Stable food farmers can now heave a sigh of relief with the inauguration of the Ghana Commodity Exchange (GCX) in Accra today.
The exchange is a regulated market system that links buyers and sellers of commodities in agricultural produce, minerals and petroleum products, among others, on an electronic platform for licenced dealers to trade.
The GCX will start trading in staples such as maize, soya bean, paddy rice, dry beans, millet, sorghum and groundnuts.
The President, Nana Addo Dankwa Akufo-Addo, is expected to ring the bell to signal formal trading on the exchange which has successfully completed a pilot operation this year.
The Chief Executive Officer of the GCX, Dr Kadri Alfah, who disclosed this to the Daily Graphic in Accra last Friday, said the exchange would later bring on board cash crops such as cotton, coffee, cashew, shea butter, timber and cocoa, as well as vegetables, livestock and fish.
“The commodity exchange is an electronic platform that uses technology to support the market to bring efficiency with the ability to move commodity from production to transaction,” he explained, and added that the exchange which worked on a warehouse receipt system ensured that commodities traded on the platform were standardised and also met strict health and safety criteria.
Warehouse receipt system
Dr Alfah further explained that the exchange, through its warehouses, took custody of commodities from farmers which were weighed, graded, packaged and stored.
The warehouses also tested the produce for moisture and micro-organisms that could affect the health and safety of consumers.
The warehouses then issued receipts or certificates (or title of ownership) to the farmer, which represents their valued asset in stock. The farmer can then decide to sell the receipt on the exchange or hold on to it and sell at a future date when the price of the product goes up.
According to Dr Kadri, the exchange had not come to collapse existing markets where middlemen acted between the farmer at the farm-gate and buyers but to provide an alternative system to actors on the value chain to access standardised and safe products and also ensure the efficient movement and distribution of commodities from the production centres to where they were needed.
“We also have to remember that the commodity exchange has come in to complement what is already there.
It is not coming in to push existing players away but comes in for a market system that is craving for alternatives,” the CEO stated.
The GCX is currently operating its own warehouses located in Tamale, Wenchi, Ejura and Sandema.
Even though the exchange has its technical staff, it works closely with the Ghana Standards Board, the Food and Drugs Authority, the Ghana Grains Council and all other actors in the warehousing and commodity trading chain.
The CEO said the rationale was to conform to national standards in ensuring that commodities were stored for the desired duration, which is more than three months.
Benefits to farmers
Other benefits to the farmer include the ability to use warehouse receipt as collateral to obtain credit from financial institutions.
Dr Alfah said already the GCX was working with some banks which were prepared to accept the receipts and offer quick short-term credit to farmers.
He said the farmers could also access a range of insurance products to protect their farms.