AFEX, Farmcrowdy,, Yefadot, Probity ruffle old feathers with virtual markets

Agric commodities trading

Structured system of agricultural commodity trading in Nigeria is not entirely an alien concept as it appears today, with the scarcity of efficient models of exchanges. Different from the informal system or open market method, standard commodity exchanges provide the platform for organised, efficient and transparent trading of selected commodities. But this mandate has hardly been fulfilled due to the inability of exchanges to acquire requisite infrastructure for the smooth running of their operations. However, a number of savvy individuals is beginning to eke out new strategies to set Nigeria back on track with the adoption of digital trading platforms and the provision of virtual markets for players, thus changing the face of agricultural commodities trading in the country. TEMITAYO AYETOTO writes on their coverage strength and the challenges that they face.

As a result of challenges around access to market and financing during colonial administration in Nigeria, Produce Marketing Boards were established to connect peasant farmers to markets at stable prices. The boards were set up in the three existing regions between 1947 and 1963 before the Western Region was spilt into Western and Mid-Western Regions. In the West, Cocoa Marketing Board was established in 1947, Cotton and Groundnut boards were set up in the North while Palm Produce boards were established in the Eastern Region in 1949, according to a TC report on commodity ecosystem.

Not only were they to address price stabilization or drive higher revenue for the economic development of these regions, emphasis was also laid on developing such buoyant commodities as cocoa, cotton, groundnuts, palm produce and rubber.

Consequently, gazetted markets were also set up across the country where the commodities were subjected to quality checks before they were bought from the Licensed Buying Agents (LBAs), which produce buyers accredited to buy on their behalf. The produce buyers in the process went to different villages and farmsteads to buy the produce based on weight, physical appearance of the produce and allowance for possible quality defects from the farmers. They paid the farmers on the spot or sometimes at a later date depending on the relationship between them and the farmers.

This concept was supposed to be developed further by the coming on stream of the Nigeria Commodities Exchange in 2001, but it hit the rocks on foundational dearth of funding for the exchange to function or enter into key technical collaboration for capacity building.

However, modern private sector initiators have veered into structured commodities trading afterwards as better alternatives and are increasingly adopting the digital space to build virtual markets across the country. The foremost example of such structured market that still functions today with large scale capacity is the AFEX Commodities Exchange Limited established four years ago.

Others are medium scale digital trading platforms such as Farmcrowdy,, Yefadot Food Company and Probity Farms among others. The trend among these players is that the focus is now being turned to generating critical financing to eliminate the barrier of lack of production resources, bridging the gap between the demand and supply of these produce and most importantly, securing a ready market for harvest.

AFEX Commodities Exchange

This exchange is Nigeria’s first private commodities exchange, operating on a large scale basis to connect small holder farmers to financial and commodities markets. It operates various warehouses in major commodity markets of Kebbi, Zamfara, Kano, Kaduna, Jigawa and Lagos and production sites across the country.

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Between Q2 2016 and Q4 2017, the volume traded on the platform ranged from 2,500 metric tonnes in Q2 2016 to 1,943mt in Q4 2017 with a value of N213 million and N235m respectively. The volume and value traded peaked between Q4 2016 and Q1 2017, leading to the expectation of a much higher value by Q1 2018. Maize (especially white) was the most traded commodity, followed by soya beans, paddy rice, ginger and others, including cowpea, wheat yellow and sorghum.

Its strategy is built around the use of electronic warehouse receipt system in trading to securitize the commodities, instil trading confidence and facilitate access to finance. The e-WRS is a real-time online inventory management system with the ability to transfer stock between buyers, sellers and banks. It represents a legal title of ownership of the security and offers increased reliability, lower transaction costs, and limitless geographic reach.

In terms of financing for growth, AFEX adopts collateral management to mitigate the risk in storage by guaranteeing the quantity, quality, and location of commodities to the owners, financial institutions and buyers where necessary. This comes with product guarantee such that products are deposited at a warehouse with collateral management and are guaranteed 100 percent in regard to quality and quantity for the duration of its storage; value-added service by grading products and assaying quality standards as well as higher-quality products. This approach commands better prices in the market, creating an incentive for farmers to better manage their crops after harvesting and builds confidence in the financial markets.

According to the exchange, quality and quantity risks are averted, the bank’s risk on the physical product is eliminated and banks are then able to extend credit to agricultural clients.

In terms storage, AFEX Nigeria has built on existing logistics systems by providing warehouses across major grain-producing states in North-West and North-Central Nigeria, and creating trading terminals where processors, traders and farmers exchange value. These primary and secondary storage facilities are being managed by collateral managers. AFEX Nigeria provides storage solutions, charged per metric tonne for commodities in storage. With its solution, vendors can store products at AFEX accredited warehouses or at their own sites.

Analysts believe that the sign of activities already occurring on this platform is an indication of the potential available in commodity trading. Although the level of transaction is still far less as a ratio of total production in the economy, ample opportunity for growth in commodity trading in Nigeria is foreseen.


Farmcrowdy is a digital agriculture platform that focuses on linking farm sponsors with real farmers in order to shore food production capacity while promoting youth participation in agriculture. It has over 53,000 broiler birds, 508 maize farmers on 1250 acres of farm, 80 cassava farmers on 529 acres and 217 rice farmers on 625 acres farms.

“We are looking at a way where we can bring land sponsors, farmers into one platform for impacting the lives of farmers. A sponsor picks, for instance a poultry farming [area] and say they want to fund a farmer in that area. They select a number of farm types and pay into the platform. The farmer then is notified that he has a partner coming on board. From our own end, we see the partner’s profile and then we associate one of our key customer engagement officers. So the farmer goes to work and runs the entire production circle. For maize and tomatoes, it’s six months. For cassava it’s nine months to a year and for poultry it last for about four months. We then mop up the harvest and sell it to off-takers who then pay us for what they have bought and then we pay the farmer 40 percent of the profit that comes from the harvest, 40 percent of the profit goes to the farm sponsor including his original investment and then 20 percent to FarmCrowdy for its work,” explained Onyeka Akumah, co-founder and CEO in an interview.

The challenges are basically bringing its technology to term with partners to suit their demand. The platform also shares in the problems of farmers, some of which include off-takers that will buy the harvests.

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“Introducing the farmers to smart farming techniques has been a challenge. It is a continuous educational process and we keep having to tell them how to do it better, getting the right people on the team who don’t just have degree in agriculture but have a passion for impacting the lives of farmers. Like any other start-up, we face raising funds to keep things going, have resource to continue fulfilling our mandate; [these] are the challenges faced,” Akumah said. is also a one-stop online platform to sell and buy any product, produce or service in the agriculture value chain. With a focus on creating economic opportunities, the platform is poised to make transactions in the agric sector seamless.

It provides the fundamental technology infrastructure and marketing to help farmers, merchants, brands and other businesses leverage the power of the internet to engage with their users and customers.

“With decades of experience in the different value chains of the agricultural sectors in several African countries, the promoters of this platform understand the peculiarity of the African agro business and have put everything in place to give buyers and sellers on the platform the right value for their money and time,” said Africanfarmer Mogaji, the founder.

It also features accessibility of quality agricultural products and personalized advisory by leveraging cutting-edge technology offering for farmers’ empowerment. The platform provides a wide choice of dealers of quality inputs a broad range of seeds, plant protection, plant nutrition and agric implements for farmers. has partnered with leading distributors of fertilizers, farm produce, and various stakeholders in the agric value chain to make farming business sustainable and profitable.

Other players such as Yefadot Food Company, Probity Farms, Binkabi, a blockchain commodity trading platform, among others, are providing similar motif and are increasingly driving the attention from the open market to its more organised system of trading. If the key problems of financing and infrastructural challenges are addressed for these players to thrive, possibilities of setting Nigeria back on track could be more guaranteed.

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Source:: Businessamlive

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