FINANCE and Economic development Minister, Professor Mthuli Ncube on August 18 launched the Zimbabwe Mercantile Exchange (ZMX), an agricultural commodities trading platform with automated electronic warehousing and receipting capabilities.
The ZMX was designed to curb warehousing and price discovery challenges relating to farmed commodities, which local farmers encounter in their operations.
The initiative also seeks to deal with challenges encountered by farmers in the marketing of their agricultural produce, which include limited and often costly logistics, inappropriate or inadequate storage facilities. The problems resulted in farmers incurring significant post-harvest losses.
ZMX’s system is suitable for trading in a number of farmed commodities including strategic grains, barley, coffee, groundnuts, macadamia nuts, millet, oats, pecan nuts, rapoko, rice, sorghum, sugar beans, tea, cow peas and round nuts.
The first sale on the newly established commodities trading platform were 2 058kg of red sorghum, which were traded at a total price of $78 204.
Cumulatively, 77,862kg of Grade A white sorghum was sold for $38 per kg and racked in $2 958 756,00 while 2 058kg of grade A red sorghum was traded at a similar price.
There were a total of 10 trades.
Currently 7 942kg of red sorghum is on the market at an asking price of $38 per kg while 22 138kg of white sorghum is selling for the same price.
The exchange initiative is a partnership between the Government and private sector participants that include Financial Securities Exchange (Finsec), a licensed securities exchange, TSL Limited, a publicly traded agro-industrial business and CBZ Holdings, a publicly traded financial services business among others.
In his keynote address at the launch event Minister Ncube noted that the inventiveness will bring expediency in the marketing of agricultural produce.
“As you will recall, Government through the 2021 National Budget allocated US$500 000 equivalent as its capital contribution towards the establishment of the commodity exchange. This exchange will provide convenience and efficiency in the marketing of agricultural commodities and this will ensure enhanced profitability, access to markets, finance and credit for farmers,” said Minister Ncube.
He added that, “This Public Private Partnership initiative will support the seamless trading of agricultural commodities by all players, including the Government itself. The innovation whose operationalisation we are witnessing today will greatly assist in reducing these post-harvest losses thereby giving our small-scale farmers more value for their efforts.”
According to Food and Agricultural Organisation (FAO) estimates, post-harvest losses encountered by small scale farmers can be as high as 25 percent.
Chairman of the newly launched ZMX Derek Odoteye said the move was a milestone towards achieving a formalised smallholder agriculture sector.
“ZMX will assist in encouraging the formalisation of small scale farmers, which I believe will ensure the sustainability of their farming activities, and will give t increased access to both local and international markets as well as avail them properly priced credit facilities by being able to collateralise their farm produce.
“This makes ZMX a one stop shop for convenient and commodity financing and trading capable of competing with the best in the world,” Mr Odoteye said.
Collen Tapfumaneyi, the chief executive officer at securities firm Escrow Group, said agriculture was the mainstay of the economy hence the need to tame some of the challenges that threaten maximum optimisation of the sector.
“What motivated us to come up with this platform is the recognition that agriculture is a significant contributor to our GDP accounting for 17 percent and 70 percent employment contribution.
“…but again came the realisation that there are quite a lot of challenges in the sector key of which include post-harvest losses and the issue of post-harvest finance which leads farmers to sell their commodities even at unfavourable prices and high counter part risk that affect both sellers and buyers,” Mr Tapfumaneyi said.
Lands, Agriculture, Fisheries, Water and Rural Resettlement Deputy Minister Douglas Karoro indicated that he was optimistic that the initiative would improve farmers’ experiences particularly on the marketing front.
“I am confident that the commodities exchange will provide the required platform for free marketing of agricultural commodities and deliver the intended results to the different farming segments, as it did during the 1990s, and in so doing, helping small holder farmers to be integrated in the mainstream economy in pursuit of National Development Strategy 1 objectives of an empowered upper middle-income society by 2030,” said Minister Karoro.
CBZ, Delta Corporation, National foods FBC Holdings and Dairibord are some of the 10 partners already on board while TSL, ETG, BAK Logistics and Grain Marketing Board are responsible for warehousing and logistics.