An evaluation of exchange driven and non-exchange driven coffee markets in Africa: contrasting Ethiopia with Cote d'Ivoire
Creators: name: Eba, Bla Josee C
Publisher: name: Zenodo
Year: 2024

description: To date, many African countries are characterised with challenges of market liberalisation;high levels of transaction costs and risks within commodities markets; and as such, emphasis nowadays has been placed on the establishment of Local Commodity Exchanges (CXs). CXshave been seen as new market institutions that catalyse equitable and sustainable development and growth. Although this may be the way forward for many African countries, conditions precedent for CXs success in African countries are not in existence, according to Rashid, et al. (2015, 2010). Nevertheless, a broad range of literature has considered CXs to be a successful potential market-based mechanism for commodity risk management and for lowering transaction costs. Although these studies have provided empirical evidence about the successesof CXs, the evidence lacks consideration of the impact of CXs on smallholder farmers. This study examines the performance of exchange and non-exchange driven coffee markets in Africa. Within this remit, a combination of methods including fixed effects, percentage change analysis, indexes, an ordered logit approach and a thematic analysis were adopted to provideempirical evidence to highlight the positive impact of CXs on agricultural commodities trading systems in developing countries, using the Ethiopia Commodity Exchange (ECX) and Cote d’Ivoire trading system as case studies. Moreover, the empirical foundations of this study aimed to elucidate the various levels of impact of the Ethiopian Commodity Exchange on smallholder farmers.The study finds that the ECX has been successful in reducing transaction costs in comparison to Cote d’Ivoire. More specifically, the ECX, by organising the Ethiopian trading system has reduced the number of intermediaries considerably, thereby improving smallholder farmers’ incomes. Also, the ECX has helped farmers organise more collectively. The grading standards introduced by the ECX have also yielded positive impacts on smallholder farmers who confirmed that these grading standards have improved the quality of their production, the pricing and facilitated trading in the industry. The availability of pricing and market data has also helped smallholder farmers to be more informed and get better prices for their products as well as improving their power to negotiate. Thus the ECX has added value to the Ethiopian agricultural marketing system (Eba and Struthers 2018).However, themes that have emerged from the semi-structured interview analysis suggest thatefficiency in Ethiopia trading system can be improved by improving transparency and infrastructure, making use of modern technology for grading while providing access to appropriate services that offer access to storage facilities, credit and training for smallholder farmers and their organisations. In Cote d’Ivoire, it is suggested that an efficient trading system can be achieved by improving transparency and providing mechanisms for risk management while offering access to appropriate services such as storage and credit for smallholder farmers.