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Experts welcome commodity exchange plan

Zachary Ochuodho @zachuodho

Economists, analysts and market experts have welcomed plan to fast-track the setting of up of a national commodity exchange.

They said the exchange would provide a platform for trading various commodities, futures and derivatives and connect farmers directly to markets. Agricultural products such as milk, wheat, barley, sugar and maize are some of the popular commodities in the exchanges.

Deputy President William Ruto challenged Nairobi Securities Exchange (NSE) recently to take a leading role in setting up the commodity exchange to help ease farmers’ access to markets.

“Capital markets have a key role to play in revitalising the agricultural sector, and I urge you to work urgently on launching a transparent and efficient commodity exchange,” he said during the seventh edition of Building African Financial Markets seminar in Nairobi.

Nancy Laibuni, a researcher at Hortinlea, an interdisciplinary research project addressing food security in East Africa, says commodity exchanges are key to food security as they serve two purposes.

These, she said, are raising agricultural productivity by ensuring substantial margins for farmers and reducing inefficiencies of agricultural marketing by streamlining trade, delivery and payment systems, thus reducing transaction costs. Moses Ikiara, Kenya Investment Authority managing director admitted that a lot of food go to waste in Kenya, something which could have been avoided if the country had a post-harvest system to minimise the losses.

He said establishing commodity exchanges in the East Africa region can stem the problem once and for all.

“Given the challenges facing the Kenyan food markets, farmers, large grain traders, industrial processors, banks and indirectly smallholder farmers can derive significant benefits from a vibrant commodity exchange,” he added. 

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