New Commodity Exchange Modernizes Ethiopia’s Farming System

Selling crops used to be a complicated process for Aweke Teshome. The Ethiopian farmer never knew the fair market price for his products, or how they rated in quality. He was forced to sell at whatever price the traders offered. Worse, with no crop storage he lost money in times of surplus.

We were not encouraged to produce bigger volume of crop as there was neither a coordinated market place to sell our products nor warehouse facilities to store the surplus from our sales,” he explained. “Additionally, commodities were sold through long channels.”

The new Ethiopia Commodity Exchange cuts through those channels. With a trading floor, electronic price information, quality assurance, and delivery warehouses, the ECX is bringing modern agricultural marketing to one of Africa’s most fertile countries.

The quality rating was a motivating experience for Teshome. “In our first participation at ECX,” he said, “our product got the least grade… which strengthened our resolve to produce quality products with higher grades.”

According to former IFPRI researcher Eleni Zaude Gabre-Madhin, the driving force behind the exchange, and its current CEO, the ECX contributes to freeing Ethiopia from a cycle of famine and starvation. “When farmers have better market incentives and can manage risk better, they can produce more…Ethiopia will be much less prone to food crises.”

Teshome is enjoying the benefits in his own farm. “Now we are members of the ECX,” he says, “and are happy that big volume sales can take place in a less risky environment.”

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Rising Prices and the Role of Commodity Exchanges - Statement to the Press by Eleni Z. Gabre-Madhin, CEO, ECX, April 17, 200851.74 KB