Trade on the AHL Commodities Exchange (AHCX) has rolled out on a high note with 30 metric tonnes of soya beans sold on the first day at prices ranging from K160 (about 40 US cents) to K180 (45 US cents) per kilogramme.
AHCX head of operations Davis Manyenje told Nation Online on Thursday the trade, which took place at warehouses in Mponela, Dowa and Lilongwe, is expected to pick up as time goes by, largely buoyed by the government’s waiver for farmers to export their produce amid an export ban issued last year.
“We have started with grade B soya beans because it is in large quantities and is also a crop we had orders on. We expect that as people develop confidence in the system, more farmers will join the trade. There are others who are also watching the price movements and are expected to join,” he said.
A commodities exchange creates an organised marketplace for agriculture produce which serves all market players equally and transactions are conducted in as efficient and low-cost a manner as possible.
All along, State grain marketer, Agricultural Development and Marketing Corporation (Admarc) has been the sole trader in agriculture commodities in Malawi; hence, the AHCX providing an alternative.
Manyenje said some farmers have already secured export orders for their produce and the commodities exchange will facilitate their deals.
For a farmer to have the crop accepted to be traded on the commodities exchange, it has to meet certain specified criteria after being assessed by an independent grader, and these include moisture content, level of impurities, broken kernel, foreign matters and colour.
Thereafter, the depositor (farmer), in agreement with the warehouse manager and grading specialist, will confirm and acknowledge the assigned grades by signing the grade sheet and after all the processes followed through, the warehouse shall produce what is called a commodity deposit acknowledgement (CDA) and each (farmers and warehouse manager) will get a copy.
The warehouse shall then electronically transmit the CDA to the central depository and after approval, it will be changed into a warehouse receipt in readiness for trading.
But Manyenje said as the commodity dries, farmers will be selling grade A of their crop to be in line with international buyers’ requirements.
The exchange is charging a handling fee of K7 500 (about $18) per deposit and a storage fee of K30 per metric tonne per day.
A Blantyre-based portfolio advisory firm, Alliance Capital Limited, said this week the commodities exchange market is a revolution to the agricultural sector and will have a tremendous economic impact to the nation as a whole if fully supported.
Apart from Lilongwe and Mponela in Dowa, AHCX has warehouses in Karonga, Mzuzu, Kasungu, Balaka, Limbe in Blantyre and Bangula in Nsanje and plans are under to establish more.