Online Reporter
Edgar Vhera, Agriculture Specialist Writer
Farmers have welcomed the five-year partnership between the Zimbabwe Mercantile Exchange (ZMX) and the Grain Millers Association of Zimbabwe (GMAZ) set to create a reliable market for their produce.
ZMX and GMAZ recently signed a five-year memorandum of understanding (MoU) aimed at ensuring an orderly and efficient grain offtake by members of the latter utilising the former’s warehouse receipt system (WRS) trading platform and financing facilities.
Trading of the grain will be on the spot market as well as forward marketing.
Commercial Farmers Union (CFU) president, Mr Liam Philp, said the shift to free market principles based on supply and demand was an important fundamental.
“This is a progressive move, shifting the responsibility to purchase grain from the treasury into the private sector.
“It is critical that this is enhanced with lines of credit for the private sector to fund the gap between the marketing and manufacturing windows,” he said.
Mr Philp said tight liquidity would be the major challenge that could derail the development. “With ZMX offering warehouse receipts on prescribed asset status, we expect that the pension funds will consider deploying capital alongside banks to this worthy cause.
“We acknowledge the Ministry of Lands for bringing about this transformation,” Mr Philp said.
According to farmers, the ZMX platform will provide the backbone as a formal commodity exchange.
“The main task at hand now is for the Ministries of Finance and Lands to implement policy reform to bring down the cost of production in Zimbabwe, which is the highest in the region.
“It is a delicate balancing act, but I believe all stakeholders are committed to resolving challenges in our value chains to deliver real economic prosperity,” he said.
Zimbabwe Farmers Union (ZFU) chief economist, Dr Prince Kuipa, said the ZMX trading platform was set to transform the grain marketing landscape in Zimbabwe through a landmark partnership that introduced a market-driven pricing system that empowers farmers to take control of their produce valuation.
“Farmers have all along been used to market their grains through one system, the Grain Marketing Board (GMB), and were offered one set Government price.
Now with this transition, prices are discovered on the market with farmers offering their preferred prices and buyers bidding,” he said.
Dr Kuipa said ZMX must embark on a nationwide awareness campaign to educate farmers on the whole process and also explain the benefits.
“We expect farmer unions to work hand in glove with extension workers as change agents to transmit information to farmers,” he added.
Zimbabwe National Farmers Union (ZNFU) president, Mrs Monica Chinamasa, said this was a good alternative marketing system bringing about healthy competition.
“We hope the Government will assist with GMB depots/locations as there are a lot of unused warehouses in the industrial areas to shorten the distance between production areas and depots,” she said.
“ZMX will facilitate grain aggregation, certification and warehousing through its network of over 30 certified warehouses.
GMAZ chairman, Mr Tafadzwa Musarara at the signing ceremony said members of the association had agreed to sign forward contracts that would absorb any current excess supply for guaranteed offtake in the near future.
Farmers whose grain is not purchased immediately will be issued with warehouse receipts against which forward contracts for future contracts will be arranged at prices that will include the carrying costs.
ZMX has in the meantime, made financing arrangements to avail liquidity to farmers supplying grain into this arrangement through warehouse receipt discounting.
Farmers, contractors and financiers interested in participating in this scheme will have to register with ZMX.
ZMX chief executive, Mr Collens Tapfumaneyi, said a farmer required a minimum of a 50 kilogramme bag of grain to participate.
“A communal farmer in any location can deposit his/her 50-kilogramme bag of grain in any certified warehouse.
“The grain is graded and given a warehouse receipt, a financial instrument they can use to get cash or inputs,” he said.
