Ethiopian Commodity Exchange

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Topics: Coffee
Executive summary

Agricultural market in Ethiopian has been long plagued by high transaction costs and non integrated market information. Small scale farmers came to the market with little information.
Ethiopian commodity exchange, the newly established organization, is providing a market place where buyer and sellers can come together to trade and be assured of quality, delivery and payment. Currently, ECX has 496 members - 346 are suppliers and 150 sellers from the coffee industry. ECX started operation of trading coffee in November 2008.
The main objective of this research is to create awareness about this infant organization and market system, its role for coffee export marketing system and at large its contribution for the development of the country 's economy.

CHAPTER 1: BACKGROUND OF THE BUSINESS

1.1 Introduction
In the Ethiopian context, Agricultural markets are characterized by prohibitively high transaction costs, evidenced by the lack of sufficient market coordination between buyers and sellers, the lack of market information, the lack of trust among market actors, the lack of contract enforcement, and the lack of grades and standards, implies that buyers and sellers operate within narrow market channels, that is, only those channels for which they can obtain information and in which they have a few trusted trading partners. Extensive empirical analyses of Ethiopian market behavior thus reveals that market actors conduct business across short distances, with few partners, in few markets, and with limited storage,

The persistence of these market constraints in Ethiopia points to the fact that market reforms alone, defined as the removal of policy distortions, are necessary but not sufficient to enhance market performance. This suggests that the new development agenda, not only in Ethiopia but throughout post-reform Africa, is to move beyond market reform to market development. In addition to policy incentives, key interventions are

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