Ethiopian Commodity Exchange

Rural farmers throughout Africa have to navigate not only the precarious changes in the weather but also the changes in the markets. Up until now rural farmers have not been integrated into national markets let alone international ones. Farmers would travel to market and sell their goods for a generally agreed price made between them and local merchants, often farmers only traded with a handful of people as to avoid risk of being cheated or the buyers defaulting.

Farmers would not have access to national or international market prices and so would often be selling their goods and a deflated rate. In Ethiopia where rural farmers make up about 95% of the country’s agricultural output this problem was compounded by poor distribution networks and a lack of quality control for goods. But now the new Ethiopian Commodity Exchange is bringing real change to the sector.

Headed up by former World Bank economist and fellow Ethiopian Gabre-Madhinthe exchange is providing accessible real time market information to rural farmers. This allows farmers to sell theirs good at a much more competitive price thus squeezing the profit margins of national and international commodity traders.

As well as providing information to Ethiopian farmers the Exchange has also put in place a groundwork of rules for trading, warehouse storage, payments, delivery and  a dispute settling mechanism. These structures are designed to encourage greater trust and transparency within the market and thus greater rates of exchange and trade.

Combine all this with a new quality grading system and there is now a real incentive for farmers to boost their productivity which in turn will help alleviate food shortages in other areas of Ethiopia.

If you want more information watch this video by BBC