Role of the Trader in Market Development and the WFP Supply Chain Ketan Patel ketan@exporttradinggroup.com +255 784 324973
Some Definitions TRADE: The BUYING and SELLING or exchange of commodities for PROFIT (oxford english dictionary) TRADER One whose business is trade (oxford english dictionary) A trader is someone who assumes RISK between a PRODUCER and a CONSUMER for a PROFIT
However, in today s competitive world, a trader s role is much more complex than these simple definitions.
TO ENSURE A SUSTAINABLE SUPPLY, TRADERS MUST FORGE RELATIONSHIPS WITH PRODUCERS. These include: Sharing market knowledge (what to plant etc.) Provision of seed and inputs Pre-financing farmers (through own funds or banks via off-take agreements) Assisting with logistics/storage Generally assisting to ensure a producer makes profit
BY ASSISTING PRODUCTION AND CREATING MARKETS, TRADERS ARE INSTRUMENTAL TO MARKET DEVELOPMENT.
In the AFRICAN CONTEXT (Where farmers are mostly small holders the average production per farmer is less than 1 Metric Tonne) THIS PROCESS IS VERY INVOLVED.
Why do we need traders? (WFP context) Bringing TOGETHER producers (small farmers) and consumers (The World Food Programme) BRIDGING the strict WFP CONTRACT TERMS Assuming TRANSACTION RISK Provision of PERFORMANCE BOND & FINANCING THE TRANSACTION (WFP pays ONLY after delivery) Assuming CURRENCY RISK (WFP Transactions are in $USD) Managing LOGISTICS
EXPORT TRADING GROUP and the WORLD FOOD PROGRAMME Supply Chain
Export Trading Company Limited (ETC) is an agricultural commodities trading and processing company incorporated in 1967. Own extensive infrastructure in Kenya, Uganda, Tanzania, Ethiopia, Sudan, Malawi, Mozambique, Zambia, South Africa, Dubai and India. Purchases commodities at farm gate level; cleans, processes, markets and mobilizes these commodities to meet the needs of the local, regional and international markets. Over the years, have successfully executed delivery of numerous WFP orders.
Procuring Close dialogue is maintained with the WFP as to their anticipated buying programmes to ensure availability. ETC includes in its overall purchasing structure, commodities in areas where WFP may potentially required them. Procurement is usually done at farm gate level through our strategic warehouse locations.
Receive Tender Document from the WFP ETC Head office will check cargo availability in our various countries of operation and best off-take points. OWING TO THE EMERGENCY NATURE OF WFP S WORK IN MOST CASES IT REQUIRES THAT GOODS ARE EX-STOCK AT THE TIME OF TENDERING. In case of DDU Delivery, ETC would source transport. Check quality parameters and other specific contract terms. Accordingly, ETC will submit a detailed tender covering all aspects of quality, price and period of delivery.
If Awarded the Contract On notification of Award, ETC will immediately notify the key people in the relevant offices to begin preparations for fulfillment of order. Once draft contract is received, this will be reviewed and signed. A Performance Bond in accordance to the contract, usually 5% of the contract value would be opened and contract would be signed.
Cleaning and Standardizing Normally the WFP requires printed bags these would be ordered and delivered to location. The commodity would be cleaned to WFP standards and re-bagged in WFP Printed bags.
Inspection Inspection would be arranged with WFP nominated inspector who would check that quality and quantity is in accordance to WFP contract delivery terms. Upon receipt of clearance from inspection agency, delivery would commence.
Delivery Update on a weekly Basis The relevant member of ground staff in each country needs to be contacted on a weekly basis to update on the status of the contract. Details to be included are: whether delivery has commenced, the quantity delivered to date (and that remaining) and whether the consignment has been delivered. A weekly delivery update is also to be sent to WFP.
Completion of Delivery WFP Take Over Certificates This is a certificate that is issued by the WFP when the crop has been received at delivery points. The T.O.C. is instrumental for invoicing.
Submit Invoices for Payment The original T.O.C and other documents like Phyto, sanitary certificate, certificate of origin, truck waybills/bills of lading etc. are collated and submitted with an invoice for payment.
As you can see, supplying to WFP is quite a process. Small producers may not have the ability or desire to get involved. TRADERS MUST BRIDGE THIS GAP!
Thank You ANY QUESTIONS?