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AHCX offers loans to farmers, traders

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Legume farmers and traders in Malawi have an opportunity to access loans from banks through the Warehouse Receipt Financing Facility on offer in the country through AHL Commodities Exchange (AHCX).

AHCX Communications Manager, Thom Khanje, said in an interview that farmers and traders who sell their grain legumes through the exchange have an opportunity to access loans from banks using commodities deposited at the exchange where they don’t want to sell produce immediately.

Commodities that can be deposited at AHCX warehouses include maize, soya beans, beans, sunflower, pigeon peas and rice, according to Khanje. AHCX has about 20 warehouses throughout the country.

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“We always have buyers looking for produce but sometimes farmers may not be happy with prices on offer, especially where there are prospects for price improvement in the later months of the year. In such cases, a farmer can instruct us to keep their commodities as they wait for prices to improve,” explained Khanje.

He said while the commodity is in storage, the farmer or trader can use the Warehouse Receipt to access a bank loan of up to 70 percent of the commodity value, based on the current price, using the produce as collateral.

The loan amount, he said, will depend on the tonnage of the commodity stored, the spot price of the commodity on that particular day as well as the conditions of each financial institution.

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He explained that a Warehouse Receipt is a computer generated security document that is issued to a farmer or trader after they deposit commodity at a certified warehouse such as those operated by AHCX.

The receipt shows the name of the depositor, commodity type, volume and grade, among others.

“This receipt is proof that the holder owns commodity which has been stored in a certified warehouse and has to be provided when one is ready to make transactions regarding the produce,” said Khanje.

Commodity deposited at an AHCX warehouse is always tested for moisture and infestation, among other things and only commodity that meets minimum standards is accepted for depositing. The commodity is also fumigated and insured against fire and theft.

Using certified warehouses and the commodity exchange to sell commodities allows aggregation and competitive pricing on a larger scale locally and internationally and makes it possible for ordinary farmers and traders to realise better returns. It also guarantees quality and quantity of commodity for buyers.

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