The Abuja Securities Commodity Exchange (ASCE), a parastatal under the ministry of commerce and industry (FMC81) has announced that it is going into warehouse receipt financing in order to improve the cash flow and provide adequate storage for farmers.

ASCE explained that the working of the scheme is that “at harvest time when supplies of commodities are surplus and the price is low, farmers can go to an exchange licenced warehouse and store their commodities. The warehouse will issue the farmers with a receipt called a warehouse receipt that will contain the name and address of the owner as well as the quantity and quality of the commodity”.

Mr. Yusaf Abudurrahim, the managing director of ASCE PLC who spoke at a stakeholders' forum on legal and institutional frame works for warehouse receipt financing and processing in Nigeria in Abuja recently day, maintained that the farmers can take this receipt to a bank and obtain a loan using his commodity in the warehouse as collateral.

According to him, “later, when the price of the commodities are right he can sell his commodities at a higher profit than he could have done if he had sold at harvest time. From the proceeds of sale he can pay back his loan and have extra money for his immediate needs”.

Mr. Yusuf further explained that before any commodity is sold on the floor of the Exchange or kept in an exchange licenced warehouse it has to be graded to determine its quality and only commodities that meet an approved standard will be accepted for trading or storage.

He revealed that the Exchange has an assaying laboratory that tests commodities for quality and for other chemical and microbiodgical analysis. He added that the laboratory, whose charges are moderated, is also open to food processors, individuals, corporate organizations and warehouse operators.

Mr. Abdurrahim stressed that “everyday, the Exchange publishes prices of commodities on its website from rural and urban markets round the country. This is to allow buyers and sellers to take good marketing decisions; they can go and buy where commodities are being sold at a cheaper price or they can go and sell where they can get higher prices for their commodities”.

The ASCE managing Director restated that one of the benefits of the scheme to farmers is that “the Exchange will reduce the cost of sourcing quality raw materials for agro commodity processors as they would be able to source them through the Exchange.