2019 will be the year for farmers- NCX
The Nigeria Commodity Exchange, NCX, says it is hoping to generate at least N4.3billion from trading on farm produce in 2019. In this interview, the MD of the agency, Zaheera Baba-Ari, talks about the new trading system to be deployed in achieving this feat. Sarah NEGEDU was there. Excerpts:
NCX activities in 2018
I am satisfied with our achievement in 2018. We were able to develop the first phase of our trading system, though we still have about three or four phases but the first phase is ready and we can trade with that.
In addition, we were able to renovate five warehouses, right now we are in the process of renovating three more; the five are ready.
We were able to consummate our MOU with New Nigeria Commodity Marketing Company, NNCMC, which is part of our business development, and with those three things, we knew that we are set to go in 2019 so that is what we achieved last year. Also, we began research into the solid mineral sector and we started the development of some contracts.
Revenue drive and NCX contribution to the economic diversification agenda
In 2019, starting from this month, we will start receiving commodities into the warehouses I told you about. The NNCMC will aggregate those commodities from the farmers and bring them into our warehouses and we will trade those commodities on the floor of the exchange.
The commodities are those that have been harvested starting from October till December 2018. So from this month we are going to use the THROUGHPUT SYSTEM of warehousing, that means the in and out of commodities over a period because each of these warehouses is about 2000 metric tons.
So assuming that each month, we get 2000 metric tons filled to capacity, it means in a year we have like 24,000 metric tons coming in and out but it will be more than that and it will now become multiples of this 24,000 because you remember our trading system is T plus Three (T+3) so commodities will be coming in and being traded on the floor most times they will not remain there for more than a week or so. That is our projection.
We are assuming what we are going to generate in the 2019, which will be the first year of our actually going into operations, will be quite substantial taking into consideration that we have not been generating revenue from trading.
For instance the projected production figure of maize, for example 2019 is like 12.8 million metric tons, if you take sorghum is about 9.8 million metric tons, soya will take about 750,000 metric tons, sesame is about 180,000 metric tons. From those volumes, we are assuming that, most of these commodities I have spoken about are domestic crops, you know they are stables and they have impacts on food security, so let's assume that about 70percent of that would be eaten by the people leaving about 30percent.
We will now take fifteen percent, and let's assume that 15percent of that is going to be traded on the exchange. The trading value for all that, for 15% of these commodities I have told you about would be about N143 billion and the revenue that would accrue to the exchange in 2019 alone based on just 15percent of all these volumes I have spoken about will come to N4.3 billion. That's just in the first year. We are just starting in 2019 but thereafter we know things will increase.
What’s in for the farmers?
All these figures are going to have great impact on the farmers because now farmers will get the correct value for their commodities. They will have a place where they can sell all their commodities. Even the middlemen will be safe as we are not phasing them out we are just redefining their roles, they will still help us in aggregating and bring in produce in exchange for commissions, so it's a win-win win situation for everybody.
How will this help in addressing the huge unemployment gap?
This plan I just reeled out will make farming more attractive to graduates. Most of them will rush back to the farm because farming is going to become very lucrative for them and it's going to be done in a very transparent manner as every one is sure of being paid. You are sure of adequate warehousing facilities and also, we are hoping that before the end of this particular National Assembly, they would have passed the bill on the Warehouse Receipt Financing because it has gotten to an advanced stage.
Once that is passed before the end of their tenure, people can now use their commodities as collateral to get more funds to do whatever they want to do with the fund. It's actually a win-win situation, government will generate revenue, the exchange will be self-sufficient, the farmers most importantly will have low hanging fruits, they will be able to go back to farming, it is actually going to be the year of the farmer as far as we are concerned.
How NCX will tackle issues of wastages during harvest
Commodity exchanges in every part of the world are established to primarily provide market for commodities and provide you with storage for produce.
You will find out that the major problem of most farmers all over the world is storage, market and finance. With the Exchange, the way it has been developed, we take care of the marketing aspect for farmers, we are also into warehousing, though that is not our core responsibility, but by the time we move on we will cede out the warehousing facilities and everything that relates to warehouses to the private sector because it's not supposed to be what we do but because we are just starting, we are doing everything together
Through the warehouse receipting system, the exchange also ensures that people have money to do other things, have money to go back to the farms. With this system farmers can use their commodities (not necessarily having to sell them at harvest time) as collateral. A farmer can get bank loans to do some other things and when it's time to sell, they come back take their commodities which has been well preserved and get access to market and sell them on the exchange or elsewhere