The Securities and Exchange Commission, (SEC) the lead promoter of the commodities exchange is expected to commence the drafting of the regulatory framework, which will facilitate the establishment of the exchange after government accepts the recommendations.
SEC is currently evaluating the submitted applications received from experts for the drafting of the framework, which will be the blue print for the operations of the exchange, a senior official at SEC disclosed to B&FT in an interview.
When adopted, Ghana would be the fifth country in Africa, after South Africa, Nigeria, Kenya and Ethiopia to have implemented the commodities exchange and warehouse receipts system which is aimed at improving prices for agricultural produce.
A commodities market or exchange is a platform where various commodities and derivatives are traded.
Most commodities exchange trade in agricultural products and other raw materials like wheat, barley, sugar, maize, cocoa, coffee, cotton, milk products, oil and the metals.
The exchange when fully operational could raise the hopes of millions of farmers, especially large-scale farmers and make their lives more meaningful.
The setting-up of the exchange will help to deal with the challenges facing the supply of agricultural produce, which in turn will deal with food inflation.
It will as well ensure guarantee prices for farmers which will basically help to clear the agricultural produce market as farmers produce to meet contracts for specific quantity, quality and supply date.
They would therefore be empowered and encouraged to produce to meet demand in the lean or bumper season.
Shortage of food supply is the bane of food inflation in Ghana. The country’s agricultural produce constitutes 55 per cent of the national basket of the Consumer Price Index. Therefore, high prices of agricultural produce will trigger inflation.
Current food supply does not meet the nation’s demand due to lack of storage facilities, weak production capacity and low productivity.
Sampson Akligo, Databank Research Analyst in an interview with B&FT recently explained that a commodities exchange will give opportunity to foreigners to trade in Ghana’s agricultural goods, be it real or imaginary.
This will promote the use of derivatives like forwards, futures and options in Ghana as the door is opened to foreigners to participate in speculating on agricultural products or metals traded on the exchange.
“Cocobod for instance will have the opportunity to hedge against falls in cocoa prices,” Mr. Akligo stated.
The prime objective is to bring producers, buyers and consumers together to trade on a common platform by providing ready market for farm gate products from the agricultural centers.
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