Zimbabwe Commodity Exchange to be launched

Zimbabwe will on Friday revive the commodity exchange nearly a decade after such a noble gesture was abandoned when the Grain Marketing Board (GMB) was given monopoly to buy wheat and maize.
GMB's monopoly was removed in 2009 when government liberalised the market to ensure competition needed to drive the economy.
In a statement the ministry of Industry and Commerce said: "The Ministry of Industry and Commerce in collaboration with the Stakeholder Working Group would like to inform valued stakeholders that the Commodity Exchange in Zimbabwe (COMEZ) will be launched on 14 January 2011."
A commodities exchange is a platform where buyers and sellers of agriculture commodities meet.
The ministry said COMEZ "is aimed at facilitating commodity trading to occur in an orderly, transparent, low cost and mutually beneficial manner". A press conference scheduled for Wednesday was pushed to Friday as the minister of Industry and Commerce, Welshman Ncube was held up in another meeting in Bulawayo.
Besides giving producers an opportunity to sell their crop, analysts say a commodity exchange provides farmers with an opportunity to access funding for the next agricultural season.
Through the Warehouse Receipt Act, producers can take their produce to the warehouse, have them weighed and graded before they are given a warehouse receipt.
"With a receipt, the producer can trade their produce on the commodity exchange or wait until the market prices rise. Alternatively, producers can use the warehouse receipt as collateral to access loans from financial institutions," an expert said.
The revival of the commodity exchange comes after intensive lobbying by various stakeholders to introduce competition on the agricultural market.
A private company, MScEX, said in 2009 that it was on the verge of setting up a commodity exchange and said it had the green light from two commercial banks that had promised to avail US$2 million.
Despite the announced, MScEX never came back to brief the market on progress towards the revival of the exchange.
Zimbabwe tried the commodities exchange in the 1990s but the plan was abandoned a decade later.
Under the Zimbabwe Agricultural Commodities Exchange (ZIMACE) a commodity exchange was born in 1994, a brainchild of the Commercial Farmers Union and Edwards and Company, a stock broking firm.
The project was abandoned seven years later when GMB was given monopoly over wheat and maize.
According to Statutory Instrument 235A of 2001 maize, maize-meal, wheat and wheat-flour became controlled products.
GMB's monopoly was removed in February 2009 when government liberalised the market to ensure competition needed to drive the economy.
Finance Minister Tendai Biti told a parliamentary portfolio committee in October that Zimbabwe needed to revive a commodity exchange to eliminate distortion on agricultural pricing.
He said while GMB was buying a ton of maize for US$275, the same ton could be imported from South Africa at US$220.
"We need as a matter of urgency the restoration of ZIMACE, the restoration of a marketing platform for agriculture," Biti said.
Biti told a parliamentary portfolio committee in October that Zimbabwe needed to revive a commodity exchange to eliminate distortion on agricultural pricing.
He said while GMB was buying a ton of maize for US$275, the same ton could be imported from South Africa at US$220.
"We need as a matter of urgency the restoration of ZIMACE, the restoration of a marketing platform for agriculture," Biti said.