The Ethiopian Commodity Exchange (www.ecx.com.et) was to host a consultative meeting of representatives from different African commodity exchanges this week on 25 February to form the African Commodity Exchanges Association. The CEO of the ECX, Dr Eleni Gabre-Madhin, was reported to have told a press conference in Addis Ababa that Ethiopia could offer to host the secretariat for the association. United States Agency for International Development (www.usaid.gov) sponsored the gathering.
The idea was first brought up at a United Nations Conference on Trade and Development (www.unctad.org) forum in Lusaka in September 2009. Its theme was: “Improving the Functioning of Commodity Markets in Eastern and Southern Africa through Warehouse Receipt Systems and Market-based Interventions.”
The previous day, 24 February, was a daylong “knowledge forum” held with the United Nations Development Programme (www.undp.org). This would involve sharing experience, best practices and challenges of establishing and working with commodity exchanges in Africa.
Participants were to come from Ghana, Nigeria, Uganda, Zambia, Tanzania, Sudan and Zimbabwe. Executives of the National Derivatives and Commodities Exchange of India and the South African Futures Exchange are also expected to take part. ECX has recently hosted groups from Kenya, Zimbabwe, Sudan, Ghana and the Philippines to look at Ethiopia’s experience and see how it helped the market.
Takele Teshome, programme analyst on Food Security and Recovery at the UNDP, reportedly says UNDP is funding the ECX with $1.5 mln a year, since 2008.
Last week on 17 February the ECX launched Direct Specialty Trade (DST), a new platform where producers of specialty coffee can transact directly with international buyers seeking to purchase premium beans on a fully traceable basis. In a press release by the ECX, Dr. Eleni said by coordinating buyers and seller, DST adds value to farmers, who can benefit from greater competition and to buyers, who can discover truly special coffees.
DST also enables trade of certified coffees, such as Organic certified, Fair Trade, RainForest, among others. She said DST is established as a monthly bidding session in which small farmer cooperatives and commercial growers may deposit specialty grade coffees in advance in ECX warehouses A condition for participation in DST is that farmers will receive a minimum of 85% of the final export price, a historic first for Ethiopia’s coffee farmers who normally are believed to receive below 40%, among the lowest share of the final price in the world. DST is an innovative way to enable direct trade that is reliable, fully traceable, transparent, and sustainable.
According to the release, on the first day, 44 lots of specialty coffee that came for the first DST session, their sellers being 35 primary cooperatives and 9 commercial growers, while 27 registered international buyers, representing coffee importers and roasters in North America, Europe, and Japan came to buy the high-quality coffee. The lowest price given was $2.15 dollars while the highest went as high as $4.02, according to Fortune newspaper (www.addisfortune.com).
Dr. Eleni said international buyers pre-register for the DST session and are able to order samples and to participate in a cupping session prior to the bidding: “DST closes the real gap between farmers seeking to benefit from the international market and buyers interested in tracing these coffees to their origin. DST also raises the visibility and profile of all Ethiopian coffee, and thus is a clear win-win for all.”