The Nation Newspaper

Tag: commodity

  • Lagos: commodity exchange ‘ll transform agric

    The Lagos State Commissioner for Finance, Dr. Mustapha Abiodun Akinkunmi, has said   a virile commodity exchange will transform the agricultural sector characterised by low output and poverty among farmers.

    Globally, commodities exchanges offer more stable, more ethical trading platforms where farmers can benefit from fairer transactions.

    Akinkunmi, who spoke at the just- concluded stakeholders’ forum at the Eko Atlantic City, Lagos, said a vibrant exchange would help break the cycle of poverty of rural farmers caused by low incomes, poor productivity output and low-level investment in farming activities.

    A handful of African countries, according to him, have set up commodity exchanges to develop markets and improve food security.

    He said for instance, since Ethiopia Commodity Exchange (ECX) trading platform started in 2008, it has become transparent and efficient for farmers.

    Besides this, there is a functioning marketing infrastructure for farmers.

    According to him, a commodity exchange boost farmers’ earnings by helping to stabilise prices of commodities which tend to fall sharply during harvest when there is a supply glut.

    To promote entrepreneurship, he said Lagos  government established the N25 billion State Employment Trust Fund.

    The fund, Akinkunmi,  explained, provided an opportunity for entrepreneurs to take advantage and contribute their quotas to the socio-economic growth and development of the country.

     

  • Fed Govt to revitalise commodity exchange

    The Federal Government plans to revitalise commodity exchange in Nigeria as part of a comprehensive development programme for the nation’s agricultural sector.

    Vice President Yemi Osinbajo made this known last weekend at the First National Economic Forum organised by Vintage Press Limited, the publishers of The Nation Newspapers, in collaboration with CEEDEE Resources at Lagos Airport Hotel, Ikeja, Lagos.

    Osinbajo said the government would develop the commodity exchange system to support the development of the agricultural sector.

    He said government would revitalise the Abuja-based Nigeria Commodity Exchange (NCX) and other infrastructure and operators in the whole commodity exchange value chain.

    According to him, a functional commodity exchange would ensure that Nigerian farmers receive good prices for their products.

    Osinbajo said the government also plans to introduce a Minimum Price Guarantee scheme under which the government will set floor prices at which it would buy agricultural produce from farmers.

    He noted that a Minimum Price Guarantee scheme would encourage the farmers to scale up their production to their highest capacity with the assurance that government will be ever ready to buy the farm produce at guaranteed prices.

    It should be recalled that the NCX had introduced a pilot electronic warehouse receipt system (e-WRS) in 2014. Under the e-WRS, farmers will be able to place their commodities at an NCX-accredited warehouse in different parts of the country and will be issued an electronic receipt stating details such as commodity type, quality and quantity, owner and other relevant information. The depositor will have the choice of using the receipt as collateral to obtain bank loans or for trading on the Exchange. Another option is to keep such commodities in the warehouse until their prices stabilise or appreciate.

    The new initiative would encourage the provision of standard storage facilities for operators in the agricultural value chain and make the warehouse receipts a prime tool of trade while facilitating access to finance. The e-WRS is also expected to strengthen small scale farmers and agro-allied businesses while creating jobs and sustainable economic growth.

  • Federal Government to revitalise commodity exchanges

    The Federal Government plans to revitalise commodity exchange in Nigeria as part of a comprehensive development programme for the nation’s agricultural sector.

    Vice President, Professor Yemi Osinbajo, made this known yesterday at the 1st National Economic Forum organised by Vintage Press Limited, the publishers of The Nation Newspapers, in collaboration with CEEDEE Resources at Lagos Airport Hotel, Ikeja, Lagos.

    Osinbajo said the government would develop the commodity exchange system to support the development of the agricultural sector.

    He said government would revitalise the Abuja-based Nigeria Commodity Exchange (NCX) and other infrastructure and operators in the whole commodity exchange value chain.

    According to him, a functional commodity exchange would ensure that Nigerian farmers receive good prices for their products.

    Osinbajo said government also plans to introduce a Minimum Price Guarantee scheme under which government will set floor prices at which it would buy agricultural produce from farmers.

    He noted that a Minimum Price Guarantee scheme would encourage the farmers to scale up their production to their highest capacity with the assurance that government will be ever ready to buy the farm produce at guaranteed prices.

    It should be recalled that the NCX had introduced a pilot electronic warehouse receipt system (e-WRS) in 2014. Under the e-WRS, farmers will be able to place their commodities at an NCX-accredited warehouse in different parts of the country and will be issued an electronic receipt stating details such as commodity type, quality and quantity, owner and other relevant information. The depositor will have the choice of using the receipt as collateral to obtain bank loans or for trading on the Exchange. Another option is to keep such commodities in the warehouse until their prices stabilize or appreciate.

    The new initiative would encourage the provision of standard storage facilities for operators in the agricultural value chain and make the warehouse receipts a prime tool of trade while facilitating access to finance. The e-WRS is also expected to strengthen small scale farmers and agro-allied businesses while creating jobs and sustainable economic growth.

  • Farmers seek commodity marketing board

    A group of farmers in the Federal Capital Territory (FCT) has demanded the urgent set-up of a commodity marketing board.

    The farmers, who spoke during a meeting with the Programme Director of African Centre for Food, Agriculture and Sustainable Development (Afri-CASD), Bolaji Akindehinde in Abuja, said the board would help regulate arbitrary pricing of farm commodities.

    The farmers sought support of the Centre to further advocate necessity of the board to increase food production and promote large scale farming.

    They said it was inappropriate for farmers to be at the mercy of buyers among other end users before farm harvests are sold.

    A representative of the farmer, Mr. Sulieman Azeez said, “Farmers are suffering in this country. This is a country where the buyers fix the price for our farm produce. But if there is agriculture commodity marketing board, you cannot tell me you will buy my rice for N5 when everyone knows in the country that it is being regulated for sales for N10 across the country.

    “So it is bad for farmers not to have control over sales of their farm produce.”

    In his remarks, Akindehinde disclosed that the erstwhile Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina showed the zeal to setup the commodity board but little was heard thereafter.

    He said such agency would better lots of the farmers and boost the nation’s overall food production.

    Akindehinde cited an instance of South Africa, United States and some advanced countries which regulates and guarantee markets for farmers’ yields to prevent post-harvest losses.

    According to him, if the nation must be food secured, farmers who are responsible for this giant responsibility should be properly taken care of.

    Speaking on the Agriculture Transformation Agenda (ATA) of the previous government, the farmers urged the present administration to continue with the agenda especially on the various value-chain programmes.

    He said though the administration is still young but emphasised need for the coming Minister of Agriculture and Rural Development to make the issue a core agenda.

    Akindehinde emphasised need to sustain the various value-chain programmes kicked by the previous administration.

    “If we must get it right by properly motivating our farmers, the agric sector should be accorded same attention given to the NNPC. Imagine that the sector has a department like the Petroleum Product Pricing Regulatory Committee (PPPRC) and Department of Petroleum Resources (DPR) also performing a similar function in the agriculture sector farmers would do much more than expected,” he added.

    Among initiatives considered laudable is the electronic wallet (e-wallet), Growth Enhancement Support scheme (GES), subsidised mechanisation supports to farmers and private sectors involvement in the sector’s transformation.

  • Govt urged to reposition commodity exchange

    The Federal Government has been urged to strengthen the commodities market to boost trade in the sector.

    The Managing Director, Multimix Academy, Mr Obiora Madu, said failure to do this would put off investors and stifle the development of commodities business.

    According to him, the main factor limiting economic potential of the sector is lack of a common market that boosts the confidence of farmers, as well as financial institutions, to invest in the sector.

    The move, he said, would encourage market access and fair returns for smallholder farmers and facilitate the formalisation of informal agricultural trading.

    Madu  said commodities trading platform has certain innovative features which have been designed to limit risks in the sector to attract agricultural investments, aside from the provision of a ready market and formalisation of commercial activities.

    To create a transparent and efficient marketing system for key agricultural commodities to promote agricultural investment and enhance productivity, he said the government must commit itself to the establishment of a functional commodity exchange and associated Warehouse Receipt System (WRS). One structure of a commodity is the Warehouse Receipt System, where farmers will be provided with receipts based on the food crops that they deposit.

    This system means dealers or farmers certified by the exchange to receive receipts from warehouses showing the quality and quantity of the commodity that they have delivered. The warehouses serve as the point at which the commodities are stored with the owner of the goods issued with the receipt to confirm their existence. In the event of a pressing need, the receipts can be presented to the bank as security for loans, in a manner similar to the way title deeds and logbooks are used in lending.

    At the commodities exchange, the warehouse receipts can be traded like shares, thereby becoming derivative instruments because they are derived from underlying real assets in the form of commodities.

    He said it is good for the banks to understand the system, so that they could see these receipts as collateral to provide funds to various actors along the agric value chain to push sector productivity and growth.

    Madu said banks would introduce financing for commodity traders and farmers secured through warehouse receipts. He said the commodity receipts will be used as collateral by exporters and commodity dealers to get loans from banks. He said dealers could then pay for their business activities even when the goods have not been sold or exported.

    He said the exchange would  tackle the challenges which make the sector a risky investment as farmers and sector actors would produce and deposit their crops to the designated warehouses and get the receipts to source funds from banks.

    This, he said, would help smallholder farmers to move from subsistence to commercial farming, as they would grow more crops which the country has comparative advantage in to promote the national quest for an export-based economy.

  • Fed Govt to establish commodity corporations

    The establishment of commodity corporations in the country will promote greater private sector participation and ownership, Permanent Secretary, Federal Ministry of Industry, Trade and Investment, Mr. Abdulkadir Musa, has said.

    Speaking in Abuja during a consultative meeting of stakeholders on the proposed establishment of commodity corporations, Musa said the forum was timely, as government was concerned about issues bordering on agric-commodity development as a way of diversifying the nation’s economy.

    “It is important to state that the global market conditions and unsustainable fiscal deficits show that the government can no longer sustain a high level of public expenditures. The liberalisation option of commodity trade should be sustained and encouraged in order to promote greater private sector participation and ownership,’’ he said.

    Musa said the ministry was saddled with the mandate of developing agricultural commodities from processing, packaging, quality certification to standardisation, storage and marketing. He recalled that commodity boards were established in 1977 as a key trade policy on export of agricultural commodities.

    The objectives of the boards, Musa said, were to purchase agric-commodity from farmers and later sell to large buyers while providing incentives to farmers to enable them increase their acreage. The boards also ensured that farmers adopted new technologies in production to increase yield.

    “It was, however, clear that the operation of those boards involved very high administrative costs, unbearable taxation on farmers, gross under-pricing of agric commodities, political interference and non-sustainable infrastructure,’’ he said.

    The permanent secretary said with the introduction of the Structural Adjustment Programme (SAP) in 1986, government policy direction changed in favour of economic liberalisation that included the trading of commodities.

    As a result of this, he said the liberalisation witnessed lack of requisite experiences, which resulted in the loss of overseas buyers’ confidence in Nigerian agricultural produce for not meeting the minimum international requirement.

    Musa added that in an effort to address the challenges, the dissolution of the marketing boards required the establishment of a market structure to fill the unintended vacuum created. He further said the Federal Government established the Export Commodities Coordinating Committee in 1989 as an inter-ministerial body with members drawn from different ministries.

    He said the committee had brought sanity into the agric-commodity business with the introduction of standards in conjunction with key stakeholders. “I am pleased to inform the gathering that the financial obligation of Nigeria to the International Commodity Organisation to which Nigeria is affiliated has been settled to date.

    “The payment of counterpart funding for counterpart programmes conceded to the country is being settled,’’ he announced.

    On his part, President, Federation of Agricultural Commodity Associations of Nigeria (FACAN), Dr Victor Iyama, urged the Central Bank of Nigeria to provide loans and grants to farmers. He said government must be involved, adding that it should, however, allow stakeholders to drive the process.

    “The government is in the position to support nationals in confronting stiff international economic competition. There should be greater reliance on private sector solutions than on direct government solution whenever and wherever possible. The open market system is far more desirable especially for the upliftment of the farmers,’’ Iyama said.

    According to him, the benefit of trade liberalisation and the scrapping of the commodity boards was that farmers will now get premium price for their commodities. Other benefits, he said, are increase in employment opportunities in the agric-commodity sector, increase and expansion in agricultural commodities production and inflow of foreign exchange into the economy.

  • Commodity exchange’ll limit risks, says expert

    Strengthening the nation’s commodity exchange will provide the much-needed financial assistance to small-holder farmers and limit risks in the agric sector, Programme Coordinator, Farmers Development Union(FADU), Elder Victor Olowe has said.

    He said commodity exchanges could help farmers manage cropping decisions which is likely to improve their access to finance.

    He called on the government to empower the Abuja Commodity exchange so it cans become a platform to attract agricultural investments, aside from the provision of a ready market and formalisation of commercial activities.

    One of the features of the system, according to him is the warehouse receipt system, whereby farmers will be provided with receipts based on the food crops that they deposit

    With the warehouse receipt system working, he said farmers can make cropping decisions when the right demand is reflected in price signals, thus reducing inter-seasonal volatility characterising agricultural production, and smoothing producers’ incomes over time.

    He noted, however, that commodity prices are quoted in distant places and as such Nigerian farmers who are price-takers are often deprived of higher profit margin by foreign buyers using exchanges.

    To make it work, however, he said the sector needs infrastructure to improve grading and certification of commodities traded on the exchange to help streamline quality of produce to gain value for international markets.

    A Consultant to German International Co-operation (GIZ) Sustainable Cocoa Business programme, Mr Dayo Mejabi Ekundayo, said the commodity is a key part of modernisng the whole agricultural marketing system.

    According to him, improving warehousing, storage, logistics, crop quality and farmer financing are all critical to the success of the venture.

    He said promoting the commodity exchange would create an orderly, transparent and efficient marketing system for the nation’s agricultural commodities and encourage market access and fair returns for smallholder farmers.

    He said it would facilitate the formalisation of informal agricultural trading activities.

  • ‘Natural gas best performing commodity in 2013’

    ‘Natural gas best performing commodity in 2013’

    Natural gas is set to be the best performing commodity in 2013 with United States (US) oil also gaining, but gold is facing its biggest fall since 1981 as commodities end the year with all eyes on signs of a global economic pick-up.

    Corn has suffered the most in 2013 with losses mounting to nearly 40 per cent as record US production boosts global supplies, while major consumer China is cutting back on expected imports.

    For 2014, investors in commodity markets are focusing on an improved economic outlook in top consumers the US and China, although increased supply may spoil the party, particularly for oil and copper.

    US natural gas futures have climbed steeply amid fresh signs of chilly winter weather and stronger than usual seasonal demand with the front month contract up nearly 26 per cent since the start of November.

    If drawdowns for the rest of the heating season match the five-year average pace, it would result in the lowest end-winter inventory since 2008. That could help prop up prices next year as utilities scramble to rebuild stocks.

    US oil prices are on track to end the year up eight per cent, recouping a seven per cent decline in 2012, but could come under pressure as the US shale oil boom curbs imports by the world’s largest oil consumer.

    Brent is set to end the year nearly flat in a year where supply disruption fears have offset concerns of weak demand.

    Gold, which has lost 28 per cent in 2013, is heading for its biggest annual decline since 1981 as investors ploughed money into equities, where the Dow Jones has jumped 26 per cent and Japan’s Nikkei index surged nearly 60 per cent.

    Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 40 per cent in 2013 to their lowest level since 2009 as investors lost faith in bullion as a hedge against inflation, anticipating the US Federal Reserve’s move to trim its commodity-friendly bond purchases.

    Expectations of revived growth in China have pushed London copper to four-month highs, while aluminium is hovering near a two-month top.

    But even though copper has gained almost five per cent in December, the market is still down nearly seven per cent this year. Ample copper concentrate expected to flow into the market next year could cap gains fuelled by growth prospects.