Forward contracts allow Mozambican farmers to set a specific price for their crops before the growing season even begins. By using the COJAZ cooperative in Zambezia, farmers can mitigate the impact of market price crashes during the harvest season.
The Challenge
Mozambican farmers traditionally sell at harvest when prices are at their lowest. Because everyone harvests at the same time, supply floods the market, and prices crash. Farmers are often forced to accept whatever price a buyer offers because they need cash immediately. This cycle is a primary reason why farmers struggle to escape poverty — they produce value but struggle to capture a fair share of it.
The Solution
COJAZ, a cooperative MBC works with in Zambezia, listed forward contracts on a commodity exchange before planting. A forward contract acts as a binding commitment to deliver a specific quantity of a crop at a pre-agreed price on a set date. Through this process, COJAZ members know their expected revenue before they plant their first seed, allowing for better financial planning.
The Three Contracts
| Contract | Crop | Quantity | Price (MZN/kg) | Delivery Date | Grade |
|---|---|---|---|---|---|
| COJAZ-FWD-MAIZE-001 | Maize (milho) | 6,000 kg | 28 | Mar 15, 2027 | Grade A |
| COJAZ-FWD-RICE-001 | Rice (arroz) | 2,000 kg | 40 | Mar 15, 2027 | Grade A |
| COJAZ-FWD-BEANS-001 | Beans (feijão) | 2,000 kg | 50 | Mar 15, 2027 | Grade A |
The Economics
- Total contracted volume: 10,000 kg
- Average price: 37.3 MZN/kg
- Estimated revenue: 373,000 MZN ($5,874 USD)
- Payment method: M-Pesa escrow (buyer deposits, released on delivery)
- Price discovery: Transparent on commodity exchange, not negotiated behind closed doors
Impact on the Farmer's Season
For a smallholder farmer, these contracts change the entire season from one of risk to one of strategy. By locking in a price early, farmers can purchase the necessary seeds and fertilizer with the certainty of a guaranteed income, shifting their focus from surviving the market crash to maximizing their production quality and volume.
The Nature of a Seed
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Why This Matters
Without forward contracts: A farmer harvests, which floods the market, causing prices to drop to 15 MZN/kg. They sell at a desperation price and often lose money.
With forward contracts: A farmer signs a contract before planting, knows their revenue in advance, and plants with confidence. Upon delivery at harvest, they receive 28 MZN/kg, earning approximately 87% more than the local spot market.
The Data
- Forward contracts listed: 3
- Total volume: 10,000 kg
- Price premium vs spot market: ~87% (28 MZN vs ~15 MZN at harvest)
- Delivery location: Muaquiua, Zambézia
- Escrow: M-Pesa (buyer deposits, agent confirms delivery, funds released)
- Blockchain logged: Block #54
Key Lesson
Price security is often more important than pure yield. A farmer who produces 1,000 kg at 28 MZN/kg earns significantly more than one who produces 2,000 kg at 15 MZN/kg. Forward contracts allow for planning, which is the difference between farming as a business and farming as a gamble. You can learn more about how we support these efforts at Meet the farmers or read about our Case Study: 9 Crops, 3 Districts, 1 Cooperative.
Frequently asked questions
What is a forward contract? A forward contract is a commitment to deliver a specific quantity of crops at a pre-agreed price on a future delivery date.
Why do crop prices drop at harvest? Prices typically drop when farmers harvest at the same time, causing an oversupply in the market that overwhelms demand.
How does a fixed price help a farmer? It allows a farmer to know their revenue before planting, which enables better financial planning and protection against market price volatility.
Maputo Bridge Capital (MBC), founded by Anselmo Boaventura in Fort Worth, Texas, connects sponsors with verified smallholder farmers like those at COJAZ. A sponsor gives from $25, which goes directly to the farmer's local seed and fertilizer shop, and the sponsor receives the receipt and field photos in return. After harvest, farmers repay into a Community Fund that sponsors the next farmer. Please note that sponsorships are gifts, not investments, and are not tax-deductible; 92% of your contribution goes to the shop, while 8% covers verification and documentation. If you would like to help, you can sponsor a farmer from $25 here.