This is a proposal document for the establishment of the Palm Oil Cooperative Exchange (POCEX).
Producers at this time have no established market. Individuals and guilds approach the rural market and buy palm oil off rural peasants who individually produce palm oil for the most part through laborious archaic methods of pounding with earth, and squeezing out oil in a clay chaff medium to salvage palm oil.
The individual peasants then take small containers to the market to sell in order to buy necessaries for daily subsistence. They are at the mercy of middle-men who dictate the price to their own advantage. Guilds exist on both ends but purchasing guilds are stronger and more overbearing.
The objective of this exchange is to create a healthy market for exchange of goods for money for both producers and consumers in a cooperative milieu that yields benefits to both sides without compromising quality of goods and services.
The market stands a chance of being electronically operated in modern idiom for rapid growth.
Objective
The objective of POCEX is to provide a sophisticated market for palm oil for consumers, and a ready market for producers of palm oil. Users of palm oil, especially in industry, which plants will require assured supplies in order to remain in gainful production of cognate goods and services to the ultimate consumer can be assured of regular supplies by POCEX.
POCEX has to be registered as a cooperative endeavour for all growers of palm trees and processors of palm nuts and kernels into various vegetable oils. The objective is to pool all products, establish pressures of demand and fix prices that will lead to equilibrium between demand and supply on a weekly basis.
Cooperative producers of oil will belong to POCEX and shall come to the exchange daily with products. It is envisaged that consumers of the products will come to the market or reach the market through electronic media to establish availability of products and in consequence bid for supplies of available deliveries. It is envisaged that for certainty of products in production time line futures will in palm oil will be traded.
A physical market will be created at a future date where palm oil in agreed units – plastic tanks or metal drums – will be purchased off producers and stored ready for collection of consumers. Designated warehouses will be established at various centres for pooling products which may be collected on delivery notes being presented.
Capital Trading Points will be close handy to purchase products on behalf of cooperative producers such that they do not run the risk of marketing. Producers walk away with money provided by capital traders in the warehouse vicinity. Consumers now approach on order for collection of goods and payment to the POCEX or its affiliates for the products purchased. In turn, individual cooperatives with accounts at POCEX will receive automatic credit for producers goods marketed. Futures will be sold in the same way. A cashless economy is envisaged in the process.
Implementation modalities
All palm growers will register a cooperative with the above name and a list of valid operators compiled after establishing real producers. Only real producers shall be admitted into the producers roll. All cooperative societies in production of palm oil will register with POCEX and shall be assured of a ready market for any consignment of product deliverable to warehouses.
Factors for primary purchase of commodities will be enlisted as cooperative suppliers. They shall purchase palm oil from markets for onward supply to the exchange at established prices. The factors are paid on established prices upon delivery.
POCEX will warehouse products with facilitators with warehousing facilities. (Nothing precludes POCEX from developing warehousing facilities for own use.) Rent is paid to warehouse owners for storage. Cooperators’ warehouses will be preferred.
Factors of consumers shall make payment for consignments and obtain a supply code which shall authorise release of the products in the warehouses as soon as payment is recorded by bankers of the POCEX.
Cooperative Capital Trading Points will be established at or near warehouses for the purpose of paying for consignments delivered to designated warehouses.
The palm oil market is monitored for the purpose of establishing prices on a continuing basis.
Loans will be available later for expansion of palm plantations or for improvement of existing yields to old plantations and for farm expansion programmes of all types.
Neglected farms will be revitalised on sharing ratios to be agreed upon between POCEX and neglectors.
POCEX shall make loans available to co-operative farmers for rejuvenation of farms with diminishing productivity.
