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Zambia likely to produce three-fold maize output

ZAMBIA – Zambia has potential to increase its annual maize production to 10 million tonnes from three million if Government policies remain consistent, a South African commodities expert has said.

JSE director for commodities and key clients management Chris Sturgess said once Zambia achieves the 10 million tonnes mark, it will determine whether the country has succeeded in building the sector.

Mr Sturgess said in a statement availed to the Daily Mail on Monday that the world needs food and Zambia has the potential to make it happen.

“I am very optimistic about the future of agriculture in Zambia. It is true that we require consistent Government policy to build a futures market, but the opportunity for Zambia to go from a three to four million tonnes grain-producing nation to a 10 million tonnes grain-production country will be the true test to decide whether we have succeeded in building the sector,” he said.

Mr Sturgess also called on Zambian commercial farmers to use the opportunities of futures and options which are contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date.

Unlike traditional equity traders, futures traders are ‘hedgers’ and ‘speculators’. A hedger is a producer of the commodity (e.g. a farmer, an oil company, a mining company) who trades a futures contract to protect himself from future price changes in his product.

“Futures and options may sound complicated but you [farmers] should use every opportunity to learn more about these well-established products that will expand your marketing opportunities and remove price risk from their business,” he said.

Mr Sturgess said farmers need to sign up with a broker who can provide them with access to the JSE derivatives market and start hedging against investment risk which means strategically using instruments in the market to offset the risk of any adverse price movements.

“Farmers should start off small and understand the difference between hedging and speculating on the market to gradually build their own confidence in these new instruments,” he said.

JSE is in a position to offer the Zambian community a full range of exchange products through Zambian Commodity Exchange following its ability to license warehouses which will soon be able to provide a spot exchange for price discovery on the day and with the JSE through its clearing house.

April 6, 2016; https://www.daily-mail.co.zm/?p=64819#