Govt to finalise commodities exchange set-up

Govt to finalise commodities exchange set-up
Published: 01 October 2013
Government needs to finalise the setting up of a commodities exchange as soon as possible for industry to start recognising benefits from the resuscitation of the agricultural sector, the Minister of Industry and Commerce, Mr Mike Bimha, has said.

Minister Bimha said there had been a lot of challenges on finalising the setting up of the exchange during the tenure of the inclusive Government which needed to be fixed by the new Government.

"The issue was taken up but unfortunately nothing concrete came up as funding from the Finance Ministry did not come through.

"Government now needs to revisit the issue and make sure the exchange is finalised because we cannot afford to keep putting it off," he said.

A commodity exchange is a market where buyers and sellers trade commodity-linked contracts on the basis of procedures laid down by the exchange.

Such exchanges typically act as a platform for trade in future contracts, or for standardised contracts for future delivery. The exchange system was abandoned nearly a decade ago when the Grain Marketing Board was given a monopoly to buy wheat and maize.

However, the setting up of the exchange has been on the cards for the past two years with the establishment of the market failing to take off.

The setting up of the commodities exchange would do away with fixed prices of farm produce at the same time playing an important role towards mobilising resources and it would also bring about discipline in the market and a competitive price regime for agricultural produce.

Minister Bimha said the exchange would ensure that farmers get value for their money when they took their produce to the exchange instead of dealing with middlemen who fleece them.

"If the agricultural sector continues on the path to recovery, then we will feel the effects in industry as we rely on agriculture for our raw materials. The commodities exchange would then guarantee production of quality products," he said

"We are currently relying on imports of raw materials which we should be getting from our farmers.

"In the process, we are promoting jobs outside the country while our people desperately need those jobs."

He said a commodities exchange would promote quality products that are reasonably priced and competitive.

"Some of our products cannot compete with those from other countries in the region, and an exchange would ensure that farmers produce competitive quality products that are reasonably priced," he said.

Farmer organisations have expressed optimism that the Government would finalise the setting up of the commodity exchange if the country is to realise fair value of agricultural produce.

Commodity exchanges are part of a move to try to revitalise agricultural productivity in Africa and have been seen as part of a holistic solution for agricultural extension, support infrastructure for small farmers, quality warehousing and finance as well as market price information.
- herald
Tags: Exchange,

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