The Ethiopian Commodity Exchange (ECX) is in the process of starting to facilitate the trading of wheat on its floor. The crop will return to the Exchange’s trading floor after 15 years of break, if the decision is approved by the regulators at the Ministry of Trade & Regional Integration.
It is a proposal that has come to the surface at a time when the country is gearing up to export wheat to neighbouring countries, including Kenya, which is a net importer of the commodity. Officials expect a surplus of wheat this year, as the grand initiative to produce the crop throughout the country is close to bearing fruit.
Almost 15 years ago, the Exchange began trading wheat and corn when it became operational, but the trading of both commodities didn’t continue for very long, according to Netsanet.
“The decision comes following the government’s measure to produce more wheat. The more it is produced, the more there will be a need for export and growing demand from local companies that add value,” said Netsanet Tesfaye, communications director at the Exchange, explaining how his office is ready to work on trading of the commodity.
The Exchange has now prepared a contractual manual and discussed it with stakeholders, including researchers from the Ministry of Agriculture. The next discussion will take place with exporters, producers, associations and concerned regional officials.
Once the ECX board approves the manual, it will be forwarded to officials at the Trade Ministry for their final approval. “The preparation isn’t only for this year. It will be for many more years,” Netsanet told The Reporter.
Waiting for the decision by the Trade Ministry, which the Exchange reports to, its officials expect to begin trading wheat this year.
A sample has been collected from wheat-growing regions to prepare the manual, which was designed with consultation among relevant authorities across the country, according to the announcement from the Exchange.
Regional states are expecting to harvest over 100 million quintals of wheat for the ending Meher season and have been given instruction to produce over 52 million quintals for the Belg harvest on a national level. The production for the Meher season will be 40 million quintals, an increase from last year.
Officials expect to save USD 600 million annually if they succeed in fully substituting wheat this year. This year’s total production will exceed the 107 million quintal yearly demand, with the excess to be exported. In light of this, the ECX has already defined a grade for each variety of wheat that is eligible for export.
“The manual specifies each type of wheat and identifies the trade centre that will grade it,” the Exchange said in its announcement.