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International
Journal of
Business and Economics Research
2018; 7(6): 183-190
http://www.sciencepublishinggroup.com/j/ijber
doi: 10.11648/j.ijber.20180706.12
ISSN: 2328-7543 (Print); ISSN: 2328-756X (Online)
The Role of Ethiopian Commodity Exchange (ECX) in Crop
Value Chain Development in Ethiopia
Bizualem Assefa Gashaw
*
, Saron Mebratu Kibret
Department of Agribusiness and Value Chain Management, Wolkite University, Wolkite, Ethiopia
Email address:
*
Corresponding author
To cite this article:
Bizualem Assefa Gashaw, Saron Mebratu Kibret. The Role of Ethiopian Commodity Exchange (ECX) in Crop Value Chain Development in
Ethiopia. International Journal of Business and Economics Research. Vol. 7, No. 6, 2018, pp. 183-190. doi: 10.11648/j.ijber.20180706.12
Received: September 20, 2018; Accepted: October 16, 2018; Published: October 29, 2018
Abstract:
This study intended to assess the role of Ethiopian Commodity Exchange (ECX) in crop value chain development
with the aim of identifying agribusiness and Value Chain activities in ECX; identifying development intervention and its
underlying impact and associated chain problems of ECX; identifying major value chain enterprises operating under ECX; and
map the generic value chain for some selected commodities. ECX is Ethiopia’s latest attempt to enhance the performance of
agricultural markets. Conceived as a meeting point for buyers and sellers of grains and coffee, the ECX seeks to organize
efficient and transparent market operations. Before the establishment of ECX, agricultural markets in Ethiopia had been
characterized by high costs and high risks of transaction forcing much of Ethiopia in to global isolation. With only one third of
output reaching the market, only buyers and sellers tended to trade only with those they knew, to avoid the risk of being
cheated. ECX developed a new method of exchange; a marketing system that coordinates better, links faster, and protects of
both side of the trade. ECX is a modern trading system based on standard crop contracts, establishes standard parameters for
commodity grades, transaction, size, payment and delivery, and trading order matching, while at the same time, preserving the
origins and types of crops as distinct unlike the previous. Quality certification is also another important issue in value chain in
ECX which is based on a modification of the previous quality grading system, with a new crop classification based on classes,
types and grades of the commodity. The role of the ECX has been to specifically address the ways suppliers and exporters
transact, with more efficient and transparent ways of trading as the main outcome. Despite the engagements of ECX have
positive impact on the existing marketing system and for the development of agricultural value chains in Ethiopia, through
creating a more reliable way to connect buyers and sellers in an efficient way to discover market prices, a way to level the
playing platform by providing market information to all, there are still problems which are faced by all actors in value chain as
infrastructural problems, legality problem, exploitation of farmers at the farm gate, marketing imperfections, systematic
rigidity and traceability issue. In this regard, the study suggest ECX to develop strategies benefiting smallholder farmers in
particular, facilitating financial and other logistics, promoting traceability in trading system for the private traders, creating
regulatory platform for controlling the illegal traders operating in the system and capacitating the cooperative unions in the
value chain.
Keywords:
ECX, Value Chain, Traceability, Sesame, Coffee
1. Introduction
1.1. Background Information
Ethiopian Commodity Exchange (ECX), established in
2008, is a new initiative for Ethiopia and the first of its kind
in Africa. It is a trading platform where buyers and sellers
come together to trade, assure quality delivery and payment.
ECX is a state owned public –private partnership enterprise
established as a demutualized corporate entity with clear
separation of ownership, membership and management and
governed by a Board of Directors constituted by relevant
public institutions and ECX private members operating
184 Bizualem Assefa Gashaw and Saron Mebratu Kibret: The Role of Ethiopian Commodity Exchange (ECX)
in Crop Value Chain Development in Ethiopia
through the sale of membership seats, which are privately
owned by wholesalers, cooperatives, exporters, processors
and food agencies [1]. It is Ethiopia’s latest attempt to
enhance the performance of agricultural markets. Conceived
as a meeting point for buyers and sellers of grains (sesame,
haricot beans, maize, and wheat) and coffee, ECX seeks to
organise efficient and transparent market operations and thus
contribute in solving the country’s longstanding problem of
starvation [2]. Before ECX was established, agricultural
markets in Ethiopia had been characterized by high costs and
high risks of transaction forcing much of Ethiopia in to
global isolation. With only one third of output reaching the
market, only buyers and sellers tended to trade only with
those having close information, to avoid the risk of being
cheated. This is done on the basis of visual inspection
because there was no assurance of product quality or
quantity, this drove up market costs leading to high customer
prices. Small-scale farmers who produce around 95% of
Ethiopia’s output came to the market with little information
and are at the mercy of merchants in the nearest and only to
the market they know; unable to negotiate better prices or
reduce their market risk.
ECX is developing a new method of exchange/marketing
system that coordinates better, links faster, and protects of
both side of the trade. The exchange is unique partnership of
market actors, members of the exchange, and its main
promoter, the government of Ethiopia, where buyers and
sellers come together to trade, assured of quality, delivery
and payment. ECX represents the future of Ethiopia by
bringing integrity, security, and efficiency to the market there
by creating opportunities for unparalleled growth in the
commodity sector and linked industries such as transport and
logistics, banking and financial services, and others. Its
mission is to provide a modern efficient, transparent and
reliable market platform to serve the national development
goals through adaptation of technology excellence in
innovation and integrity. Important values in ECX are to
create market integrity between product, actor, and
transaction, build balance between all actors, create
modernization, and market transformation. The vision of
ECX is to become a leading and dynamic exchange in Africa
and to revolutionize Ethiopia’s tradition bound agriculture.
1.2. The Development Intervention of ECX
Agricultural marketing in Ethiopia has undergone several
transformations over the decades. Recent initiatives to
increase values and benefits to the agricultural sector include
fair trade certification by cooperatives, organic and specialty
crop promotion and the trade marking and licensing
initiatives that have successfully established international
branding. It aims to provide trading ground for sesame
haircot beans, maize, wheat and coffee. The ECX is supposed
to mainly guarantee: (1) market integrity: guaranteeing the
product grade and quality and operating a system of daily
clearing and settling of contracts (2) efficient coordination of
buyers-sellers and standardized contracts (3) market
transparency: disseminating market information in right time
to all markets players and (4) managed risks [3].
1.3. Main Activities of the Organization
Ethiopian commodity exchange (ECX) is a modern trading
system based on standard crop contracts, establishes standard
parameters for commodity grades, transaction, size, payment
and delivery, and trading order matching, while at the same
time, preserving the origins and types of crops as distinct
unlike the previous. The existing auction trading system in
the document is to mean the marketing system before the
establishment of the ECX. By now the existing trading
system is the one which currently works in ECX. Quality
control is undertaken in liquoring and inspection units
located in the major crop producing areas and the crop is then
weighted and inventoried in ECX operated warehouses.
Trade is thus on the basis of warehouse receipts issued to the
depositor rather than on sample basis. ECX manages a
central depository of electronic warehouse receipts, removing
the risks of paper loss or fraud.
ECX quality certification is based on a modification of the
existing quality grading system, with a new crop
classification based on classes, types and grades of the
commodity. Currently ECX has over 20 warehouse branches
at different regions; namely Hawassa, Dilla, Wolyita Sodo,
Gimbi, Asossa, Nekemte, Adama, Gonder, Dansha, Metema,
Hummera, Abirhajira, Shiraro, Dire Dawa, Kombolcha,
Bedelle, Bonga, Jimma, Bure, and Pawi. The major roles of
these warehouses are arrival, sampling, coding and decoding,
grading, weighing, deposit, reconciliation, and reporting. For
the transaction to be applied at the exchange, primary
depositors should bring their commodity to their nearby
branch so that the load shall be sampled, graded and
weighted. Trade/price is determined based on the information
given on the grade, the weight and the location of inventory.
1.4. Agribusiness and Value Chain Activities in ECX
The ECX was started to benefit and modernize the way
Ethiopia was trading its most valuable asset, its commodities.
Agricultural marketing in Ethiopia had undergone several
transformations over the decades. Smallholder farmers sell
agricultural commodities to local merchants who intern sell
to distributors and collectors; and collectors sell to suppliers
who export through the ECX. Cooperative unions sell
directly through ECX and capture margin that would
otherwise be captured by merchants and collectors. Prior to
listing on the exchange, producers must submit crops to the
inspection centre for grading and consolidation through
warehouses. The Ethiopia commodity Exchange (ECX) has
contributed to the functioning of the value chain, with an
indication that farmers are in general more satisfied at the
services provided by the ECX, such as in moisture and
quantity testing, transaction and assessment. Besides, farmers
are also benefited from accessing market information
displayed on the price ticker board in their locality. Within
the international context of coffee trade, for example, quality
comes high in the requirements. The importance of an
International Journal of Business and Economics Research 2018; 7(6): 183-190 185
integrated supply chain that builds close links between client
and the exporting company, in turn are closely in touch with
the producers. Ethiopian farmers are now required to sell
their coffee at designated primary markets where only
certified buyers are allowed to make purchases. Similarly,
coffee processors must receive approval to use designated
warehouses, where their product is graded for either export or
sale on the domestic market.
1.5. ECX Linkage with other Organizations
ECX has strong linkage with other organizations which are
very essential for the work/service provided by ECX.
(1) ECX Authority: these are the legal responsible body
controlling ECX based on the rules.
(2) Coffee and Tea Development Authority: These area
governmental body works on quality and productivity
of coffee and tea.
(3) Woreda Agricultural Offices: The Woreda agricultural
office is responsible for the registration and
identification of the owner of the commodity.
(4) Banks: ECX works with over 11 international banks.
2. Objective
The general objective of this case study was to identify the
major value chain enterprises operating under ECX and map
their respective generic commodity value chain. Specifically
this case study intended to (1) identify the generic value
chain map, major actors and describe the value adding
functions for major selected crops operating under ECX (2)
undertake a SWOT analysis for and identify the role of ECX
along the respective value chain (3) identify the major
challenges and opportunities of actors along the respective
value chain.
3. Methodology
3.1. Data Types
The authors studied the case with the help of the
supervisor assumed to provide general introduction and
orientation about the organization and the working
environment, to provide directions to start the work, to
follow-up all series of activities, to provide some secondary
data, and to arrange some trips/visits to other
departments/offices. Both qualitative and quantitative data
types were collected.
3.2. Sources and Method of Data Collection
The research methods employed were mainly qualitative,
such as semi-structured interviews. Observing the auction
system, attending trading activities and visiting the
warehouse outside the central office were the major, but not
limited to, observations done. The Ethiopian commodity
exchange has one head office and more than 20 regional
warehouses. One central warehouse located in Addis Ababa
was visited for two weeks. Checklists and incidental oral
discussions and interview were used to collect primary data
from organizational staffs, and some traders trading under
ECX. In doing so, valuable ideas reflected from the
respective discussions and interviews were gathered
accordingly. Besides, data were collected through frequent
observations while attending the overall trading activities and
some intra and inter organizational visits. On the other hand,
secondary data of both qualitative and quantitative types
were gathered through thorough reviewing and examining of
organizational profile and staffing documents containing
detail explanation of the organization, reports as well as
records of published and unpublished documents found in the
organization and from the internet.
4. Result and Discussions
4.1. Agribusiness and Value Chain Activities Carried Out
by ECX
The case study tried to identify ECX’s major services
provided for efficient and effective agricultural marketing
services as warehouse service, laboratory test, grading,
trading platform/auction service, provision of communication
links; and market related training services for agents. Once
commodities are graded by experts in ECX, it is stored in
ECX warehouse to prevent tampering; then bid on and sold
to exporters.
All commodities/products that enter the ECX are given a
grade and a geographical designation. Even cooperative
products, not passing through the ECX, end up with a grade
and a geographical code. Grading is also handled by ECX
using a well-established laboratory. Grades are based on
physical inspection of lots and on cupping. For example, for
the commodity coffee, first, the raw green beans are visually
evaluated for defects (physical screening of defected coffee
grain), and second, ECX uses coffee quality testers to
identify sensory aspects of a roasted bean, including the
aroma, taste, acidity, and other flavours before grading.
ECX also provides a kind of transparent marketing
platforms where the marketing agents are fairly and
transparently negotiate and exchange in the floor. ECX
bidding system is two types: an ‘open cry out’ system where
sellers and buyers meet on an open trading floor to negotiate
and finalize the sales deals and the currently stated
‘electronic bidding’ system where both buyers and sellers
themselves (or with their agents) bid and fix price through
the electronic computer. Providing communication links and
training services related with the marketing for agents
4.1.1. Coffee Value Chain along ECX
Coffee is in charge for the livelihoods of an estimated of
1.3 million producers and 15 million people of producers,
wage workers, transporters and their families along the coffee
value chain [4]. ECX has over 450 registered
buyers/exporters that are members of the exchange with
licenses to bid for and export coffee. Unlike other producing
countries in the region, Ethiopia does not allow multinational
companies (MNCs) to register as exporters. The reference [5]
186 Bizualem Assefa Gashaw and Saron Mebratu Kibret: The Role of Ethiopian Commodity Exchange (ECX)
in Crop Value Chain Development in Ethiopia
suggested that as a result of the absence of MNCs
competition at the auction level, the industry is much more
locally controlled than elsewhere in Africa. The government
goal is to standardize coffee by region (Harar, Sidamo) and
grade (1-9) than regionally or locally specialized producer.
This enables buyers to source a standard region at a standard
grade, and trade for a set price on the ECX. According to [6]
there are generally two paths in the Ethiopian coffee
marketing chain: one through Ethiopian commodity
exchange (ECX); and other a direct export path through
cooperative unions and it is directly exported to different
countries in the world.
4.1.2. Sesame Value Chain along ECX
Oil crops are the second largest source of foreign exchange
earnings after coffee [7] and are the main oilseed crop in
terms of production value. Sesame is one of major oil crops
traded under the platform of ECX. Ethiopia was considered
the second main exporter of sesame seeds in the world,
behind India. The cultivation of sesame has owing to its high
value on the export market and good adaptability in the
country. The many varieties of Ethiopian sesame seeds make
it suitable for a wide range of applications, either as seeds or
oil products. The sesame value chain in Ethiopia is poorly
organized, although it is currently under reform since the
introduction of the new market auction system (ECX). The
study identified that the main actors under the sesame value
chain are producers/suppliers, collector, wholesalers, brokers,
farmer associations, the auction market (ECX) and exporters.
Other important service providers and/or influencer are
transporters, agricultural input suppliers, consumers and
retailers.
Constraints identified along sesame value chain include
lack of improved cultivars, poor seed supply systems poor
agricultural production techniques and post-harvest crop
management. From different possible sesame chain the most
common trend is farmers sell their product to the primary
market where all the sesame is bulked. In almost Kebele, a
primary market has been allocated where legal trade may
take place from the primary market until the sesame goes to
the ECX, the place where the sesame is graded in to different
quality groups (1-5) from the ECX the graded sesame goes to
the export traders, who sell to the international market [8].
Source: Authors sketch based on preliminary information from ECX
Figure 1. Generic coffee value chain map in Ethiopia until 2017.
International Journal of Business and Economics Research 2018; 7(6): 183-190 187
Source: Authors sketch based on preliminary information from ECX
Figure 2. Generic sesame value chain map.
4.2. Beneficiaries of the Chain
The study also identified major beneficiaries for the
agricultural products value chain trading through the ECX.
For suppliers and especially for smallholders, ECX create
improved earning, improved productivity and premium for
better quality supplies, by improved market information
and access to finance. Exporters assured quality through
industry acceptable standards, reliable supply, and
improve international market share. Bankers increase
customers’ base, earning and transaction turn over, foreign
exchange, earning and technology transfer. Government
improved regulation, tax administration, and increased
foreign exchange earnings. Clients (non-member producer
and supplier and suppliers) also gain access to market,
reliable payment and delivery without direct membership.
Generally, all actors in the chain are becoming beneficiary
mainly by technology transfer, experience sharing and
business reporting.
4.3. Impact of ECX Interventions and its Associated Chain
Problems
Even though those agribusiness and value chain activities
undertaken ECX have impact along the whole value chain, its
respective impact on smallholder farmers was given attention
under this case study. ECX gives farmers power and
participation for better able to negotiate price with market
transparency; quality controlling advisor services during
post-harvest handling. Farmers are not restricted or captive to
local market and farmers can use future prices by planning
and decision for risk management.
Despite ECX’s role in creating a more reliable way to
connect buyers and sellers in an efficient way to discover
market prices, a way to level the playing field by providing
market information to all (transparency), and a way to
incentivize better quality and to eliminate contact risk, there
are still problems which are faced by all actors in the chain.
Constraints in the value chain include lack of improved
cultivars, poor seed supply system, poor agricultural
production techniques and postharvest crop management
[10]; weak farmers’ organizations to engage in the value
chain, poor market information system, limited financial
material and skills for processing, limited use of traditional
agricultural inputs and little research support to increase
yields, and erratic rainfall [11]. There is still a problem of
high contact default, unreliable supply, volatile price, poor
quality, unregulated actors, unreliable trading parameter,
uncoordinated market, high cost and risks, and also poor
information. The study tried to identify the following major
problems as:
(1) Infrastructural problem: Although ECX is intended as
an innovative institution tailored to the particular
requirements of the Ethiopian agricultural
commodities, the country’s deficiencies in terms of
infrastructure, access to technology and finance and
technical services pose significant challenges to its
ability to really transform the country’s agricultural
markets.
(2) Legality issue: The new exchange created a great deal
of tension during its first year of operations,
particularly between the government and private
exporters, some of which even had their exporting
licenses suspended for suspicions of hoarding
commodities [9].
(3) Exploitation of farmers at the farm gate: Private traders
were not interested in disclosing information. Lack of
information and transparency problem between farmers
and traders had adversely affected smallholder farmers.
This kind of exploitation from traders by hiding market
information was the prevailing chain problems among
the other.
(4) Marketing imperfections: Before the establishment of
188 Bizualem Assefa Gashaw and Saron Mebratu Kibret: The Role of Ethiopian Commodity Exchange (ECX)
in Crop Value Chain Development in Ethiopia
ECX, the effects of market distortions created by
private exporters were highly affected the marketing
system and sustained in some extent. According to [5],
it was becoming an increasingly common practice
among private exporters to register as suppliers
through sister companies ensuring the possibility of
reacquiring their own products by bidding higher price
which increases the risk of marketing the chain non-
competitive.
(5) System rigidity: The rigidity of the auction and
export processes including the inability of buyers to
test the quality of the product (especially coffee) in
advance of sales again creating a higher quality
export coffee beans (as an example) has created an
illicit market that yields higher profit than exporting,
albeit in local currency, is also another challenge
ECX facing.
(6) Traceability issue: Originally the ECX started
operating for easily standardised goods (like the
commodity coffee) for instance is that of
guaranteeing coffee differentiation and traceability
or speciality, fair trade and organic markets, which
is lost once coffee is deposited in the ECX
warehouses and graded according to regional types
and quality. This is the current new platform created
by the ECX through which producers of specialty
coffee are supposed to transact directly with
international buyers. However, traceability, which is
becoming increasingly important for different
commodities especially for organic coffee is not still
feasible for the private traders in the present ECX
auction system. The new system allows for
differentiation between products coming from
different regions but not from individual producers
or farms which is the basic requirement in
international markets, which offer higher price
premiums. Only cooperative unions are able to offer
full traceability; and Ethiopia’s specialty market
share is only 20% compared to Kenya’s 40% (the
highest in Africa), Guatemala’s 60% in terms of
specially volume (ECX, 2010b). However, estimates
suggested that Ethiopia has the potential to increase
its speciality coffee production to two third of total
production, or even 80% of production adding
organic or rainforest certified coffee (bid).
4.4. Upgrading Decisions in the Chain
Effective vertical linkages between actors at different
levels of the value chain play a key role in supporting the
upgrading capacity of the chain. Rapid response to
changing market conditions requires on-going
communication and cooperation both up and down the
chain. When vertically linked actors are willing and able
to share information on new technologies, then the value
chain as a whole is more competitive because it can adapt
more rapidly to changing market condition. In other ways,
effective vertical relationships can contribute to decision
in the chain competitiveness by creating conditions that
support risk-taking and investment. Example of this can
be found in coffee and grain value chain, where it is
common for smallholder farmers-suppliers-consumers
both up and down the chain. Through horizontal linkages,
actors at the same level of the chain interact to accomplish
what a single actor working independently could not do so
well. This interaction may come in the form of either
cooperation or competition (or both). Effective horizontal
relationships can promote efficiencies, reduce costs, open
markets and spur beneficial competition. A producer
association is a classic example of horizontal relationships
designed to promote economies of scale, favourable
market pricing and other benefits for its members.
Effective model of cooperation among smallholder
farmers are needed in order for large number of these very
small farmers to be integrated in to competitive value
chain. This makes it possible for small-scale producer to
reduce the costs of inputs and supporting services (e.g,
training or transportation), while gaining access to new
buyers and better prices.
The new ECX regulation introduces important changes in
terms of the processes for quality control and product
transaction. First, quality control procedures are enhanced by
adding a pre-inspection at the locality of production and an
official grading at a regional quality and liquoring unit
(according to the agro-ecology of the production area).
Second, the lawful places for the transactions to take place
and the duties and obligations of the different types of actors
are specified (such as having the necessary capital and
facilities to operate a given capacity). In this regard, the
figure of the collector, formerly recognised as an independent
actor operating between the producer and the supplier, is
eliminated and collection is ascribed to suppliers. Third, a
warehousing system is setup where products are stored until
sold at the ECX.
On the other hand, certain regulations remain unchanged,
such as the need to obtain a quality certification prior to
export and the prohibition to sell export-quality commodities
(especially coffee) in the domestic market. Above all, strict
government regulation remains a means not only to ensure
quality but also to guarantee the timely collection of foreign
currency from the export of agricultural
commodities/products.
International Journal of Business and Economics Research 2018; 7(6): 183-190 189
4.5. Result of SWOT Analysis for ECX
Table 1. Result of SWOT analysis.
SWOT components
Descriptions
Strength (S)
ECX is a well functioned organization.
ECX revolutionize Ethiopian traditional bound marketing system to a modern one.
It bringing integrity, security and efficiency to the market.
ECX creates more reliable way to connect buyers and sellers in the market.
ECX is an efficient way to discover market price.
ECX’s centralized market location provided enough information to integrate domestic and international markets reasonably.
Weakness (W)
ECX has had no significant impact on the spatial integration of coffee markets and that there has been no significant change in the
extent to which price volatility gets transmitted from international to domestic market.
The strict regulations that ECX has introduce in to the country’s coffee markets have resulted in higher transaction costs.
These costs could potentially cancel out the benefits of some of the ECX innovations, such as electronic payment system.
The rigidity of the auction and export processes including the inability of buyers to taste the products traded.
Traceability is not also feasible for private traders in the present ECX auction system.
ECX couldn’t capacitate farmers to become direct traders at the ECX; at most, smallholder farmers are represented by member
cooperative unions.
Opportunity (O)
ECX is a new initiative for Ethiopia and the first of its kind in Africa.
The ECX is unique partnership of market actors, the members of the exchange, and its main promoter of the Ethiopian
government.
It is the only auction centre.
ECX has a commitment to free market principle and a more reliable way to connect buyers and seller in the market.
Has an efficient way to discover market prices in a way to eliminate contact risk.
Threat (W)
Lack of infrastructures
International competitive market
Problem of illegal trading (contraband) activities
Local consumer demand for the higher quality export products has created an illicit market that yields higher profits than exporting
5. Conclusion
The study assessed the role of ECX in the context of
agricultural value chain. ECX is a new initiative for Ethiopia
and is the market place where buyers and sellers come
together to trade, assure quality delivery and payment. The
role of the ECX has been to specifically address the ways
suppliers and exporters transact, with more efficient and
transparent ways of trading as the main outcome. Improving
access to information and thus strengthening the bargaining
power of smallholder farmers has come almost as a trickle-
down effect gradually benefitting the remaining value chain
actors. Issues like improving farmers’ agricultural practices,
working capital, access to finance, organisational capacities,
as well as improving the massive deficiencies in public
infrastructure, are widely recognised as necessary elements
for promoting a more favourable participation in markets and
depend on a variety of actors. The engagements of ECX have
impact on smallholder farmers. It gives power and
participation, the new ECX regulation introduce important
changes in terms of the processes for quality control and
product transaction. Even though ECX create a more reliable
way to connect buyers and sellers in an efficient way to
discover market prices, a way to level the playing platform
by providing market information to all, there are still
problems which are faced by all actors in value chain. Such
as infrastructural problems, legality problem, exploitation of
farmers at the farm gate, marketing imperfections, systematic
rigidity and traceability issue.
It is finally recommend that ECX to increase the
warehouse receipt systems both in the center and regional
warehouses. ECX should establish regulatory framework
able to avoid the problem of illegal trading (contraband)
activities. Effective model of cooperation among smallholder
farmers are needed in order for large number of these very
small farmers to be integrated in to competitive value chain.
ECX auction system should be encouraged to continue
promoting cooperative unions to sells top-quality coffees
through a special DST auction platform maintaining the
traceability of the lots of coffee. So far, very little coffee has
been sold this way, but it is an option which may grow more
in the future. Besides, ECX should make feasible the
traceability issue for the private traders in the ECX auction
system. It is also recommended that improving conditions for
poor farmers requires actions by ECX that start to offset the
historical power relations between chain actors. The study
suggested that in order for this framers should be represented
to directly involve in the trading activities besides being only
by cooperative unions. For this trading membership seat cost
should be affordable in particular to the smallholder farmers.
Acknowledgements
The authors would like to express deepest appreciation to
all the people who in one way or another contributed to the
completion of this study; especially the interviewees, ECX
staffs, key persons involved in the group discussion who
generously shared their time and information. Sincerest
appreciation goes to Mr. Daniel Anberbir, warehouse
operator in central ECX, for his incredible support and
cooperation in providing the required data, introducing the
ECX and providing the researchers the key contacts for the
interview and group discussion.
190 Bizualem Assefa Gashaw and Saron Mebratu Kibret: The Role of Ethiopian Commodity Exchange (ECX)
in Crop Value Chain Development in Ethiopia
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