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Edgar Vhera
Agriculture Specialist Writer
GOVERNMENT has added cotton and its by-products to the basket of commodities traded under Zimbabwe Mercantile Exchange (ZMX) warehouse receipt system (WRS) to aid in financial inclusion and price discovery.
This follows the recent gazetting of Statutory Instrument (SI) 173 of 2024, Warehouse Receipt Act (Chapter 18:25), substitution of schedule notice 2024 that paved the way for listing of the white gold on the ZMX trading platform.
ZMX chief executive officer, Mr Collen Tapfumaneyi said his organisation warmly welcomed the development, describing it as positive.
“For cotton farmers, this move signals a new era of opportunity and security. By utilising the WRS, farmers can store their cotton in certified warehouses, ensuring safe and secure storage that significantly reduces post-harvest losses,” he said.
Mr Tapfumaneyi said in exchange of their cotton, farmers receive warehouse receipts, which serve as proof of ownership and can be traded or used as collateral for financial services.
This added layer of security is set to revolutionise how cotton is managed and marketed in Zimbabwe.
One of the most significant advantages of the development is the enhanced access to immediate financing for farmers. “Warehouse receipts can be used as collateral to secure loans, providing much-needed liquidity for on-going operations and investments.
“This financial flexibility is crucial for managing cash flow and enables farmers to invest in crops, equipment and other essential business aspects,” the ZMX boss said.
The inclusion of cotton in the WRS also enhances market efficiency, transparency and price discovery.
Mr Tapfumaneyi explained that farmers, contractors and traders would have access to real-time data on commodity prices, trends, bids and trading volumes, empowering them to make informed decisions. He added that the transparent system promoted fair and equitable transactions, ensuring that all parties can trust the integrity of their dealings.
The inclusion of cotton on the ZMX platform also benefits financiers who by participating in the system, can offer warehouse receipt financing, backed by the value of stored commodities.
This not only promises stable returns on investment but also bolsters the growth and resilience of Zimbabwe’s agricultural sector, he added.
“As the next harvesting season approaches, ZMX encourages all stakeholders to seize the opportunities presented by the WRS. This initiative not only aims to secure the livelihoods of farmers but also positions Zimbabwe as a competitive player in the global commodities market, driving the agricultural sector forward into a promising future,” Mr Tapfumaneyi pointed out.
This development comes on the backdrop of the addition of horticulture and livestock on the initial list of the 49 commodities trading under the WRS.
A recent X (formerly Twitter) post by ZMX described WRS as a structured framework that facilitates the issuance, transfer and settlement of warehouse receipts, which serve as proof of ownership for commodities deposited and stored with a designated secure and certified warehouse in exchange for a WR. The warehouse receipt issued by ZMX is a negotiable instrument, that has liquid asset status and which can be used as collateral for credit facilities or can be used as an instrument of exchange in commodities spot market trading.
The ZMX has successfully traded wheat, maize, soya beans on its platform since inception.
The country is targeting to plant 270 000 of cotton to stimulate rural development and economic growth.
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