In the next few months, the Ethiopian Commodity Exchange (ECX) will install mung beans as the sixth commodity to be traded on its floor, Fortune has learnt.

The final decision was made last Friday, after the board of the Ethiopian Commodity Exchange Authority (ECEA) gave its approval. The ECEA is the supervisory body of ECX and has the final say on whether or not new commodities can enter the trading floor.

Export of the legumes has increased over the past three years. This is one of the major reasons the board approved the decision, according to Addisalem Balema, director general of the ECEA.

"There is a marketable surplus, which can be traded through the ECX and bring benefit to farmers," Addisalem told Fortune.

In the 2011/12 fiscal year, production of Mung Beans, which are largely used in food, predominantly in Asian countries - with China being the major consumer - stood at 42,042tns. Trading at 1,400 dollars a tonne, in the international market, Ethiopia exported 3.4tns of Mung Beans, worth 2.6 million dollars, the same year.

Mung beans, known in Amharic as 'Masho', mostly grow in the lowland areas of Amhara Regional State. They are especially common in Debresina, North Shoa Zone, as well as in Kallu, South Wollo. It is currently also taking root in the Oromia and Benishangul Gumuz regions.

In the Amhara Regional State, the use of these beans has been twofold, according to Gedu Andargachew, head of the Amhara Agriculture Bureau.

"Because of their ability to store water, they are crops that can easily be cultivated, even when rainfall is low. In addition, they are used as an alternative during crop rotation, in order to preserve soil fertility," Gedu told Fortune.

However, since 2010/11, it is their market value, which has increased their demand by farmers, says Gedu. Exporters, especially from Dessie, the capital of South Wollo Zone, 400Km from Addis Abeba, started actively exporting mung beans. This led to a price increase and inspired many farmers to get involved in mung bean production.

Currently, export grade mung beans sell for around 145 dollars a quintal, according to Henock Hailemariam, from Hajuta Trading Plc and Tessema Bezabeh, from Koma Import & Export Co Ltd, both of whom export the commodity. The price was only 80 dollars a quintal a few years back, according to the two exporters. Indonesia is the main export destination, followed by India.

The boom has trickled down to farmers and suppliers who now sell export mung beans for prices ranging between 2,500 and 3,000 Br a quintal, according to Degu and the exporters. In 2010/11, the price was only 1,650 Br a quintal.

The Amhara Regional Administration, as well as various NGOs, have been advocating the entrance of mung beans on to the trading floor, in order to help farmers benefit further from this boom, according to Addisalem. The boom is also something the ECX hopes to benefit from.

Just as sesames doubled the Exchange's trading volume when it entered the trading floor, mung beans are expected to bring a change both in trade and price volume, according to Addisalem. A harvest of 50,000tns is expected for the 2012/13 fiscal year, according to him.

The fact that adding the commodity on to the ECX list will not require additional warehouse or infrastructural capacity was also another consideration during the board's decision, according to Addisalem.

Of the 56 warehouse sites the ECX administers throughout the country, Kombolcha, Addis Abeba and Asosa have been picked as delivery centres for mung beans, according to an official at the ECEA, who talked to Fortune on conditions of anonymity.

Procedurally, before a commodity enters onto the trading floor, the product development team at the ECX collects samples from production areas and Mesalemia, where Addis Abeba's largest wholesale grain market is located. These will then be studied by a technical expert panel, comprising of individuals from the ECX, Ministry of Agriculture (MOA) and the Quality & Standard Agency (QSA). They will give advice on what quality and grading should be applied to the commodity.

Input is also gathered from traders, exporters and food processors in an industry consultation to assess the grading and quality applied. A trading contract results from these two discussions, which are then presented to the board of the ECX and eventually to the board of the ECEA for final approval.

The Board of the ECXA, consisting of six members, was convening for the first time under new chairman, Tefera Derebew, Minister of Agriculture. He has been appointed in place of Melaku Fenta, the detained former director general of the Ethiopian Revenues & Customs Authority (ERCA).

Mung beans will follow in the footsteps of coffee, sesame, haricot beans, maize and wheat at the trading floor. Like the latter two commodities, mung beans do not have to be traded exclusively on the ECX floor.

"Only those interested in price and quality assurance can use the services of the ECX," Addisalem told Fortune.

This is different from coffee and sesame, which always have to pass through the ECX trading floor before exports. This is with the exception of when cooperatives are allowed to export directly abroad.

The fact that it is not mandatory comes as a relief to an anonymous broker, who exports mung beans on behalf of clients.

"Products tend to lose market value after a while when they enter the exchange," the anonymous broker told Fortune, citing the recent plunging trend in coffee prices as an example.

For exporters, like Tesema, who are already members of the ECX and export sesame, however, the trading floor is a better choice because currently there is an unmet demand in supply. Though his company's current export volume has quadrupled, from the 5,000 quintals he exported in 2010/11, it still does not match the demand from abroad, according to him.

"Through the exchange, a lot of suppliers can congregate in one place and quality will be ensured," he forcasted.