Dar es Salaam. Farmers of some crops have a reason to concentrate on production and value addition as the commodity exchange seeks to solve the challenge of markets.
The platform, which will start trading of strategic crops such as cashew nuts, sesame, tea, coffee, cotton and maize, is supervised by the Warehouse Receipts Regulatory Body (WRRB) in association with the Tanzania Mercantile Exchange (TMX).
It is expected to bring markets closer to farmers, increase transparency, reduce transportation costs and time, according to TMX chief executive officer Godfrey Malekano who spoke last week during a seminar on the new system for agriculture stakeholders.
“We are starting with spot exchange for now and because this system will depend much on information and communication technology system, it will reach buyers within and outside the country. We are working on it and we will soon implement it,” he said, adding that they will be working with Tanzanian embassies of Tanzania in finding markets by using ICT.
The ICT system will connect farmers, buyers and regulators. They will be able to access and see market situation from where they are.
According to WRRB managing director Augustino Mbulumi, the big role will now be to collect crops, grade them and ensure their quality so that they will be used by TMX for exchange.
“After storing and grading and adding value to them we will tell TMX through ICT so they can have this in their system” he said.
To ensure value maintenance, WRRB uses quality packages known as hermetic bags so that no insects penetrate. The crops will be stored in silos.
Farmers must store their crops in the Warehouse Receipt System (WRS) and receive receipts.
The process involves undergoing commodity verification and grading before the receipt is issued.
To reduce storage costs to farmers, WRRB is working with the Tanzania Cooperative Development Commission (TCDC) to collect produce for storage in bulk as it is easy to find markets for them.
Farmers will wait for their crops to be sold. TMX agents will look for markets using their local agencies which will be dealing with local markets and information from foreign countries will be provided by respective embassies.
To avoid risk of money loss or counterfeits by conmen after transaction, the produce owners will receive their payments directly into their bank accounts, one day after trading.
The TCDC registrar of cooperatives, Mr Tito Haule, hopes the system will ensure farmers and buyers get what they deserve in such a way that farmers will have full follow up of their produce until they are sold and they will get paid once the transaction is completed while buyers will get produce of the quality they want.
He said that the role of TCDC is to collect farm produce from farmers and educate them on the importance of WRS and how they will access market through the new established commodity exchange.
Depending on the time commodities stay in the warehouse, farmers will pay only the same price for storage and the owner of the produce will have access to loan by up to 60 per cent of their produce value only by showing the receipt.
Mr Mbulumi said the system will also minimise risk and transaction costs, quality assurance and encourage the farmers to produce more.
Mr Malekano said farmers will now, have no need to search for markets for their produce as TMX will be dealing with that and buyers will have easy access to large quantity and quality crops as they will have reliable data and information about the market.
“Farmers should now concentrate on production and it will enable crop boards to focus on supporting farmers to increase production while buyers will use ICT system to access the commodities they want,” he said.
Mr Malekano said the commodity exchange would help farmers to make decision on the price of the crops they sell and they can now deal with commercial farming.
The permanent secretary in the Prime Minister’s Office, (Policy and Coordination), Prof Faustine Kamuzora, said the commodity exchange would increase opportunities.
He said the value chain system from farmer to seller set to remove all leakages, so that ever participant would get what he/she deserves.
“To make farmers confident financial institutions must connect them to their mobile money so that they can have easy access to their bank accounts,” he said.
