Capacity Support for the Agricultural Commodity Exchange for Africa Trust Final Program Report

ACE has operated a live exchange trading platform since late October 2006 and has facilitated trade of more than 46,106MT of commodities worth over USD 15,756,000 million across the exchange. Initially, ACE focused on sensitizing large traders in the region to buy commodities from Malawi through ACE, but problems arose as farmers started to default on contracts. In 2008, ACE changed strategy and focused on training of NGOs, extension workers, and farming associations on aggregation and structured trade. The critical element was to get significant volumes traded on ACE so that timely, up to date, and reliable market information could be published. ACE soon experienced other hurdles, including the capacity building and trainings resulting in well-organized farmer associations aggregating and bulking their commodities, but ACE couldn't find a market for the farming associations, leading to frustrated and disbelief in the whole concept amongst the farmers. In 2010, ACE approached WFP to create the initial demand that would enable the farmer associations to actually experience the benefits. Motivated farmer associations combined with commodities on warehouse receipts would revitalize the initial interest from the region. COMPETE awarded ACE bridging funding to help it set up necessary processes or baselines to generate agricultural commodity market access, encourage transparency, and hence commodity price discovery. This bridging funding enabled ACE to stay operative and proved to be very important, as WFP decided to test procurement through ACE, which generated a much-needed pull in the market. The COMPETE funds also provided the means needed to develop the software applications necessary to fully harness the benefits WFP is bringing to the market. ACE trade statistics show a significant increase in trade volumes and values over the years, with a total of 81,812.83MT of commodities worth USD 25,937,940.14 traded across the exchange. The trade summary indicates a steady increase in trade volumes and values from 2006 to 2011, with the highest trade volume and value recorded in 2011. The objectives set out in the bridging fund to ACE included the first regional procurement through ACE with delivery in Zimbabwe, 10,000MT of commodity contracted for regional procurement through the BVO system, and USD 7,000 in commission and fees to ACE. The integration of the BVO system, trade platform, and warehouse receipt system was also a key objective. The bridging fund enabled ACE to achieve these objectives and set the stage for further growth and development.