Ethiopian Commodity Exchange offers processors higher price for soya bean to limit exports

ETHIOPIA – The Ethiopian Commodity Exchange has created a special window to facilitate purchase of soya beans by agro-processors, aimed to ensure there is ample supply of legumes in the market for processing.

Through this, according to reports by Addis Fortune, it will promote agro-processing in the country with the end goal of import substitution.

With the special window which can accommodate up to 200 buyers at a time, the price of soya beans sold to agro-processors has been increased by US$20 a tonne, a higher price to that offered to exporters.

The higher profit margins achieved is geared to entice suppliers to sell their soya beans to agro-processers rather than exporters.

“The window is beneficial, it will curb price variations, purchase cancellations, and informal purchase agreements.”

Trading operations manager ECX – Bereket Meseret

The supply and demand for soya beans is not at equilibrium due to limited production. This has in turn made agro-processers compete heavily for the crop, searching for suppliers across the market, including directly from the farmers and traders, which at times led to skyrocketing of prices.

During the past fiscal year, two million quintals of soya beans were produced, and despite the limited supply for local processing, 1.5 million quintals were exported.

“The window is beneficial, it will curb price variations, purchase cancellations, and informal purchase agreements,” said Bereket Meseret, trading operations manager at ECX. Further to this it will ensure product quality and proper grading systems.

So far, 10 agro-processors have been registered to buy soya beans from the centralised market platform.

Last week, two processers, Rich Land and Ronghi Ethiopia, bought 352tn of soya beans with a value of 5.7 million Br (US$150k) via the new special soya bean window.

Since it started trading soya beans two years back, the ECX has transacted about 150,000tn of the legume.

Even if the establishment of the special window for processers is a win for the local industries, Zelalem Aychew, general manager at Worku Aytenew Import, Export, Transport & Construction Plc, has highlighted that the government should not undermine the export sector, as it generates foreign currency.  

Zelalem, whose company is establishing an edible oil factory for 3 billion Birr (US$78.9m) in Debre Marqos, also raised concerns about the price increase.

He argues that localities for market centres have to be given sufficient attention since the centralised trading system might inconvenience processers in terms of transportation costs.

Further recommendations have been made aimed to bolster the sector, to include the private companies engaging in contract farming to increase production, on the fear that few industry giants might monopolise the minimal soya bean supply.

For the exchange of soya beans to processers, ECX has established market centres in Humera, Hawassa and Neqemte in addition to the capital. Three more centres in Adama, Jimma and Gonder are expected to be established soon.

Meanwhile, two overseas firms have secured contracts to supply 600,000tn of wheat to Ethiopia for a total of US$159.3 million inclusive of freight cost.

The procurement undertaken by Public Property Procurement & Disposal Service, on behalf of the Ethiopian Trading Business Corporation, is aimed at market stabilisation and for use in emergency responses.

Rosentreter Global Food Trading, a German firm, has been contracted to supply 400,000tn of wheat for US$75.7 million, while the Turkish firm Martina Mertens Sample, was also hired to import 200,000tn of wheat for US$51.2 million.

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