Posted by: Armel | March 5, 2008

ETHIOPIAN COMMODITY EXCHANGE

              board.gif                          gabre-mahdin.gif

 The POWER of FREE MARKETS

Well, Obama might be right. May be when Ordinary people do Extraordinary things, real change can happen.The Ethiopan Government trough Eleni Gabre-Madhin may have found the solution to sustainable economic growth via the ETHIOPIAN COMMODITY EXCHANGE (ECEX). I can’t believe I am actually talking about a country that endured a Starvation Crisis from food shortages not too long ago (2002-2003), and the well known Famine from 1984-1988.

In 2002, the Ethiopian Government was asking for Aid Programmes on Food because of a price collapsed that led to a break down in grains and vegetables supply from the farms to the local markets. That breakdown was in part due to the huge discrepancy between the street price of food and the revenues farmers had gotten. This phenomenom always occurs in countries (3rd World) where the Agricultural sector still suffers from a lack of transparency in the whole chain. What usually happens, is that there are so many middle men in the process that, by the time the final retailer gets to the produce, the selling price accepted by the farmer has swollen by higher than normal margins. And this would automatically make the money received by the original farmer far too depressed much like a currency with less than face-value.

So India, China and now Ethiopia decided to do what the US did back in the 1800’s by opening the agricultural trade to all stakeholders and letting the market freely decide on prices. The exchange system, by showing current prices will help farmers decide when to sell and what quantity to sell. In order to keep the farmers informed directly about on-going prices. Electronic screens are set up to display continuously real times prices. Anytime that farmers are allowed to take an active part in the trading activities of their produce (provided that the Government keeps the operations running efficiently), a commodity exchange market tends to Boost Food Output, Create Wealth for Farmers, and Slow Down the Rural Dependence on Remittances.

Something to think about when we know that most sub Saharan countries agricultural sector suffers from the same kind of difficulties. Go ECEX !

For more on Eleni Gabre-Madhin, watch her explain her vision  CLICK HERE..

Armel Njeunou

 

Additional Sources: BBC, CNN, FT, WSJ

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Responses

  1. Dear Eleni.

    Your dream will be visible soon.

  2. This is what ethiopia lacks: credible vision .

  3. Ahaa, its fastidious discussion about this article here at
    this blog, I have read all that, so at this time me also commenting here.


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