GHANA COMMODITY EXCHANGE IN COLLABORATION WITH JUABEN FOOD BANK LAUNCHES OPERATIONS IN JUABEN.
from left to right (Nana Adjei Ayeh II, GRIB President, Mrs. Tucci Ivowi, CEO of GCX, Nana Otuo Siriboe II, Omanhene of Juaben & Chairman of the Council of State, Nana Abeyie Siriboe, Founder of Juaben Food Bank Limited, Hon. Ama Pomaah Boateng, MP of Juaben and Garry Adu-Darko, Executive Director of JFBL.)
The partnership between the Ghana Commodity Exchange (GCX) and the Juaben Food Bank (JFBL) was concretized with the launching of GCX warehouse operations and the JFBL rice and maize milling plants on 7th September 2020 in Juaben. Thanks to the Government flagship programme, Planting for Food & Jobs, more good quality grains are being produced across the country. And now, thanks to the Juaben Food Bank, the Ghana Commodity Exchange can support farmers in the Juaben municipality to store their grains securely, in a quality fashion, and then be assisted to find markets for their produce.
The Juaben Food Bank (JFBL) has constructed a 1,000MT warehouse with an additional structure that accommodates a rice-processing unit and a maize processing unit with daily capacities of 40-tonnes and 100-tonnes respectively. And in order to put to work the MOU signed between JFBL and GCX, this first warehouse will be operated by the Exchange for the purpose of storage and trading of commodities.
The establishment of this warehouse in Juaben will undeniably enable farmers and crop producers in the area to experience an increase in income from their farm produce. This is due to the fact that there will be an improvement in post-harvest management thanks to the storage handling services and facilities provided by GCX.
The objective of the occasion was to formally launch the warehouse and introduce GCX to farmers and traders in the local communities, highlight the benefits of trading through GCX, whilst rallying the support of opinion leaders in these communities.
Nana Otuo Siriboe II, the paramount chief of Juaben and Head of the Council of State had this to say; “We the people of Juaben take pride in being one of the largest maize producing districts in the Ashanti region. Now with GCX, our farmers will no longer be faced with the problem of inaccessibility to wider markets due to the substandard quality of commodities as well as the high transportation costs and weak bargaining power when trading. I therefore wish to express my deepest gratitude to Ghana Commodity Exchange for bringing positive change in the production and marketing of commodities particularly maize and rice when listed here in Juaben”.
Addressing the farmers and community leaders, Tucci Ivowi, the Chief Executive Officer of the Ghana Commodity Exchange shared that “With GCX linking the smallholder farmers of Juaben to a larger sample of buyers, they will be able to get more competitive prices for their produce; and this is money that they can reinvest into their business and develop themselves as market actors. Farmers who deposit their commodities with GCX have access to affordable drying, cleaning, and weighing facilities, which allied with the grading process, gives them the opportunity to meet international standards with their produce and be more attractive to international buyers”.
It is worth noting that, Ghana Commodity Exchange is getting ready to launch rice contracts on its trading platform; a move which is of importance to farmers in Juaben, it’s surrounding areas and the nation as a whole. As it has started to do in the maize, soyabean, sorghum and sesame sector, the GCX aims to contribute to the improvement of the rice value chain and bring stability and value to rice farmers in Juaben and across all rice producing areas in the country. Farmers in Juaben will have access to all the grading and storage facilities that will bring value to their crop and allow them to reach a wider market.
The Ashanti Regional Director of Agric, Rev. John Manu said; “For farmers who participate in the Planting for Food and Jobs programme, the Juaben warehouse presents an opportunity to derive value from forward and backward linkages between producers and commodity chain actors created as part of the initiative. These farmers, who also benefit from a subsidy on the cost of inputs, can generate higher profit margins when trading through GCX. The linkage between Planting for Food and Jobs and GCX has the added benefit of achieving the government’s goal of improving food security and reducing poverty among Ghanaian farmers.”.
The launch was graced with a number of dignitaries including The Omanhene of Juaben, Nana Otuo Siriboe II who doubles as the Chairman of the Council of State, the Member of Parliament of the Juaben Constituency Hon. Ama Pomaah Boateng, the president of GRIB Nana Adjei Ayeh II, the Policy Advisor of the JAK Foundation, Nana Ama Oppong-Dua, the MCE’s of Juaben, Ejisu, Fijaise and Konongo, The Police Commander of the Juaben Area, representatives of SEC, Juaben Rural Bank, Juaben Polutry Farmers Association, Various farmer cooperatives among many others.
About GCX
GCX was established in November, 2018 to provide Ghanaian farmers with access to markets through a fair, transparent, structured trading system. Ghana Commodity Exchange has warehouses in Afram Plains, Kumasi, Ejura, Wenchi, Kintampo, Tamale, Wa , Sandema and Juaben, where farmers can deposit commodities and trade to diverse buyers. GCX also supports buyers by guaranteeing the quality and quantity of commodity sold. GCX is regulated by the Securities & Exchange Commission of Ghana. Since inception, GCX has been working to assist farmers to reduce post-harvest losses by helping them manage the post-harvest quality of their grains and linking them to markets.
About Juaben Food Bank
Juaben Food Bank Limited (JFBL), a wholly Ghanaian owned company, was incorporated under the laws of Ghana in 2019 with the principal object to undertake general agri-business with a focus on agro-processing and agri-warehousing. The company currently seeks to venture into the production and procurement of grains and root tubers, its processing and onward marketing to local and foreign targets.
JFBL is driven by an objective to increase the local production of maize, rice and cassava required for industrial use; such as breweries, poultry and livestock feed processors as well as food and beverage producers, and ultimately the creation of employment. Accordingly, it relies on best farm practices and the engagement of technical experts in agronomy and agribusiness to ensure this objective is attained in an effective and sustainable manner.
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Kumasi (April 24, 2018) The Ghana Commodity Exchange (GCX), a trading platform for physical commodities and futures contracts, under the auspices of the Ministry of Finance, piloted trading operations on the 24th of April 2018.
The Government of Ghana’s drive to support smallholder farmers, increase value along the agricultural value chain and provide export opportunities for Ghanaian commodities, has led to its investment in GCX, in its bid to structure the commodities market towards the eventual commencement of regular formal trading. This is being done by piloting the trading of maize in certain parts of the country, with maize stored in warehouses in Bonyo/Ejura in the Ashanti region and Sandema in the Upper West region.
On 24th April 2018, GCX brought together sellers and buyers of maize from all parts of the country to participate in its first auction trade which took place in Kumasi. 126 farmers were involved and several amongst them sold 136,000 GHS of trade during two (2) trading sessions, using a Reserve Auction trading mechanism. Buyers of maize had the opportunity to purchase high quality maize (GCX grade 1) whilst sellers (mostly small holder farmers) received premium prices and are benefiting from access to a wider market for their goods. Both parties benefiting from low transaction costs, the model presents a sustainable alternative to low prices and margins.
The Chief Executive Officer (CEO) Dr Kadri Alfah explains, “GCX initiated this pilot trading operation largely to demonstrate our structured trading concept which includes; commodity quality testing, grading, weighing, packaging and standardization, and to prepare our farmers and other market actors for our planned electronic trading and electronic warehouse receipts (e-WR) later this year. We are learning from other commodity exchanges that failed in Africa because they did not plan ahead to get the market behind them prior to the establishment of the trading platform”.
With many more of these trading sessions planned, GCX intends to use this initiative to educate and train market actors including farmers, farmer cooperatives, traders, brokers, financial institutions, regulators and warehouse operators to get everyone involved from the beginning.
During the first trade, farmers of White Maize were provided the opportunity to deposit their commodities, and have them graded, where they conformed to meet national and international market standards, prior to sale in a GCX Reserve Auction trading floor. Title was transferred from sellers to buyers using highly controlled contracts. GCX has established a system of performance guarantees including guaranteeing the quality and quantity of the commodity traded, freeing the farmers from the risk of commodity losses.
According to the farmers who participated in the trade, the auction was a simple, transparent and beneficial process. They were happy to receive the support to weigh and grade their grains. Some of them said they didn’t know they had high quality grains and could receive a premium for it. They were also happy to be presented with buyers which saved them time and cost. The biggest surprise for them was that they received contracts for their trade, with the guarantee from GCX that they would receive their cash settlement within five (5) days of the trade. This is fully in line with GCX’s objectives to help farmers sell their products at fair and competitive prices by providing them with real time price and market information while facilitating their access to financial institutions for loans and financing opportunities.
GCX has come at the right time to support the Government’s “Growth and Transformation Plan” to double production of key stable crops, improve storage and improve the general wellbeing of Ghanaian farmers and the people of Ghana. GCX is expected to play a crucial role in supporting government initiatives such as the Ministry of Food and Agriculture’s “Planting for Food and Jobs” and the “One District One Warehouse” initiative. GCX will support these initiatives by collaborating to provide warehousing management and quality control systems.
The GCX trading mechanism used for the pilot was a Reserve Auction. Interested buyers had the opportunity to interact with the farmers to discover prices in a fair and transparent manner. A Reserve Auction is a payment against delivery system whereby the farmers ( sellers ) announce a minimum price for their product incorporating their production cost in the sale price. The buyers then put in a bid to match the farmers’ asking price, factoring in transportation and other costs. By so doing, both the buyers and sellers hedge against their cost in a win-win situation for all.
30th May 2018: The Ghana Commodity Exchange (GCX) has brought together over forty (40) market actors from across several commodity value chains to provide inputs into the ongoing implementation phase. Members included representatives from farmer groups, aggregators, logistics companies, traders/brokers, agro-processors, manufacturers, financial institutions, insurance companies, and developmental organisations.
Representatives from the commodity value chain market actors form the GCX Market Council, who are playing key roles in the activities of the Ghana Commodity Exchange (GCX). The Council was established to solicit inputs and feedback on the various elements needed to ensure a successful implementation of the commodity exchange for Ghana.
During the session, the GCX team gave a status update on GCX activities, shared details on the GCX Membership Process and outlined the structure, rules and processes of the current trading activity that GCX was undertaking.
The GCX team explained that in its efforts at structuring the commodity market for the eventual spot trade activities later this year, the market council has a crucial role to play.
Whilst several challenges were highlighted by market council members, there were extremely positive sentiments regarding the role of the Exchange and a commitment by council members to champion the cause, providing insights and actions towards contributing to a successful establishment of the Exchange.
The GCX, in April of this year, commenced maize trading in spots through auctions (reserve). The owner of Akandem Farms, Mr. Maxwell Akandem shared his experience from one of these recent trade activities through the GCX, expressing his delight at the efficiency of the trading and the speed with which he received his cash settlement for his commodity sold.
On sustainability of the GCX, the council members opined the need for the GCX to ensure that operations would be continuously strengthened to help the nation deliver on its mandate towards greater financial inclusion, particularly regarding famers, and that the value chain as a whole would provide the ripple benefits expected.
Council members advocated a well thought out plan regarding transportation and other logistics, since that is a source of loss of goods, be it through theft, damage, or time lost. The GCX was urged to develop criteria or standards in the transportation chain in order to reduce potential frictions between truck owners and goods owners.
On the subject of the state of warehouse infrastructure across the country, council members requested the GCX to take practical steps to increase current stock by renovating and equipping warehouses with the right tools to enable farmers and producers of agricultural produce to have access to and use of the facilities. This will help reduce post-harvest losses in the country.
In his closing remarks, the Chief Executive Officer (CEO) of GCX, Dr. Kadri Alfah, expressed his appreciation to the market council members for showing commitment towards the establishment of the Commodity Exchange, which is expected to be the leading Exchange in West Africa. He stated that this will be the first of many gatherings by market council members to deliberate on issues and challenges surrounding the commodity value chain.
Supported by the World Bank Group (WBG), particularly the International Finance Corporation (IFC) and support from the Swiss Secretariat for Economic Affairs (SECO). The Securities and Exchange Commission brought together eighty-one (81) key stakeholders from the Central Bank (BOG); Ghana Commodity Exchange (GCX); Financial Institutions; Ministry of Food and Agriculture (MOFA), Brokerage Firms, Insurance companies, Farmer Groups, Academia, and more, for a review of Commodity Exchange and Warehouse Receipt System at the Alisa Hotel, Accra.
The Director General of SEC, Rev. Ogbamey Tetteh in his welcome address highlighted the relevance of warehousing and the need to grow the commodities market shepherded by a commodities exchange. He introduced the role of the regulator, opining that they would play a key part in building trust in the system.
Dr. Langyintuo (IFC Senior Technical Specialist for the Ghana WRS Project) in his presentation on the Project, reported that trade in Africa is a big challenge because of high risks, border related difficulties, standards, policy uncertainties and export finance. He explained the role warehouse receipts play in filling the gap for trade and collateral financing.
He recommended the following areas to be especially considered:
Dr. Langyintuo hinted that solutions could arise from friendlier tax regimes, non-discriminatory access to markets, non-interference with the functioning of the markets, honoring of internationally accepted standards, abiding by contractual undertakings, and ensuring the sector is free from corruption.
Dr. Kadri Alfah (Chief Executive Officer, GCX) gave an overview of the Warehouse Receipt System and Commodity Exchange. He indicated that the Ghana Commodity Exchange operates as a market and the WRS is a key component.
Dr. Alfah iterated that the Exchange’s rules are designed in the context of the Securities Industry Act and that it is a membership-based market with brokers who trade for themselves and on behalf of others. Dr. Alfah shared that the GCX has adapted its own standards for maize, rice and soy beans using the GSA standards as a benchmark.
He highlighted GCX’S current situation as follows:
- Identified 6 warehouses in Tamale, Wenchi, Ejura (3 warehouses) and Kumasi
- 65 members, including 2 Banks and off-takers with capacity to buy
- New office and trading platform almost ready
- Auction traded over 6,000 mini bags (this was designed to test the system which has been successful so far)
- Maize contracts designed
- Capacity building of market actors has commenced (40 trained)
The way forward according to Dr. Alfah is to get rules for the Exchange and WRS approved by SEC; passage of the WRS Legal Instrument (LI) and the Borrowers & Lenders Bill and build capacity of bank staff and other key stakeholders.
He stated that the bell for the commencement of official trading activities on the GCX platform is expected in November 2018. Finally, Dr. Alfah mentioned readiness of the warehouses; commodity price vitalities; getting interest rates below 20% for financing WHR; readiness of banks; banks accepting GCX performance bond for warehouse operations and passage of the WR and Commodity Exchanges’ regulations.
On the part of SEC, Evelyn Essien (Head of Exchanges) said SEC’s regulations are aimed at controlling behaviors of Exchange actors in the commodity market. She stated that the regulatory powers would be derived from Securities Industry Law, 2016 (ACT 929) and along the line, guidelines and circulars could be issued by SEC. SEC, according to Mrs. Essien, will keep a close eye on possible market abuse and crimes under the Act such as false trading and would apply penalties and other disciplinary measures such as revocation and suspension when necessary. Mr. Caliis Baidoo (Head of Legal, SEC) shared the regulatory components of the WRS, clarifying the role the WRS played within the context of a Commodity Exchange, so that they are clearly distinguished.
The session ended with a round table discussion chaired by Mr. Paul Ababio (Deputy Director General, SEC), with Mr. Robert Owoo (Project Director, GCX), Dr. A. Langyintuo and Caliis Baidoo, opening the floor for all participants to seek clarifications or share their own comments on the areas of operationalizing the WRS/ GCX; the role of technology, and other general business opportunities that would emerge as part of the Exchange ecosystem.
About Ghana Commodity Exchange (GCX)
GCX is a market / platform which brings buyers and sellers together to trade commodities including agricultural commodities, and as a body, guarantees the quantity and quality as well as prompt settlement (cash and delivery) of all products traded on the platform. This shields both buyers and sellers from physical and financial losses. GCX is regulated by the Securities and Exchange Commission and is managed by an experienced team of professionals with varied work experiences across the commodity value chain both in Ghana and abroad.