Developmental contradictions in Ethiopian coffee trade system: The case of Ethiopian Commodity Exchange (ECX)

Abstract

Ethiopia is Africa’s biggest coffee exporter nation with deep history. Coffee discovered in Ethiopia and it continues to be pivotal for the country in many fronts till to date. The coffee linkage with Ethiopia is deep-rooted many historians believe back in 9th century coffee discovered by Kaldi, a goat herder. He discovered it after noticing coffee’s energizing effect on his goats. The word coffee itself also derived from place called ‘Kaffa’ where the trees blossomed. Coffee gradually became a world obsession by spreading from highlands of Ethiopia traveled along spice routes to Yemen, Turkey and Europe. Coffee exporting is a significant portion of Ethiopian economy. It accommodates more than twenty five million peasants which indicate its magnitude for the country. It is one of the leading sources of income for the government and other stakeholders. The establishment of Ethiopian Commodity Exchange (ECX) has seen the Ethiopian coffee trade system being transformed. It created a platform of primary, secondary and tertiary market divisions. In a way that the coffee can be traded based on value addition from one division to the other. Unlike the previous centralized warehousing system, it introduced decentralized warehousing and liquoring centers across the country where the coffee quality checked by use of laboratory tasting. It gives a temporary produce storage services until the coffee is sold and ownership of the produce transferred from seller to buyer. The introduction of modernized and transparent system enabled economic gain and helped farmers to enhance their life conditions. The objective of this study was to identify some of the contradictions that are solved in Ethiopian coffee trade activity by the establishment of ECX. In addition, the emerging contradictions and prevailing disturbances at present as well as the overall benefits it brought in relation to farmers’ day to day life conditions were analyzed.