THE STARTING bell rings and dozens of traders in green and grey jackets take to the floor of the trading pit, gesturing loudly at screens displaying the prices of commodities in different parts of the world, writes MARY FITZGERALDin Addis Ababa
The scene is not from Wall Street or the City in London. Instead it is the daily routine at the Ethiopia Commodity Exchange, a three-year old initiative that is helping revolutionise the country’s once limping agricultural sector.
What happens here inside the exchange’s imposing glass and metal building on a busy Addis Ababa thoroughfare is linked to trading hubs in Ethiopia’s regions and from there by mobile phones to traders in villages, who chalk up prices on a board.
The price information on products like coffee and grains shown on the screens ringing the trading floor is transmitted within two seconds to 31 electronic display boards in rural areas, and the exchange’s website. An automated phone system provides prices for different products and grades, and 156,000 subscribers receive real time data via SMS.
The exchange replaces the previous, more informal, system of sales through middlemen, and helps empower Ethiopia’s millions of farmers by allowing them direct access to current market prices.
“Small scale farmers, who produce 95 percent of Ethiopia’s output, come to market with little information and are at the mercy of merchants in the nearest and only market they know, unable to negotiate better prices or reduce their market risk,” the exchange says in its mission statement.
“This is putting Ethiopia on the global commodity map,” says chief operations officer Ahadu Woubshet.
Showing a delegation from the Oireachtas foreign affairs committee around the bustling trading floor yesterday, Woubshet explained that before the exchange was established in 2008, produce would usually have changed hands eight times between farmer and exporter.
Sinn Féin TD Pádraig Mac Lochlainn told Woubshet the old system sounded like Ethiopia’s version of Ireland’s “gombeen man”.
The Ethiopia Commodity Exchange is being held up as a model for other countries in Africa. A pan-African conference in Addis Ababa this week concluded with a call for a continent-wide commodity exchange as well as more exchanges in other African nations. Former World Bank economist and CEO of the Ethiopian exchange Eleni Gabre-Madhin told the conference that the initiative had made a real difference to the lives of millions of Ethiopia’s farmers because they could now get access to the same information about market trends that exporters and processors had. “A farmer … on his way to market checks his mobile … because receiving a text message now from the Ethiopia Commodity Exchange could save him hundreds of birr,” she said.
The exchange’s champions, which include several UN and international aid agencies, argue that the system can also contribute to boosting agricultural productivity among smallholder farmers. In the past, farmers often struggled in informal local markets to gain the right price for their products. This resulted in a lack of incentives for maximising land use.
Some 2.4 million farmers are currently directly involved in the exchange.
Woubshet says plans are under way to broaden that base.