East African Exchange (EAX), Kigali-based commodities exchange, will start trading in coffee and beans in coming weeks, Alfa Kadri, the EAX chief executive, has said.
Kadri said the move aimed at attracting more farmers to use the platform and expand tradable products on the EAX.
Kadri the plan is to encourage as many farmers as possible to sell their produce through EAX and benefit from better prices, as well as ease access to regional markets.
“There is a lot EAX can do in the coffee value chain, particularly linking growers to local and international markets through the Exchange’s trading platform. We can also offer them finance under the warehouse receipt system arrangement with some local banks,” Kadri said.
Presently, the exchange trades in maize provided by farmer co-operatives
Meanwhile, Kadri has urged farmers to use the platform’s warehouses to reduce post-harvest losses and enhance produce quality, arguing that this ensures better earnings.
He said farmers lose about 20 per cent of their produce due to poor post-harvest handling and lack of proper storage facilities.
Kadri said when farmers store produce in the exchange’s warehouses, they suffer only 3.5 per cent in post-harvest losses.
EAX partnered with Collateral Management International (CMI) last year to manage produce in the warehouses run by the exchange and ensure quality storage.
“When a farmer brings maize, CMI checks the quality, dries, cleans and re-bags the produce for safe storage,” Kadri said.
EAX, which currently trades in maize, also links farmers to buyers who pay better prices (according to produce grade).
“A buyer may want grade one, two, three or four, depending on what they are going to use it for, which gives sellers better bargaining power because they are sure of the grain quality,” Kadri explained.
He, however, said despite the benefits, most farmers prefer to keep the produce themselves, arguing that EAX takes huge commission on their sales. This action, Kadri added, compromises produce quality and condemns farmers to low prices offered by middlemen.
Charl van der Merwe, the CMI country manager, explained that when farmers deposit produce at EAX warehouses they are given receipts, showing the details of the grain.
“The grain details are then entered into software that generates electronic warehouse receipts they use sell the produce on EAX trading platform,” he said.
Merwe said farmers pay a $20 (Rwf14,500) management fee per metric tonne after the produce has been sold.
EAX gets 1.2 per cent per sale on the grains, which Kadri said is affordable, good to ensure a sustainable business model for EAX if they traded in higher volumes.