Adehyeman Savings and Loans Limited (Adehyeman) has partnered the Ghana Commodity Exchange (GCX) to offer commodity-backed loans to farmers under a Warehouse Receipt Financing Scheme.
Under the innovative scheme, farmers can use receipt of their commodities stored at GCX warehouses to access loans from Adehyeman with their commodities at the warehouses serving as collateral.
This arrangement also means interested farmers could store their commodities at a certified warehouse, secure the loan, and repay after selling the farm produce.
Mr Joe Emmim, Managing of Adehyeman Savings and Loans Limited, expressed his happiness for the partnership and highlighted the challenges the partnership will solve.
“We are pleased to offer support to farmers as they face challenges accessing financial support to upscale their operations. We see the agricultural sector of the economy as key to ensuring food security in the country and for export to generate foreign exchange to grow the economy.
“It is against this background that we are stepping in when others deem the sector risky and, therefore, shy away from providing the needed financial support to make farmers realise their full potential.”Mr Joe Emmim
Mr Emmim expressed the hope that farmers would take full advantage of the opportunity and avail themselves to secure loans to upscale their operations.
Mr Robert Dowuona Owoo, Chief Operations Officer of Ghana Commodity Exchange, said the partnership would address the financial challenges farmers faced in their work.
The Chief Operations Officer of Ghana Commodity Exchange explained that the GCX has three main components – connecting farmers to markets, providing storage for their farm produce, and providing financial access. He noted that their access to finance challenge would be addressed by the partnership.
Mr Robert Dowuona Owoo urged the financial institution to be considerate in its interest charges and rates on the loans for farmers.
The Ghana Commodity Exchange is a spot trading platform company that links buyers and sellers of agricultural products to trade.
Farmers store their produce at the warehouses of the Company, while GCX connects them to markets.
The Company’s Key Goal
The Company’s key goal is to link Ghanaian smallholder farmers to agricultural and financial markets in Ghana and across the West Africa Region to ensure farmers secure competitive prices for their commodities.
Financing has become a critical barrier for farmers, especially smallholder farmers with financial institutions shying away from providing financial support to them, some describing the farmers as a risky group due to fears of default in loan repayment.
This partnership will help both parties in many ways. Apart from job creation, agricultural economic transformation will occur through the myriad of opportunities for value chain actors to achieve high levels of sustainable and equitable growth, from farmers who receive a premium on quality grains to traders who are guaranteed the right quality, with cash and contract settlement within a few days.
Meanwhile, GCX is a marketplace or a platform for buying and selling listed commodities. Starting with spot contracts for physical products, GCX will later trade in futures and options contracts for the listed commodities.