Sorghum and soya farmers in the country will soon be able to earn more from their harvest and receive warehouse space through the East Africa Exchange (EAX). Presently, only maize and beans are traded through the EAX system.
The EAX is a regional commodity exchange, which was established to link smallholder farmers to agricultural and financial markets aimed to secure competitive prices for their products, and facilitate access to financing opportunities.
EAX services include warehouse operations, trading, warehouse receipt financing, clearing and settlement, and risk management and compliance.
The new development was announced at a consultative meeting that brought together officials from the Ministry of Agriculture and Animal Resources (MINAGRI), various financial institutions and EAX (Rwanda) last Friday.
The officials were meeting representatives from 104 cooperatives ahead of planting season ‘A’.
According to Elvis Nkundanyirazo, who is in charge of linking farmers to market at MINAGRI, participation in the EAX will help stabilise prices for farmers’ harvests.
“This collaboration is a good channel to find reasonable prices for farmers. While we increase produce we also need to maintain good prices,” he said.
How EAX works
Farmers are able to acquire loans from banks thanks to the warehouse vouchers they receive when they store their produce at an EAX warehouse.
They can receive 70 per cent of the value of the deposited produce while waiting to sell their produce at a reasonable price, according to Dr Cadri Alfah, the EAX manager.
Farmers can keep their produce at the warehouses, located in Kigali, Kayonza, Nyanza, Musanze, Karongi and Bugesera, for up to nine months.
Currently, 120 cooperatives work with the EAX.
Farmers working with the EAX are able to receive loans for fertilisers and seeds at a reduced interest rate.
According to Jackson Munyaneza, of Urwego Opportunity Bank, they give loans at an interest rate of 1.67 per cent for farmers in collaboration with EAX.
“Depending on the quantity of produce in the stores of EAX warehouses, the bank provides loans to farmers and the produce serves as the collateral,” he said.
Munyaneza said they started to provide the service in July and had so far provided about Rwf300 million in loans to 12 cooperatives.
Eric Kanyarwanda, a farmer from KOPUAIM cooperative in Kayonza District, said working with EAX had increased their profits.
“Whenever we stored our produce it always got spoilt. But since we met with EAX officials things have changed. In February, we stored about 170 tonnes of maize with EAX when the price was at around Rwf120 per kilogramme. They sold our produce at Rwf200 per kilogramme which is a good price,” he said.
However, he complained about the cost of the storage, saying the EAX’s fee of 1.25 per cent of the value of the produce was too high. He suggested reduction to 1.15 per cent.