Addis Ababa — The last nine months of its existence has been challenging for Ethiopian Commodity Exchange (ECX). It saw decline in coffee production and felt impact of global financial depression, among others, ECX disclosed.

Transformation from traditional to modern transaction system, shortage of laboratories, low storage capacity of warehouses, the existence of 256 to 781 coffee variety grades were also among the challenges faced by the ECX, said Dr. Eleni Zawde, CEO, at the annual ECX members' forum held at Addis Ababa Hilton on Monday.

Even then, ECX has been striving to overcome the challenges and achieve its targets since its establishments nine months back, it was indicated. Before ECX was established, the agricultural markets in Ethiopia had been characterized by high costs and high risks of transaction; only one third of the output reached the market; and commodity buyers and sellers tended to trade only with those they knew so as to avoid the risk of being cheated or default, she said.

In addition to that, trade was carried out on the basis of visual inspection because there was no assurance of product quality and quantity. This drove costs up, leading to high consumer prices.

Small-scale farmers on their part, who produce 95 percent of the country's output, came to the market with little information and were consequently at the mercy of merchants nearby, the only market they knew. Hence, they were unable to negotiate better prices or reduce their market risk, Dr. Eleni underlined.

ECX is working for reconciliation between warehouses and the central depository, to install an automated system and for regular close monitoring of security issues and manipulation at warehouses.

In the just ending year, coffee worth 2.8 billion birr was made available for transaction in the domestic and export market by ECX.

The suitable altitude, ample rainfall, favorable temperatures and fertile soil makes Ethiopia a favourable region with a huge potential for coffee production. A genetic pool of the country's coffee shows it contains more than 6000 varieties, giving the country a big specialty coffee capacity.

Coffee plants cover a total area of 700,000 hectares in Ethiopia, producing roughly 250,000 tons per annum. Around 20 million people make a living out of the commodity. Forest coffee accounts for about 10 percent of the total.

The Ethiopia Commodity Exchange is a recent initiative in Ethiopia. ECX has a vision to revolutionize Ethiopia's tradition bound agriculture through creating a new market system that serves all market actors, ranging from farmers to traders, from processors to exporters and consumers.