On 13th April 2021, the Ghana Commodity Exchange undertook a reserve trading auction of raw cashew nuts.
As the Ghana Commodity Exchange operates to support smallholder farmers, develop various agricultural value chains and provide export opportunities for Ghanaian commodities, the Exchange organized a reserve trading auction to engage market actors in the Cashew Value Chain.
The Chief Executive Officer (CEO) Mrs. Tucci Ivowi explains, “GCX decided to undertake this reserve cashew auction to demonstrate to the actors in the cashew value chain how the GCX structured trading concept which includes; commodity quality testing, grading, weighing, packaging and standardization operates and to prepare our cashew value chain market actors on how to trade on the Exchange as an alternative and a more structured market for trade.
The Exchange currently trades maize, sesame seed, rice, soya beans, sorghum and is working on adding on cashew. With the growth of cashew production in the Bono, Bono East and Ahafo regions, cashew production in Ghana has recently been geared towards generating revenue through export.
Thus, the introduction of Cashew unto the electronic trading platform of GCX will undeniably reap many benefits for Ghana’s cashew value chain as well as market actors involved in the cashew sector in Ghana.
The open and accessible price discovery system offered by GCX will reduce the difficulty that farmers, processors and traders of cashew face when it comes to determining the price of cashew.
Mr. Robert Dowuona Owoo, the Chief Operations Officer had this to say, “We are grateful to you all for making time to be a part of GCX’s first Cashew Auction, as this signifies acceptance of the structured market that the Exchange hopes to bring into the Cashew value chain. The support from UNIDO as we work to develop the cashew value chain is overwhelming. From the facilitation of training sessions for warehouse managers to training market actors and provision of cashew warehouse equipment is an illustration of the commitment on the part of UNIDO in developing the cashew value chain.”
According to the sellers and buyers who participated in the trade, the auction was a simple, transparent and beneficial process. There was a deep satisfaction with the participants considering the fact that they received contracts for their trade, with the guarantee from GCX that the seller would receive his cash settlement within five (5) working days of the trade and buyer could pick up commodity within two (2) working days of the trade upon full payment. This is fully in line with GCX’s objectives to help farmers sell their products at fair and competitive prices by providing them with real-time price and market information while assuring buyers of high-quality commodities.
The seller of the 50,000kg raw cashew nut valued at GHC 280,000 sold at the auction is KAKSFOUR COMMODITIES LTD, a wholly Ghanaian private owned and licensed to undertake business in Cashew nuts trading and general Agri-business both in Ghana and internationally. The company is a registered Broker member of the Ghana Commodity Exchange (GCX) and the African Cashew Alliance (ACA) since 2019. Mr. Francis Peprah the representative of KAKSFOUR expressed great satisfaction in being able to get a better price than he quoted for his commodities during the auction and mentioned he is looking forward to having more of such trades.
Present at GCX’s maiden cashew auction were major market actors in the cashew value chain namely representatives from OLAM Gh., Red River Foods, Ayowa Natural Resources, M.M.D, Stride Business Group Emerald Empire and Grow for me, being buyers. For observers, there were representatives from OMNI BSIC, Ministry of Food and Agriculture, Cashew Industry Association of Ghana, Securities and Exchange Commission, HiKO Gh. Ltd, Ghana Export Promotion Authority, Access Bank, M&L Ltd., Association of Cashew Processors, Centre for Technology and Economic Development, R.Smith and Fidelity Bank.
About Reserve Auctions
With the Reserve trading auction, interested buyers and sellers were brought together to discover prices in a fair and transparent manner. A Reserve Auction is a payment against delivery system whereby the farmers (sellers) announce a minimum price for their product incorporating their production cost in the sale price.
The buyers then put in a bid, hopefully, to match the farmers’ asking price, factoring in transportation and other costs. By so doing, both the buyers and sellers hedge against their cost in a win-win situation for all.