Auction Holdings Commodity Exchange has invested $17 million (K5 billion) in setting up markets across the Malawi.
Commodity Exchange advisor Dr Bharat Kulkarni said the company is now operational and all international processes such as setting up rules and putting in place mechanisms on how grading will be done have all been finalised .
A commodity exchange is a highly organised market where local farmers will be selling their crops which will in turn be exported and earn Malawi foreign exchange.
“We have already set up warehouses in Bangula, Limbe, Balaka, Lilongwe, Mponela, Kasungu, Mzuzu and Karonga and the exercise has consumed between $15 million and $17 million.
“Our plan is to have a warehouse within a radius of every 200 kilometres so that Malawians can easily access our markets. We are optimistic that with this kind of a set-up, most farmers will move out of poverty,†he said.
Kulkarni, who was influential in setting up commodity exchange markets in Ethiopia and India, said prizes for farm produce sharply rose after a similar initiative was introduced in those countries.
“In Ethiopia, crops such as sesame and coffee were poorly priced before the commodity exchange was set up, but Ethiopia now is one of best exporters of coffee,†he said.
He said the Indian and Ethiopian commodity exchange markets were championed by the United Nations, but Malawi is lucky because the project is done by a local company.
“The commodity exchange allows international buyers to take part in the buying process and farmers decide when to sell their crops. At the moment, farmers are pressurised to dispose of their products and some, in fact, sell their products before they are planted,†said Kulkarni.
With the commodity exchange, most scrupulous traders who were ripping farmers off will now be put out of business.
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