Online Reporter
Nelson Gahadza
Senior Business Reporter
The Zimbabwe Mercantile Exchange (ZMX) has entered into a five-year collaboration with the Grain Millers Association of Zimbabwe (GMAZ) for grain offtake through forward contracts and spot cash, in a development expected to secure demand, unlock finance for producers and revolutionise maize trading in the country.
A forward contract in maize is an agreement between a buyer and a seller to exchange a specific quantity of grain at a predetermined price on a future date. This type of contract helps farmers and buyers manage price risk and plan for future sales or purchases.
Millers secure access to grain through buying forward contracts, while farmers, traders and aggregators gain the ability to raise financing before the actual sale of the grain.
ZMX and GMAZ last Thursday signed a 5-year memorandum of understanding (MOU) for the efficient and orderly off-take of grain by members of GMAZ utilising the ZMX Warehouse Receipt System (WRS), trading platform and financing facilities.
GMAZ chairman Mr Tafadzwa Musarara, in an interview after a joint press conference yesterday, said the new arrangement was a deviation from the past, whereby the burden of buying maize was put on the Grain Marketing Board (GMB), which had to look for money to pay the farmers, and then the millers would later buy from GMB.
“In this case, the private sector is mobilising funding from the banks through ZMX to pay the farmers on time, in the process breaking the record by making maize a cash crop,” he said.
He added that previously, cash crops have always been horticulture products and tobacco.
“Through the spot cash payment system, any farmer goes to the collection point with his one bag or ten bags; their maize quality is verified, and they are paid immediately,” said Mr Musarara.
He added that farmers who might want to wait for the price to go up will deposit their maize and get a ZMX warehouse receipt.
“The warehouse receipt acknowledges that you have 500 tonnes that you have put in the system, and that receipt can be used to go and borrow inputs. We are simply trying to be in line with international best practices of grain marketing and grain buying,” he said.
A warehouse receipt is a legal document that provides proof of ownership of a commodity stored in a certified and approved warehouse, providing evidence of the quantity, grade and quality of the stored commodity.
It is recognised as a security under the Securities Act, and they are used worldwide for commodity trading and financing as well as collateral for loans.
According to the MOU, ZMX will facilitate grain aggregation, certification and warehousing through its network of over 30 certified warehouses, and trading of the grain will be both on the spot market and the forward market facilitated by ZMX.
Under the arrangement, members of the GMAZ agreed to sign forward contracts that will absorb any current excess supply for guaranteed offtake in the near future.
ZMX chief executive Mr Collen Tapfumaneyi said with the culmination of a couple of years of establishing an organised marketplace that meets international best practice, the better way to endorse would be to have major dealers coming on board and committing to off-take through the commodity exchange.
He said the partnership agreement between ZMX and GMAZ is related to structured trade systems that speak to national food value chains.
Meanwhile, Mr Musarara said from now until the next harvest in 2026, maize meal will be abundantly available, hence no need for consumers to panic buy.
He also noted that GMAZ is now working with the Minister of Lands, Agriculture, Fisheries, Water and Rural Development Dr Anxious Masuka, to commence the contract farming of local rice production as the demand for rice continues to grow significantly.
“At its core, this collaboration enables grain intake through forward contracts, helping secure demand while unlocking financing for producers. Most of our production is seasonal, and if we produce a million tonnes of maize at the same time, it is not practical for that to be bought at the same time, milled and then delivered to the market. There has to be a structured way of taking that grain,” he said.
He said commodities that would be delivered to the ZMX-certified warehouses will be converted into warehouse receipts.
“The farmer has the option to sell it to the market, or if there is no ready market for the excess grain, we put it into the certified warehousing, and the farmer gets a financial instrument known as the warehouse receipt,” said Mr Tapfumaneyi.
He said millers, on the other hand, signed forward contracts for these commodities listed on ZMX, and clearly defined delivery windows were established, and these were backed by the commodity sitting in the certified warehouses.
“Therefore, with that power, the farmers and other suppliers holding the warehouse receipt can then wait for off-take as scheduled in terms of the forward contract and wait to receive payment when the forward contract is due.
“If they cannot wait, which is sometimes the case, under that forward contract-backed warehouse receipt, the farmer can then access financing by monetising those instruments by going through the various ZMX financing options,” said Mr Tapfumaneyi.
He also noted that the partnership also benefits financiers and further encourages credit flow into the agricultural value chain by creating a bridge that connects financiers with agro-commodity producers and processors.
“Financiers now have an opportunity to access highly secure financing opportunities with attractive returns; hence, prior to the MOU, we have already onboarded financiers in various categories.
“Several leading banks, microfinance providers, fund managers, and pension funds are already on board to partake in various instruments that support a provision of liquidity for this arrangement,” Mr Tapfumaneyi said.
He noted that the entire model is anchored on the ZMX-regulated warehouse receipt system, which digitally certifies stored grain in quality and quantity, enables secure title transfer and is entrusted by banks.
Meanwhile, Mr Musarara said from now until the next harvest in 2026, maize meal will be abundantly available, hence no need for consumers to panic buy.
He also noted that GMAZ is now working with the Minister of Lands, Agriculture, Fisheries, Water and Rural Development Dr Anxious Masuka, to commence the contract farming of local rice production as the demand for rice continues to grow significantly.
