ZMX to enhance farm profitability

FINANCE minister Mthuli Ncube says the Zimbabwe Mercantile Exchange (ZMX), a commodity ex-change platform that was launched last week, will increase efficiency in farm produce marketing, enhance profitability and access to agricultural markets.

The ZMX shall be based on a Warehouse Receipt System and is designed to support agricultural development in Zimbabwe, according to the Treasury boss, who officiated at the launch.

"This exchange will provide convenience and efficiency in the marketing of agricultural commodities and this will ensure enhanced profitability, access to markets, finance and credit for farmers," Ncube said, noting that the launch would "revolutionarise our agricultural sector".

Contributing about 17% to the country's gross domestic product, agriculture is one of four sectors that have been earmarked by government to drive economic recovery. The others are mining, tourism and manufacturing.

Official statistics indicate that the sector provides employment and income to more than 65% of the country's population, and its influence is felt across industries, including Zimbabwe's mostly agro-based companies. Through the 2021 national budget, government allocated the equivalent of US$500 000 towards the establishment of the commodity exchange. The exchange initiative is a partnership between the government and the private sector.

Private sector participants include, the Financial Securities Exchange (Finsec), a licensed securities exchange, TSL Limited, a publicly-traded agro-industrial business and CBZ Holdings, the country's biggest financial services outfit which trades its stock on the Zimbabwe Stock Exchange.

"The Warehouse Receipt System is key in addressing one of the challenges farmers face, that of poor storage facilities resulting in post-harvest losses," Ncube said.

"According to the Food and Agricultural Organisation estimates, post-harvest losses encountered by small scale farmers can be as high as 25%. "The innovation will greatly assist in reducing these post-harvest losses thereby giving our small-scale farmers more value for their efforts.

"The infrastructure that has been developed is suitable for both commodities classified as strategic grains such as maize, wheat and soya beans, as well as any other agricultural commodities including the likes of barley, coffee, groundnuts, macadamia nuts, millet, oats, pecan nuts, rapoko, rice, sorghum, sugar beans, tea, cow peas and round nuts."

Over the past few months, the Ministry of Agriculture, together with the Ministry of Finance, have worked on supporting legislation culminating in the gazetting of the Warehouse Receipt Regulations under Agricultural Marketing Authority (ZMX) Rules, 2021 to regulate the registration of warehouses and the issuance, negotiation, trading and settlement of Warehouse receipts.

Ncube said approved dealers would be used to facilitate the grading, certification and physical safe-keeping of commodities prior to and during trading through the ZMX. He said the commodity exchange and Warehouse Receipt System were being rolled out across the country to various key stakeholders in the agricultural value chain.

"The commodities exchange will encourage formalisation of small-scale farmers to ensure the sustainability of the farming activities, increase in access to credit facilities through collaterisation of agricultural produce and enhance the farmers' contribution to employment creation, environmental conservation and economic development," Ncube said.

"This can only be possible if we embrace innovation, cooperation and development as key drivers of the agricultural sector."