ECX ‘exclusive seats’ bid for cooperatives postponed


The Ethiopian Commodity Exchange (ECX), the modern commodity market facility in the country, has postponed the opening of a bid for full membership seats for farmers’ cooperatives due to the lower-than-expected number of bidders that competed. Earlier this year, the Exchange had announced that it will provide 30 full membership seats for farmers’ cooperatives to facilitate their direct involvement on the exchange, which is currently trading in agricultural produce on the floor.
When  the 30 seats are taken over by the winning cooperatives, their  membership in the electronic market will double.
However, following the tender announcement made two weeks ago exclusively for the cooperatives, the number of bidders that bought the bid document was below the number of seats that was offered by the exchange for the bid.
According to our sources, the farmers’ cooperatives which purchased the document were not more than 26, hence forcing ECX to postpone the bid opening day.
There are 200 farmers’ cooperatives in the country, and  based on this information, the exchange had expected more bidders to compete for a full membership seat on the electronic market. Though the result was unexpected, experts said that the number of bidders was low due to the fact that cooperatives have different options to trade their product in and out of the country. “For instance farmers’ cooperatives can export their product bypassing the opportunity that is given for farmers unions and cooperatives only. Due to that fact, it is not necessary to be part of the trading actors in the exchange,” they explained.
On the other hand, the majority of cooperatives are not financially strong to bid for a seat. The floor price for the seat at the Exchange is currently 100,000 birr; it was 50,000 birr when ECX was established in 2008.
The government and the exchange have been working together to increase the 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 farmers’ cooperatives at the exchange. ECX officials said that previously, farmers could not compete for seats due to the high competition on membership bids. The current bid was expected to be relatively less expensive because the cooperatives were to be exclusively bidding for the available spots. 
The study at the exchange indicated that the trading volume of farmers’ cooperatives which are members of ECX has not exceeded 2.2 percent of total trading.
According to the plan, the farmers’ cooperatives will purchase the 30 seats by competing with each other and that will increase their membership share to around 12 percent.
According to sources, the bid opening is postponed to May 17, while the bid document is available for purchase for one week beginning May 10.
ECX commenced trading operations in April 2008 in coffee, sesame, maize, wheat, and pea beans. 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, 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.