The Zimbabwe Mercantile Exchange (ZMX) has shown that organized commodity markets can help agricultural producers by giving them fair prices based on market demand.
The newly opened ZMX is starting to become popular among farmers and traders following an increase in the amount of trade happening and the prices of goods being traded.
It was launched last month with intentions to make it easier for farmers to trade their agricultural products using an online auction platform.
Earlier this month, 185 tonnes of maize were traded at US$315 per tonne, demonstrating steady price growth from the debut auction. At time of its launch in June 93 tonnes of white maize were traded at US$260 per tonne, both volumes and prices have trended upwards as participant confidence grows.
“Maize volume retreated to 188.14 tones from last week’s 327 tones.
“maize prices increased marginally to US$315 per tonne from week’s US$310 per tonne,” reads the latest auction statement.
In addition, the amount of products available for auction increased a lot this week. Last week, there were only 376 tonnes of products, but this week there are 2,285 tonnes because more producers are selling their goods.
ZMX is successfully getting more sellers by offering a wider variety of products. The big amount of soybeans worth US$1. 9 million on the first day shows that farmers are really interested in the new platform. Soybeans was introduced this week, with 4,000 tonnes auctioned at US$480 per tonne.
The important thing is that the prices at which buyers want to buy and sellers want to sell are coming closer together hence shows that the process of determining a fair price is working well. In the last month, the average price that people are willing to pay for something went up from $260 to $315 per ton.
The ZMX conducts auctions online weekly, providing a transparent market for agricultural commodities. Following the government’s deregulation of soybeans, wheat, and barley in July 2023, the exchange rapidly expanded its product scope, enabling farmers to reach a broader buyer base.
Moreover, some experts are say that the emergence of organized commodity trading is a positive development for the agriculture sector, according to experts. An efficient market improves liquidity, reduces transaction costs through competitive bids, and allows better price discovery.
The current maize prices are already competitive with imports from South Africa, proving the exchange can become a viable sales channel for Zimbabwean farmers.