the ZMX will be critical in establishing a market price discovery mechanism, which will ensure farmers, for a long time shortchanged on prices, get better and fair prices for their produce.
About eighteen agricultural commodities will be traded on the exchange while four; maize, wheat, soya and cotton, will be excluded when the new farm produce market launches early August.
“For the farmer, it (Commodities exchange) is a welcome development actually, it enhances market access.
“In addition to that, it also brings in an element of price discovery mechanism,” Mr Isaya said.
“In the past, you may recall, farmers have not been getting the full value for their products as far as pricing is concerned. So this platform gives everyone an opportunity to get the right price for the commodity, that is the whole idea,” he said.
Unlike previously, Mr Isaya said the operationalisation of the agricultural commodities exchange will bring together farmers and buyers under a single roof in a more structured way.
He said the exchange will address issues around viability of farmers, which would enhance farm production and productivity while farmers will produce what the market requires.
“So it also gives indicators in terms of what commodities are in demand. For a start, there are about 18 commodities that can be traded on the commodities exchange,” Mr Isaya said.
“But there are some that will not be traded because they are controlled goods. These are maize, wheat, cotton, and soya for now because there are statutory instruments for their trading,” he said.
ZMX is a partnership between the Government of Zimbabwe and the private sector led by Financial and Securities Exchange Limited (Finsec), the implementing agent, TSL Limited, CBZ Holdings.
Development partners have put a hand to support the initiative. The World Bank has assisted with setting up of the Warehouse Receipt System (WRS), by providing technical expertise.
The WRS will ensure efficient market price discovery, giving access to local and international buyers. The Grain Marketing Board (GMB) as one of the strategic partners will provide warehousing together with TSL Limited, Origen and ETG.
Agriculture, which accounts for about 16 percent of Gross Domestic Product, plays a crucial role in the lives of Zimbabweans in rural and urban areas. Most of the people in rural areas survive on agriculture.
Zimbabwe’s economic performance largely depends on developments in its agricultural sector. Commonly grown crops include maize, tobacco, wheat, soya, cotton, sorghum, millet, round and ground nuts.
Apart from its direct contribution to the economy, agriculture (both crop and livestock production) provides employment to hundreds of thousands of people across the entire country.