The Ghana Commodity Exchange, which serves as a link between agricultural and commodity producers and buyers, will soon add locally produced rice to its listed items. This comes after the approval of the Securities and Exchange Commission (SEC).
This will bring to five the number of items the Exchange trades in including maize, sorghum, soy bean, and sesame.
Rice is considered the second most important grain food in Ghana, next to maize, and accounts for 58 percent of the country’s cereal imports.
With its consumption in 2017 and 2018 estimated at 1 million megatonnes, the government expects that the annual per capita consumption will reach 40 kilogrammes this year.
But dependency on foreign rice is a phenomenon that is a source of worry for many in Ghana. This phenomenon started increasing steadily in the 1980s, but now accounts for more than 70% of local consumption.
According to the Ministry of Food and Agriculture, Ghana spends almost over a billion dollars on rice importation annually since 2015.
For many years, rice farmers in the Builsa South District of the Upper East Region and other parts of the country have lamented the lack of ready market for their produce.
Despite assurances from the Ghana Buffer Stock, some have been forced to keep their produce for many months without buyers, a situation that is worsened by inadequate warehouses.
Before December 2019, a campaign started by Citi FM and Citi TV for the consumption of local rice, received widespread support, leading to an increase in demand for local rice during the festive season.
Government also responded by getting the Ghana Buffer Stock Company to buy some of the rice, while discussions have been ongoing to get banks to provide credit to players in the local rice value chain to expand and meet local demand.
Government further promised to end rice importation by 2022.
With this intervention by the Ghana Commodity Exchange, rice farmers and millers can be sure of ready market with competitive prices once they meet the expected quality standard.
Chief Executive Officer of the Ghana Commodity Exchange, Dr. Kadri Alfah made this known to Citi Business News.
“We’ve just had an approval from our regulator, the Securities and Exchange Commission. They’ve given us the go-ahead to trade rice, so this is good news to the Exchange, the farmers and the general Ghanaian public. So, you would see that we will be listing rice contracts on the Exchange and then trade in them in the coming months” he said.
Dr. Alfah believes local rice farmers have the capacity to produce enough to meet the country’s demand.
“To be honest with you, we haven’t really done a lot on rice, we are still importing a lot of rice, but we don’t need to import rice, we should actually be exporting rice because we have the climate, we have the resources. There’s been a lot of support also from the government through the Planting for Food and Jobs initiative. Rice farmers have been largely supported. The Exchange has also been set up to ensure that we are able to provide market linkages and get the farmers to get better market,” he added.
The Exchange as part of preparations for its new addition has secured warehouses to store enough rice in the next few months.
“Usually, we would bring in new products at the harvest season so we a targeting the next quarter or so. We’ve actually even started because when we are starting with a new product, we start with the feasibility studies, we look at the buyers and sellers and some of the dynamics, the price trends and we just make sure that the market understands what we are doing. We also consult with the industry. We’ve also gotten two warehouses that we want to commit to the trading of rice and we’re looking for more warehouses. We have a warehouse in partnership with Juaben Food Market and we also have a warehouse in Bolgatanga where we are working with institutions.”
Meanwhile, due to the coronavirus pandemic, Dr. Alfah says its buyers within the off-taking chain have reduced. Already, the Exchange says the amount of produce it receives for the five listed items is now less also due to the pandemic.
“We’ve also suffered from the off-taker side as well because those who were buying from us were mainly processors of food. They were businesses that were processing. They buy raw material from us and process. Most of them have actually scaled down their operation and some of them have actually shut down completely. So that it the reason why the off-taking side has gone down,” Dr. Alfah said