Zimbabwe Mercantile Exchange gaining traction
The Zimbabwe Mercantile Exchange (ZMX) is fast gaining traction from farmers who are appreciating the critical role of the commodity exchange in empowering them as there is an upsurge in volumes and prices of commodities at the trading platform.
The ZMX initiative is a partnership between the Government and the private sector led by the Financial and Securities Exchange Limited (FINSEC), TSL Limited and CBZ Holdings.
One of the key objectives of the ZMX is to provide an open market for commodities, with willing buyers and willing sellers providing price discovery mechanisms.
The exchange also ensures a timeous settlement of transactions, on a willing buyer-willing seller basis with both parties agreeing on the price.
The auction system is practiced the world over as a safe trading platform for agricultural produce, as it benefits market forces freely determined by buyers and sellers.
ZMX deals with small-scale, medium-scale, and large-scale farmers, and agro-processors.
The auction is in accordance with the ZMX Trading Rules gazetted in Statutory Instrument (SI) 184 of 2021 and started with maize and eventually will include all other commodities listed on the exchange.
The agriculture commodities exchange’s first trade was in June and saw 93 tonnes of maize worth US$24 050 going under the hammer.
ZMX Trades and Markets Coordinator, Mr Dennis Chisevure told Business Chronicle that the exchange commodity is experiencing a positive response from farmers.
For instance, this week maize volumes traded rose steadily to 327 tonnes and prices increased to US$310 per tonne up from US$290 the previous week.
“In terms of response by farmers, we are seeing a positive response, they are appreciating the relevance of ZMX into their farming space.
“Farmers are now part of price setters and not price takers, they set the price they want for their commodities and the demand side is also seeing the prices being asked by farmers. This is contributing to price discovery,” said Mr Chisevure.
“Any farmer in Zimbabwe from anywhere and any province can participate in the commodities exchange. From all areas participation has been slow but gradually increasing as farmers are starting to appreciate it.”
Mr Chisevure said farmers are now equipped with relevant information and they do not need to rely on middlemen.
“Farmers now know that ZMX prices are the right prices, it’s a certified and regulated market place which gives the correct price.
“This has enhanced and given the power to farmers to say, for this commodity we want this price. With the coming of the exchange we have empowered farmers in terms of information and other market dynamics,” he noted.
Another benefit for farmers is the usage of storage facilities by farmers within the ZMX.
“We have warehouses in all provinces where farmers can deposit their commodities and we are working on engaging more service providers to have as many warehouses as possible and be close to farmers to cut on transaction costs. Usually farmers are forced to sell even at low prices as they have nowhere to store their commodities. Now they have the option to store and sell later.”
Another key benefit to farmers is access to loans from financial institutions using commodities as collateral.
“Farmers now also have the benefit of accessing finance through banks while using their commodities as collateral. Most farmers had no collateral, a development that prevented them from accessing loans from banks.
“Now they have an opportunity to use their commodity as collateral and get loans from banks and improve investment at their farms and other expenses.”
Mr Chisevure said the commodity exchange is conducting awareness campaigns using different platforms that are available which include attending area shows, provincial agricultural shows and visiting farmers.
“We are on an overdrive of reaching out to farmers. We are making all efforts to reach out to every farmer countrywide,” he said.
This week, the commodity exchange said it has expanded tradable commodities.
The updated list of commodities tradable on the auction with effect from 2 August are maize, soybean, sugar beans, sunflower, white sorghum, red sorghum and wheat.
In a notice, ZMX said, “Marketing and trading of soybean, wheat and barley has been liberalised following the gazetting of Statutory Instruments 129 and 130 by the Government of Zimbabwe on 21 July 2023,”.
“Self-financed and private contractors may now sell these commodities through ZMX,” said ZMX.
“Those interested in participating in the auction are required to register with ZMX and Agricultural Marketing Authority (AMA) as required by the law. Once registered, farmers and contractors can deposit their commodities into ZMX-certified warehouses and receive warehouse receipts that will be used for trading,” added ZMX.
With the auction, buy and sell orders are posted continuously but matched at the end of the auction with one clearing price.
The mechanics of the auction are designed to cater to as many buy and sell orders as possible, allowing buyers and sellers with similar needs to meet in the market at once.
-chronicle
