HomeNewsGovt launches commodity exchange market

Govt launches commodity exchange market

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Government will on Friday launch the Commodity Exchange in Zimbabwe (Comez) aimed at facilitating the orderly trading of commodities in the country, thereby accelerating the recovery of the agricultural sector and also widening the government’s revenue base.

Commodity markets are markets where raw or primary products are exchanged.

In his 2011 National Budget Finance minister Tendai Biti said pursuant to improving the country’s agriculture marketing model, the launch of the commodities exchange will open up the market.

This would ensure that agricultural produce has a ready and transparent market, with both producers and consumers getting the best possible prices, in the same breath resolving some of the pricing disputes being experienced.

Oxlink Capital managing director Brains Muchemwa said the prevailing economic stability ushered in the right timing for launching a commodities’ exchange.

“Considering the importance of such sectors as agriculture to the economy, it is very crucial to have an exchange that assists the creation of an efficient price-discovery mechanism that will continuously reward productivity and quality,” said Muchemwa.

Biti said the introduction of the market would ensure prompt payment to farmers, with forward contracting available for some farm produce to enable farmers to get part-payment before delivery.

The new market is expected to offer an opportunity for the pricing of domestic agro-produce in line with prevailing prices on the international commodities market hence providing buyers from outside the country the platform to participate in the marketing of the country’s agricultural commodities.

“Commodity derivatives and commodity warrant schemes, if properly structured, will be able to generate the much-needed liquidity for the exchange,” said Muchenwa.

“People should not overly confuse the Zimbabwe Stock Exchange and the commodities exchange when evaluating the role of economy-wide liquidity levels in influencing the price movements and trading activities.”

Minister Biti said the introduction of a commodity exchange should also allow farmers, including smallholder communal ones, to benefit from development of agricultural produce facilities that will enhance farmers’ ability to manage produce supply in line with market demand.

He said this should put to an end the avoidance of seasonal over and under-supply situations that destabilise prices and prejudice farmers.

The introduction of the commodity market will also see the government broadening its revenue base both from agriculture and other sources.

Economist Eric Bloch said the market should not only focus on well-known commodities such as tobacco.

“It makes a lot of sense to introduce the exchange now. It offers a platform for the commodities to fetch international prices,” he said.

Zimbabwe Farmers’ Union director Paul Zakariya said there was no better time for the re-establishment of a commodities market in the country.

“As key players in the agricultural sector, we think it’s positive development that would definitely go a long way in easing frustrations of non-payment by farmers.”

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