THE government has disbursed $500 000 for the establishment of the Agriculture Commodity Exchange expected to be operational during the upcoming grain marketing season, Finance minister Tendai Biti has said.
Presenting the state of the economy report for April in Harare on Tuesday, Biti said in order to ensure efficiency in the marketing of the country’s agriculture produce, the government was moving with speed to establish the agriculture commodity exchange.
“In this regard, an amount of $500 000 has been disbursed towards the establishment of the commodity exchange. It is anticipated that the exchange will be operational during the forthcoming grain marketing season,” said Biti “The exchange should bring about market discipline, eliminate delayed payments to farmers, as well as ensure a competitive price regime for agriculture produce,” said Biti.
Last month, the Finance minister said he would provide $1 million to revive the exchange.
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 (GMB) was given a monopoly to buy wheat and maize.
GMB’s monopoly was removed in 2009 when the government liberalised the market.
Zimbabwe tried to revive the commodities exchange in the 1990s, but the plan was abandoned a decade later.
GMB has been slow in paying farmers and consequently agricultural production in Zimbabwe has suffered.
GMB has been the major buyer of maize as well as wheat and a price setter.
Due to capital constraints, the entity has been struggling to ensure timeous payment for the delivered grains.
The exchange is also expected to bring about discipline in the market and a competitive price regime for agricultural produce.