Cash crops produced under the investment or contract farming scheme will have to go through the Ethiopian Commodity Exchange (ECX) only to be measured on weighting scale, according to a new directive issued by the Ministry of Trade and Regional Integration.
Investors engaged in the production of oilseeds and cereals through investment and contract farming are mandated to measure the weight of oilseeds and cereals at the ECX in order to have them register by the Trade Ministry and ready for the market.
Should the producers desire trading the oilseeds and cereals at the ECX, they will be permitted to do so. Requirements such as getting approval from the concerned government bodies within a month after production, possess valid agreements between the producer and farming contractor, present adequate information regarding type, quantity, and quality of the grains have to be met.
Effective September 29, 2022, the new directive obliges producers to sell the grains until six months since production. However, with valid reasons presented to the Trade Ministry, the producers might get a three or more months extension to sell the cash crops.
A legal advisor to the State Minister at the Trade Ministry confirmed to The Reporter that the ECX will only check and validate the weight of the grains.
“After the application of this directive, the ECX isn’t mandated to make quality assurance or anything else. Trades can happen outside, but the ECX will only measure the weights and report to us,” the advisor said.
The ECX is only mandated to validate the exact weight of oilseeds and cereals produced through the two schemes, conduct the measurement while the oilseeds and cereals are still loaded on the trucks, and provide the information to the Ministry in due time.
Among the prohibited actions for the investors are selling products produced under contract farming. They are also not allowed to transport goods without getting approval letters. It is also mandatory to export goods in the same budget year it is produced.
This is a new arrangement for the ECX, according to Netsanet Tesfaye, communications director at the ECX. But as soon as his office is greenlighted to implement the directive, new operational procedures will be introduced.