Commodities exchange offers farmers relief
THE Zimbabwe Mercantile Exchange (ZMX) says over 2 129 tonnes of maize, soyabeans and wheat valued at nearly US$1 million have been traded on the exchange since June this year, demonstrating the platform’s robust performance.
The ZMX was created to lessen the difficulties local farmers face in their operations with regard to warehousing and price discovery for agricultural commodities.
The market also aims to address issues that farmers face while marketing their agricultural products, such as inadequate or improper storage facilities and restricted, frequently expensive logistics. Due to these issues, farmers suffered large post-harvest losses.
Strategic grains, barley, coffee, groundnuts, macadamia nuts, millet, oats, pecan nuts, rapoko, rice, sorghum, sugar beans, tea, cow peas and round nuts are among the agricultural commodities that can be traded using ZMX'S system.
As of June 21, 2023, a total of 1 694,44 tonnes of maize worth US$518 806,81 and 199,88 tonnes of soyabeans for US$97 242,40 were traded on the platform. During the period under review, 234,82 tonnes of wheat valued at US$96 211,20 was also exchanged.
Regarding the warehouse receipt system, ZMX said 31 warehouses have been registered, and cumulative receipts issued are 221 953,67 tonnes for maize, 419,22 tonnes for soyabeans, 1 962 tonnes for white sorghum, 1 137,26 tonnes for red sorghum, 72 429,56 tonnes for wheat and four tonnes for sugar beans.
In e-mailed responses to businessdigest, the country’s leading marketplace said despite operating optimally, it was facing a number of challenges and asked for government’s intervention.
“Partial utilisation of warehouse receipts (is) stifling warehouse receipt financing and access to liquidity by farmers. Buyers need efficient mechanisms for imports during times when there is low local production,” the response reads in part.
Currently, warehouse receipts are primarily used for commodities traded through ZMX, while contractors are yet to adopt the warehouse receipt system. The grain not delivered to the government is not currently included in warehouse receipt operations.
“Farmers need access to external markets when there is excess local supply of commodities. Low volumes traded on the commodity exchange, this lack of awareness is particularly notable considering Statutory Instrument 129 and 130 of 2023 which permits the trading of soya bean and wheat on the exchange is fairly new,” it said. “Despite an adequate supply of wheat, the demand remains low due to potential buyers’ limited knowledge about the opportunities offered by the ZMX platform.”
ZMX said the platform provides a convenient and efficient avenue for connecting buyers and sellers, but if buyers are unaware of its existence or benefits, they may not actively engage in trading wheat.
“To address this issue, ZMX is focused on increasing awareness and educating potential buyers about the advantages of utilising the ZMX platform for trading wheat and soyabean. Promoting the platform's benefits, emphasising its user-friendly interface, and communicating the wide range of opportunities it offers would help attract more buyers and enhance overall market activity.”
Other challenges include horticulture commodities that are prone to severe post-harvest losses, lack of central platform or repository for livestock, farmers have cattle as dead capital, and limited access to capital and market access.
ZMX urged the government to make it mandatory for warehouse receipts to be issued for all grains and oilseeds delivered to warehouses, whether contracted or self-financed.
“This will create a central database for all grains and oilseeds produced and traded in the country. The current laws are mainly skewed around grains. There is a need for the law to take care of livestock-specific areas,” it said.
ZMX is now part of the African Continental Free Trade Area commodity exchanges that facilitate cross-border trading in the region.
On Zmx-based crop contract farming, the organisation said the scheme will work through allowing farmers to pledge part of their cattle herd as collateral to secure loans from financiers to support crop production.
“Farmers will apply for financing by pledging a desired number of cattle corresponding to the amount of loan required,” it said.
On the horticulture warehouse receipt system, it noted that the current laws were mainly skewed around grains, adding that there is a need for the law to take care of livestock-specific areas.
There is also a need for clear regulatory expectations when setting up a horticulture warehouse, which may include the cold chain.