- The Ethiopia Commodity Exchange has signed an agreement with food aid donors that will make and increasing part of food aid by purchased through the commercial market point.
The UN agency World Food Program (WFP) has signed a Memorandum of Understanding with the Ethiopia Commodity Exchange (ECX), enabling it to take part in auctions to purchase local products. WFP is the major player to act when there is need for food aid in Ethiopia.
ECX Chief Executive Officer, Eleni Gebremedhin and WFP Country Director Mohammed Diab signed the agreement this week. Ms Eleni on the occasion said the agreement would help WFP to "gain a market in which there are much greater number of suppliers, which for a big buyer is a good thing."
She added that this would mean "more competition, lower prices, more choices, and at the end of the day, an opportunity to feed more people at lower costs." In crisis years, WFP is among the largest food product customers in the country and the UN agency has an aim of buying products locally when possible.
The agreement with WFP initially was to last for one year, Ms Eleni explained. After that, the parties would assess this commercial angle tp food aid, seeing if a more permanent agreement should be signed.
WFP representative Diab on his part said the aim of the agreement was "to enable Ethiopian farmers sell their products at fair price." He said this new deal would contribute to a share in supporting the country's agriculture sector.
WFP plans to purchase 1000 tonnes of grain for the first time through the ECX as consequence of the new agreement, Mr Diab said, adding that the amount would be "increased when necessary."
The Ethiopia Commodity Exchange (ECX) was established in Addis Ababa in 2008, mainly for grains. Its establishment was strongly supported by UN agencies such as UNDP and foreign development aid agencies.
According to the development agency UNDP, the ECX already has been a great success in helping Ethiopian agricultural products reaching the market and safeguarding trade. "There will be a lot of interest in other developing countries in this kind of exchange," said UNDP Administrator Helen Clark, visiting the ECX last year.
The exchange has handled transactions worth US$ 260 million since December 2008, amounting to over 175,000 tons of coffee beans. An estimated 850,000 small-holding farmers - mostly producers of coffee, sesame and other cash crops - are now involved in the ECX system. This amounts to around 12 percent of the national total of farmers.
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