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Zimbabwe: Commodities Exchange to End Marketing Woes

Zimbabwe: Commodities Exchange to End Marketing Woes

Government is set to launch the agricultural commodities exchange in March next year that is expected to address agriculture marketing problems undermining market access and financial viability of farmers, a senior official has said.

The Zimbabwe Agricultural Commodities Exchange, to be supported by the Warehousing Receipt System, will offer orderly marketing where future delivery contracts for graded commodities such as grains, cotton, sugar and coffee are bought and sold, Finance and Economic Development Minister Professor Mthuli Ncube said.

Addressing delegates during a post budget breakfast meeting in Harare this week, Minister Ncube said Government “cannot continue setting producer process,” adding the exchange will be in place soon.

The exchange was abandoned when the GMB assumed monopoly over maize and wheat. It is a private sector driven initiative in partnership with Government that is injecting an amount equivalent to US$500 000 as Government shareholding capital.

In February 2011, Zimbabwe launched the commodity exchange but never saw the light of the day due to a number of issues including lack of political will and funding challenges.

Analysts say the need to establish a commodity exchange in Zimbabwe is inevitable considering the importance in unlocking agricultural finance and market access.

“A commodity exchange is a good thing,” economist Prof Gift Mugano recently told the local media.

“It creates efficient market systems with proper price discovery for farmers contrary to the current system where the price is determined by the Government.

“Right now, we have had too many instances of farmers complaining about prices offered by the Grain Marketing Board. A good example of a commodity exchange is the tobacco auction floors. It also unlocks financing; you get a warehouse receipt which you can use as a financing instrument. Finally, you can also attract investors from all over to come and invest in grain production,” he added.

Meanwhile the Government is expanding the role of agricultural extension services to include business advisory as it seeks to transform farmer’s mindset into taking farming as a business.

The agricultural extension services, which offer training and advice to farmers have been unreliable and sometimes non-existent. This partly contributed to poor agricultural practices, which resulted in low yields for small scale farmers.