Prices of staple and export crops such as rice, yam and cocoa beans are likely to remain stable within the first half of this year, on high output recorded in 2018.
The prices will also be sustained by current stability prevailing in the international markets, according to Ayodeji Balogun, country manager at AFEX Commodities Exchange Limited, an e-trading platform for agricultural commodities.
The Commodities began last year on low prices, but rose quickly to peak at about the end of the first half, and then began to drop, trend that continued till the end of the year. For instance, maize and soybeans started with average prices of N94.67 and N133.31 respectively per kilogramme, but ended the first half higher at N101.95 and N181.78.
Paddy rice made an exception on the AFEX commodity price report by ending the first six months lower at N125.88 per kilogramme after beginning at N133.20.
At the end of the second half, maize and soybeans had fallen by 18.9 percent to N82.59 and 30.8 percent, respectively. Paddy rice lost just 6.24 percent to end the second half. “There is a lot of supply already,” Balogun noted.
Generally, Nigeria’s foremost agricultural commodities e-trading platform, AFEX Commodities Exchange Limited, traded over 40,000 metric tonnes of these produce and injected inputs worth $3.8 million into farming activities across eight states during the 2018 wet season farming, according to Balogun.
The financial support, which came as an offshoot of partnerships with corporate clients including LAPO Microfinance Bank, Dangote Rice, Thrive Agric and Farmcrowdy, among others, enabled over 20,000 farmers to access alternative financing to boost their productivity and yield.
The AFEX has kicked off input disbursement for the 2019 dry season input programmme in Kebbi state, with plans afoot for Sokoto, Zamfara, Kano and Jigawa, according to Balogun. Its target is to reach an additional 10,000 farmers for the dry season to shore up the total number of recipients for the 2018 period.
Trading of agricultural commodities recorded some improvement in 2018 as the platform expanded the aggregation and trading of cocoa, Balogun explained.
AFEX is poised to ramp up the volume of trading under its partnership with Binkabi and Sterling Bank to incorporate blockchain technology in solving the challenge of financing while facilitating international trade.
Through it, farmers would now be linked directly to consumers and retailers, creating security for off-taking and minimising post-harvest losses. The blockchain technology is also expected to solve the issue of lack of price transparency in the supply chain, helping farmers obtain fair prices for their produce and leading to increased income.
“The platform will bring price discovery as buyers and sellers will be able to trade and settle their transactions remotely. It will also allow both retail and institutional investors to be able to invest in Agriculture through the exchange,” Balogun said.
In the absence of a national commodity exchange equipped with adequate funding to build technical capacity and address gaps in infrastructure and institutional frameworks to strengthen the supply side of the market, AFEX has since stepped in with the creation of trading terminals for processors, traders and farmers to exchange value.
Low volume of agricultural commodities and dearth of financial support for rural farming are some of the limitations for farmers to trade directly with commercial consumers, but these barriers are being mitigated through AFEX’s combination of different small transactions to cater for large purchase orders, Balogun explained.
For the government to derive increased outcome from its diversification efforts into agriculture, Balogun underscored the need for a linkage between various government interventions to give way for a centralized platform that will ensure efficient delivery and also allow it to leverage private capital.
AFEX has plans to launch a Food Security Fund that will provide liquidity to players and open the exchange to investors interested in the cash market. Balogun believes that with this AFEX would be able to support the government on interventions like the Anchor Borrowers Program (ABP) in the near future.
Temitayo Ayetoto
