Friday, December 2The voice of the voiceless

The Agricultural Commodity Exchange and its impact on the Sudanese economy

MAHMOUD FAROUK

Mahmoudfarouk.kse@gmail.com

Business Administration Specialist & supervision of financial markets
and Marketing with a demonstrated history of working in the financial
services industry.

 

Sudan, with its huge potential in resources, has been suffering from difficulty in transferring and benefiting from these huge and diverse natural resources in order to be reflected in the economic indicators such as (GDP, inflation rate, unemployment rate, balance of payments), where we find that most of the visitors to Sudan wonder and bemoan the lack of benefit from these resources. The causes of this suffering are many. A simple observer of this vast country can summarize the reasons are political, the lack of a unified vision for all Sudanese, and of course mismanagement.

When examining the challenges with regard to the largest sector that contributes to the economy and has several natural ingredients, which is agriculture that contributes between 35 to 40 percent of the gross domestic product, according to data from the World Bank, and works in this sector between 70 to 80 percent of the workforce in rural areas according to the information of the International Fund for Agricultural Development, we find that these farmers, on their various agricultural areas and the agricultural crops they grow, have a number of challenges that hinder their development and shrink the cultivated areas, which affects the rate of economic growth, and among these challenges:

  • Lack of sufficient funding for most farmers to meet the costs of the agricultural process, due to the fact that the Sudanese banking sector cannot meet all requests for financing from the agricultural sector despite the presence of banks specialized in agriculture such as the Sudanese Agricultural Bank and the Farmer’s Commercial Bank, in addition to the weak funding through the non-banking financial sector represented by financing through the stock exchange, and this is attributed to the weak culture in this field and the low interest of the state in the securities industry.
  • The lack of storage capacities with high specifications that work to control the quality of crops according to international standards, enabling farmers to store their crops and not be exposed to risks, as existing stores are exposed to many risks, ranging from natural pests to climate factors and finally security threats.
  • If the farmer is able to obtain sufficient financing and find safe storage capacities away from risks, he will face other challenges that shorten his continuity in the sector and affect the quality of the crops he grows, namely that he – the farmer – cannot obtain a profitable return from selling agricultural crops because of The absence of an organized platform for displaying and trading crops and benefiting from the proceeds of sale in the development of its cultivation. This absence of an organized platform for the trading of agricultural commodities and crops led to the emergence of people and companies who buy from farmers and traditional markets at prices that are not commensurate with the cost of agriculture and with the international prices of these agricultural commodities, as well as exploiting their need for money and purchase at very low prices, and the proceeds of purchase are not included in economic indicators because of smuggling abroad.

All of these challenges led to the exit of many farmers and the impact of this on the increase in the unemployment rate and the tendency to invest in matters that do not benefit Sudan and do not help getting out of the economic crisis, such as investing in lands and foreign currencies, and many of them transferred their savings to invest abroad to countries that provided them many incentives and facilities.

The establishment of the Stock Exchange of Commodities and Agricultural Crops will have a great impact in helping Sudan and farmers to overcome the challenges that were previously listed, as the stock exchange will be the platform on which agricultural crops are traded in all transparency and through an electronic system that facilitates trading operations and at a very fast speed from brokerage companies with experience in this field of trading and financial market analysis, with mobile applications to keep pace with prices and to display the largest possible amount of agricultural crops.

The stock exchange system will also provide the most important thing that farmers miss and limit export operations, which is a quality control system that measures the quality of crops according to agreed global standards, in addition to providing warehouses with large capacities , with high quality and speed of absorption to store agricultural crops in various parts of Sudan away from environmental risks and security threats. Where the warehouses and quality control operations under the supervision of a company affiliated with the stock exchange can be equipped according to the latest findings of agricultural commodity stores around the world, and here we will find that the farmers’ risks have been completely removed, and they will not care about what happens inside the stores, and all they have to do is focus on agriculture and then Handing over their harvest to the nearest store to them through transport companies or cooperative societies that can be established for this purpose, then farmers are given printed electronic certificates sent to their phones proving that they have a specific quality crop on a specific date that entered the store and then the farmer is considered to have known the value of his crop, if he wants to sell and receive his share either in cash or in his bank account. All he has to do is contact the nearest brokerage company to him, and it is only minutes until he receives the notice of sale, or if he wants to keep the electronic certificate to enter the transaction of any financing process from banks by guaranteeing his crop in the store.

If the seller is the farmer or the agricultural company, who is the buyer then? Buyers in the agricultural commodity exchange are numerous some of them buy crops for the purpose of introducing them into the local industry. Of course, in this case, imports will decrease, employment rates will increase, unemployment will decrease, GDP will increase at large rates and inflation will decrease. There are also buyers who export abroad according to specific controls from the supervisory authorities in the state, as well as any person or company in the world, can buy agricultural crops from the stock exchange through trading applications through financial brokerage companies and supply the purchase amounts in foreign currency into Sudan, and this of course leads to higher growth rates in economic indicators, and enables the Central Bank of Sudan to build a more than excellent reserve for foreign currencies easily .

The establishment of the Agricultural Commodities Exchange will lead to the recovery of a number of important sectors in the country that have a direct or indirect impact on agricultural commodities, for example the transportation sector of all kinds, which will rebound due to the increase in the transfer of crops between warehouses with each other and between warehouses, ports and airports in the case of export, as well as the banking sector will recover because farmers and agricultural companies will be in a state of continuous and increasing desire behind financing in large numbers, in addition to the fact that all financial transfers to the stock exchange, brokerage firms, buyers and sellers will be made through the banking system.

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