Note
from Wondwossen: The MoU that is signed between ECX
and USAID appears to be signaling an introduction of an electronic coding and marking system along with yet another attempt, after the failed Direct Specialty
Trade (DST) platform, to routing farmers' cooperatives to ECX. If this is
confirmed, it will be more problematic and needing serious scrutiny and monitoring.
It is to be recalled that the new
coffee law, which has mandated the trading of all coffee at ECX, exempts cooperatives
and commercial farms from the ECX platform and grants them the right to
directly trade with buyers and exporters. What would these cooperatives now get
by trading through ECX that they couldn't find in direct trade with ultimate
buyers? This and related questions call for a closer look at what the ECX/USAID
plan is about.
As such, the subtitle of this
article, "smallholder farmers are going to directly participate in ECX's
trading system" is misleading. Under the current law and ECX's
prohibitive requirements, the coffee produced by smallholder farmers can be traded
at ECX only if it flows in through cooperatives or the collectors-suppliers
channel. Smallholder farmers cannot participate directly in ECX's trading.
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ECX, US to
strengthen coffee trading, marketing
Smallholder
farmers to directly participate in ECX's trading system
By Dawit Taye
By Dawit Taye
February 2, 2013
The Ethiopia Commodities Exchange (ECX) signed a Memorandum
of Understanding (MoU) with the United States government, through the United
States Agency for International Development (USAID), to collaborate on
increasing the quality, traceability and marketing of coffee on Thursday .
Under this agreement, which was signed at the Ghion Hotel, USAID’s Agricultural
Growth Program-Agriculture Market Development Project (AGP-AMDe) will
collaborate with ECX to improve the ability of sellers and buyers to track the
origin of coffee through electronic coding and marking, certify labs and coffee
quality graders, increase the number of farmers’ cooperatives, and improve ECX
warehouse efficiency. These joint efforts will ensure the integrity and
marketability of the coffee trading system in Ethiopia.
ECX, the first modern market in Ethiopia, commenced trading
operation in April 2008, with contracts traded in coffee, sesame, maize, wheat,
and pea beans. ECX is a market place where buyers and sellers come together to
trade based on warehouse receipts, assured quality, delivery and payments. It
is a national multi-commodity exchange that provides market integrity, enhances
market efficiency, ensures market transparency and allows risk management.
The United States was among the first donors who supported the
establishment of ECX. USAID funded four technical advisors and supported the
coffee Direct Specialty Trade (DST) linking smallholder farmers with
international buyers, warehouse equipment, and the Warehouse Receipt System
(WRS).
“We are extremely happy to see the renewal of our cooperation
with the Ethiopia Commodities Exchange,” Dennis Weller, Mission Director, USAID
Ethiopia said. “We believe in the ECX mission to be a structured trading
platform for buyers and sellers that addresses the fundamentals of commodity
transactions: quality, quantity, payment and delivery.”
“This MoU demonstrates our commitment to enable smallholder
farmers to reap the benefits of their produce by enhancing their direct
participation in ECX’s trading system”, ECX CEO Anteneh Assefa said. “ECX is
undertaking various efforts to grow the number of full member farmers’
cooperatives from the current number of 15. This is only one of many
improvements to come with the support of this partnership.”
In that regard, ECX has allocated 30 membership seats which
will be up for grabs by farmers cooperatives in the upcoming auction that is
scheduled to be held in a month's time.
USAID’s AGP-AMDe project is a flagship project under the US
President’s Feed the Future (FtF) Initiative in Ethiopia and its implementation
is led by ACDI-VOCA.
---
RELATED
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RELATED
Below is the full text of the press release
U.S.
GOVERNMENT AND ETHIOPIAN COMMODITIES EXCHANGE TO STRENGTHEN COFFEE TRADING AND
MARKETING
Addis Ababa, Ethiopia
2013/02
Addis Ababa, Ethiopia, January 31, 2013 – The U.S. government, through
the United States Agency for International Development (USAID), signed a
Memorandum of Understanding (MoU) with the Ethiopia Commodities Exchange (ECX)
to collaborate on increasing the quality, traceability and marketing of
coffee. Under this agreement, USAID’s
Agricultural Growth Program-Agriculture Market Development Project (AGP-AMDe)
will collaborate with ECX to improve the ability of sellers and buyers to track
the origin of coffee through electronic coding and marking, to certify labs and
coffee quality graders, to increase the number of farmers’ cooperatives, and to
improve ECX warehouse efficiency. These
joint efforts will improve the integrity and marketability of the coffee
trading system in Ethiopia.
ECX commenced trading operation in April 2008, with contracts traded in
coffee, sesame, maize, wheat, and pea beans.
ECX is a market place where buyers and sellers come together to trade
based on warehouse receipts, assured quality, delivery and payments. It is a national multi-commodity exchange that
provides market integrity, efficiency and transparency.
The United States was among the first donors to support the ECX. USAID funded four technical advisors and
supported the coffee Direct Specialty Trade (DST) program linking smallholder
farmers with international buyers, supported the establishment of the Warehouse
Receipt System (WRS) and provided warehouse equipment.
“We are extremely happy to see the renewal of our cooperation with the
Ethiopia Commodities Exchange,” says Mr. Dennis Weller, Mission Director, USAID
Ethiopia. “We believe in the ECX mission to be a structured trading platform
for buyers and sellers that addresses the fundamentals of commodity
transactions: quality, quantity, payment and delivery.”
“This MoU demonstrates our commitment to enable smallholder farmers to
reap the benefits of their produce by enhancing their direct participation in
ECX’s trading system,” said ECX CEO Anteneh Assefa. “ECX is undertaking various efforts to double
the number of full member farmers’ cooperatives. This is only one of many improvements to come
with the support of this partnership.”
USAID’s AGP-AMDe is a flagship project under the U.S. President’s Feed
the Future (FtF) Initiative in Ethiopia and its implementation is led by
ACDI-VOCA.
###