ETHIOPIA – The Ethiopian Commodity Exchange (ECX) is seeking to debut four types of agriculture produce on the exchange, bringing the number of traded commodities to 15.
ECX has indicated that it will add black pepper, fenugreek, black cumin seeds and coriander on the exchange before the month ends.
According to reports by Addis Fortune, the move follows a two-year feasibility study which paved way for approval by the authority.
The exchange’s officials highlighted that the move will improve the production and marketing systems associated with the spice trade and reduce high transaction costs brought on by the heavy involvement of intermediaries.
The high transaction costs have discouraged smallholder farmers who cultivate spices on an average holding of less than half a hectare.
Although large swaths of land are well suited for spice production, productivity remains low due to traditional farming practices.
According to a recent survey conducted by the Ethiopian Statistical Service, Ethiopia produces over 240,000tn of 50 varieties of spices each year.
However, spices account for under one percent of the 22.8 million hectares of farmland cultivated by 18 million small-scale farmers.
The average productivity of spices stands at 10 quintals a hectare, much lower than the average productivity of 36 quintals a hectare for grain crops.
The inclusion of the commodities will have a profound effect on productivity by increasing farm gate value and reducing transactional costs.
The ECX has come a long way since it was established in 2008 under the stewardship of Eleni Gebremedhin.
In the early days, only three commodities were traded before growing to five over four years, when trade volume also grew to over half a million tons.
The ECX continued to expand, incorporating six additional commodities during the tenures of three successive leaders.
Under the leadership of the fourth and current CEO, Wondimagegnehu Negera, who assumed the position in 2017, the trade volume reached 614,586 tonnes worth 39.6 billion Br last year.
Currently the exchange serves close to 3.5 million small-scale farmers and operates 62 warehouses with a combined storage capacity of 400,000 tonnes.
Other than Ethiopia, Malawi, Zambia, Rwanda, Nigeria and Ghana also operate commodity exchanges, but the Ethiopian exchange is the first of its kind in the region.
It has largely been considered to have successfully modernised the country’s economy, linked smallholder farmers to markets, and enhanced food security.
The exchange is set up as a private company owned by a partnership of the market actors, members of the exchange, and the Ethiopian government.
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