The government on Monday launched the agricultural commodities exchange that will ensure that market forces will determine the prices of farm produce and close the existing arbitrage gaps caused by middlemen.
Speaking at the launch, Finance and Economic Development Minister Mthuli Ncube said the commodities exchange will be supported by a warehousing receipt system. Ncube said:
The commodities exchange will provide an organized market of players across the agricultural commodities value chain which include small-scale to large-scale farmers, buyers, regulators, retailers, banking institutions and warehouse operators.
This will close the existing arbitrage gaps caused by middlemen and stimulate price discovery.
According to online sources, a warehouse receipt system enables farmers to deposit storable goods (usually grains or coffee) in exchange for a warehouse receipt.
On the other hand, a warehouse receipt is a document issued by warehouse operators as evidence that specified commodities of stated quantity and quality have been deposited at a particular location.
In 2001 the Zimbabwean government closed the commodity exchange and gave the monopoly to buy and sell maize and wheat to state grain procurer, the Grain Marketing Board (GMB).
The latest development means the government will no longer fix the prices of agricultural commodities.