Price risk is the fundamental barrier to agricultural investment in Malawi. Without the ability to hedge prices when putting a seed in the ground, commercial farming remains too risky, while smallholder farmers have no choice but to hope for the best.
This is the fifth and final article in a five-article series published by ACE Africa. The articles dive into ACE's thinking about solutions to Malawi’s complex agricultural problems, its current focus, and the way forward. The first article explained the mechanics of utilising the Warehouse Receipt System (WRS) to increase smallholder farmers' income. The second provided a general overview of the WRS, food security, and policy considerations. The third addressed the potential of the ACE Commodity Fund to ncrease agricultural finance and access to finance for farmers and small-scale traders. The fourth article introduced the ACE Market Maker modality that brings markets to farmers' doorsteps.
The Market Maker Modality
Rural farmers get the urban price, minus transport and tax, paid immediately. This solves the age-old problem: farmers sell fragmented at significant discounts for immediate cash, while buyers need consolidated volume and are willing to buy at a premium. The ACE Market Maker bridges this gap.
ACE is proud to announce it has signed an MoU for the @African Continental Free Trade Area (AfCFTA) Secretariat Association of Commodity Exchanges (A-ACX), with the @Tanzania Mercantile Exchange PLC, @Zambian Commodities Exchange, and @Zimbabwe Mercantile Exchange.
This is a significant step towards strengthening regional trade, leveraging each commodity exchange’s expertise to foster collaboration and improve market efficiency. Ultimately, this will also create export opportunities for smallholder farmers across the region.
It is strikingly clear – if finance is not available, the choice to store is not an option. Farmers need cash at the time of harvest, and they will be forced to sell regardless of price if finance is not available. The ACE Commodity Fund helps unlock this finance and bring a choice to farmers.
The Theory of Warehouse Receipt Finance for Producers
Warehouse receipt systems (WRS) are regulatory frameworks to license and oversee warehouses storing the goods of depositors, and to provide legal support for the issuance of negotiable warehouse receipts (NWRs) to depositors...
We collected the recent series of articles in one publication "ACE Retrospective 2005-2020 - A journey through structured trade: from an idea to a licensed agricultural commodity exchange". Please have a look if you missed an article or simply check out the contributions by industry experts: Adam Gross, Chris Sturgess and Ian Goggin. Enjoy and please help share our story
An era of informally developing structured trade in Malawi comes to an end
Lilongwe, Malawi, 8th April 2020: ACE Africa’s journey began in 2004 when National Smallholder Farmer’s Association of Malawi (NASFAM), conceptualised the idea of establishing a commodity exchange in Malawi...
In 2016 ACE developed and published the ACE Rural Strategy 2020 and in 2020 ACE collected its experiences developing structured trade in Malawi in a publication named the ACE Retrospective. The ACE Trust Strategic Plan is a natural progression of this work to guide the efforts of ACE in the coming years.
Market information enables market players to make well-informed decisions and provides them with increased bargaining power.
This gives a small farmer the ability not to sell immediately after harvest when prices are traditionaly too Low. Farmers and other clients can deposit and safely store their commodities at ACE certified warehouses. ACE has 53 warehouses representing 225,884 metric tonnes of storage space available for third party deposits. From this, ACE operates a nation-wide network of 29 rural warehouses owned by partner farmer associations or private sector partners; cumulatively they offer depositors access to 22,900 metric tonnes of storage space. Upon deposit, the commodity is cleaned, graded, re-bagged and stacked.
ACE strives for inclusive trade and supports farmers to access higher value output markets.
Access to batter farm input ranging from fertilizer, seed and chemicals, and professional guidance to better harvest.
The Ace Rural Strategy 2020 will guide ACE’s programmatic planning, decision-making and total activities for the next 4 years. Operationalised as an ACE-internal change project, the Rural Strategy looks at how ACE can better support farmers to deposit and trade through ACE, how we can improve the tailoring of our services to better serve rural clients and finally what we need to do to become more accessible, efficient and effective
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