The Ethiopian Commodity Exchange (ECX), the modern commodity market facility in the country, has invited interested parties to bid for full membership seats,
which it has exclusively set aside for farmer cooperatives. Early this year, the exchange had stated that it will provide 30 full membership seats for farmer cooperatives to facilitate their direct involvement on the exchange, which is currently trading in agricultural produce on the floor. When the stated number of seats is taken over by the cooperatives which have won the bid, it will double the cooperatives’ membership in the electronic market.
The government and the exchange have been working together to increase direct involvement of farmers on the trading floor. Currently, most of the trading seats, especially full membership seats, are controlled by private companies.
From a total of 329 members with seats, only 15 seats or below five percent are controlled by farmer cooperatives at the exchange. Anteneh Assefa, CEO of ECX, recently stated that, previously, farmers could not compete for seats due to the high competition on membership bids. The current bid is expected to be relatively less expensive because only the cooperatives will be bidding for the available spots.
So far, the trading volume of farmer cooperatives which are members of ECX has not exceeded 2.2 percent of total trading.
According to the plan, the farmer cooperatives will purchase the 30 seats by competing with each other and that will increase their membership share to around 12 percent.
ECX commenced trading operations in April 2008, with contracts traded in coffee, sesame, maize, wheat, and pea beans, and it is a market place where buyers and sellers come together to trade based on warehouse receipts, assured quality, delivery and payments. It is a national multi-commodity exchange that provides market integrity, efficiency and transparency.
Since the formation of the trading exchange by Dr Eleni Gabre Madhin, founder and first CEO of ECX, trading in agricultural produce has become transparent and quite efficient and has resulted in increased revenue for farmers. Previously, the trend in commodity trading favoured and was more beneficiary to trading actors and middlemen rather than farmers, because they were able to set market prices, but now trading prices are regulated by daily market requirements. The success of the Ethiopian Commodity Exchange has led several African countries to make it the benchmark for the establishment of their own electronic markets.