How farmers will benefit from the commodity exchange system

Three weeks ago, Tanzania Private Sector Foundation (TPSF) inaugurated the commodity exchange system with the aim of promoting the various development activities of the small scale farmers in the country. In line with this inauguration, TPSF organized a seminar with a view to deliberate some crucial issues to be included in the trade so as to empower farmers in the country, and reaffirmed its commitments to effectively promote the programme in order to make it become successful in the country. A half day workshop under the theme titled “Private sector role in development” discussed ways on how private sector could benefit through commodity exchange programme while the government is currently preparing a legislation that would guide its operation. The programme which has been introduced by the government aims to ensure together with other things better quality of agricultural commodities to be sold in market by determining fair selling price rates, commodity standards and their grades as well as free market opportunities.   This is a new method which has been adopted by the government whereby farmers will now benefit from their farm commodities and in addition to that, it will help to a greater extent ward off the existing disparities which has been there between farmers and the market stakeholders in the country. To be implemented with the auspicious support of TPSF, the system is designed to reduce bureaucracy which is reported to have been undermining the cashew nut industry and other cash crops as farmers labour and toil was thwarted by long delayed payments. In addition to that, the system will help enlarge local market capability by way of facilitating prompt payments and reduce long bureaucracy which farmers are currently facing of demanding long overdue payments for their agricultural crops notably cash crops.  Under the system, local farm producers would trade freely their products at the local market level that would be made available with various agricultural commodities. To start with, the government has put in place commodities such as maize, rice, cashew nuts, peanuts and sunflower oil seeds. In addition to the most agricultural commodities to be traded under the systems, TPSF’s Chairman Dr. Reginald Mengi requested the government to include other commodities such as minerals to be traded in the system in future once business operation picks up.In his speech, Dr.Mengi stressed the importance of trading gold and other mineral gemstones as these are also among the commodities which should not be left behind for private sector development in the country. He later on highlighted some challenges facing the agricultural sector and the most daunting factor from which the sector suffers most, is the cost of transportation for a number of bulky agricultural produce which is recorded as constituting up to 40 percent of total cost. He also noted that, access to finance that is a key for efficiency along the entire agricultural value chains is particularly problematic at the marketing level in the country.  In spite of all these, he however appreciated the government’s move for the initiatives it has taken so far to overcome the impending situation. Elaborating more on commodity exchange for Tanzania, Dr. Mengi noted that, this is a development programme that could play in the transformation of agricultural trade and is a centre piece in the process of the agricultural sector transformation. The purpose of commodity exchange system is to provide a centralized marketplace where commodity producers (commercials) can sell their commodities to those who wish to use them for manufacturing or consumption.  The Chief Executive Officer of the Capital Markets and Securities Authority (CMSA) Ms. Masama Massinda whose organization is spearheading the programme on behalf of private sector in the country said there are a number of benefits the sector would benefit. She said in an exclusive interview when contacted that, creation of jobs and better commodity price rates are among the elements that the sector should expect to get, others she noted are farmers in the country would access different varieties of commodities in the market.

 

 

The Chairman of Tanzania Private Sector Foundation (TPSF) Dr. Reginald Mengi

She further noted other benefits are the presence of large volumes of commodities in the market, in this aspect she elaborated that, there will be a transparency on commodity selling whereby most commodities would be fetched at a cheapest price rates. According to her, there would be no cheating of prices as everything would be made open and the information would be scattered at all centres to be allocated later in various selected main trading points equipped with special warehouses throughout the country. She said thorough inspections would be carried out at the main godowns to verify the quality and the quantity of commodities brought for sale at the market whose prices would be determined correctly according to their standards. Currently the CMSA is preparing policies and regulations to make the system operate effectively so as to deter commercial speculators from outside to manipulate the system from operating.   Quoting on the issue, a consultant on agricultural commodity price control Bede Lyimo has highlighted the importance of the programme and noted that, the market will be dominated with fair price rates as these are important mostly for farmers in the country. Lyimo who has been assigned by the TPSF as a consultant to help private stakeholders in agricultural commodities and direct them in whatever ways possible noted that, in order to facilitate the move, the private sector needs to establish warehouses. Speaking in an exclusive interview with The Guardian yesterday in Dar es Salaam, Said Awad, a cashew nut small holder farmer from Kitema village in Tandahimba District, Mtwara Region welcomed the government initiative describing it as ‘a saviour’ of the cashew nut farmers in the region. He says the system is designed to facilitate prompt payments for farmers for their produce and the market assurance so as to encourage increased productivity. TPSF’s Director for Membership Services, Louis Accaro said that payment delays will now be a thing of the past and farmers can rest assured that they will be no more frustrating bureaucratic procedures as the system will operate on a ‘pay upon delivery’ principle. Further, he said the system will be complemented by initiatives geared at improving not only production capacity but also improvement in the quality of the product to meet market standards. “The warehouse receipt system will also put an end to unscrupulous middlemen cheating the farmers on prices,” he said, noting that through the system, prices will be consistent across all purchase centers due to be set up across the region. The director outlined other benefits of the system to include, creation of jobs, transparency of trade transactions and a reliable and secure market. All in all, the system will ensure a peace of mind for the farmers, Accaro concluded. Trading in the commodity markets has been around for more than 150 years in the U.S. and there is evidence the commodity trading began more than a 1,000 years ago in Japan. Commodities are simple goods that make up the basis of food supply and manufacturing of goods.