Ethiopia Commodity Exchange Launches Electronic Tagging System

Ethiopia Commodity Exchange Launches Electronic Tagging System

The Ethiopia Commodity Exchange (ECX) has launched a national traceability system that will make it possible for international buyers to track the footprint of Ethiopian coffee in granular detail.

The new electronic tagging system worth $4.5 million — powered by IBM and Frequenz IRIS technology — encompass over five million smallholder farmers engaged in producing multiple commodities traded at the ECX.

The system is expected to increase exports of high-quality Ethiopian coffee world-wide and enhance market access for specialty coffee from Ethiopia.

“True traceability goes beyond the commodity’s type or origin to tracing where the commodity has been,” CIO East Africa quoted Ermias Eshetu, chief executive ECX, saying.

“We wish to track the footprint of our coffee and where and when it was washed, stored, who sampled and graded it, and when it was shipped. All of these facts will help improve our ability to move commodities traded within the exchange and create premium value for all stakeholders in the value chain.”

The initiative is expected to increase the nation’s coffee exports by allowing buyers to track the commodity’s ‘footprint’ to better ensure its quality and sustainability.

The ECX tagging system will link bags of coffee traded on the platform to one of over 2,500 geo-referenced washing, hulling and cleaning stations located in Ethiopia’s southern, central and western coffee growing regions.

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“The traceability system will utilize IBM’s powerful cloud platform, analytics and mobile to provide ECX with continuous real-time data insights that enable the system to learn and predict the quality of Ethiopian coffee based on local growth and processing conditions.” IBM General Manager for East Africa, Nik Nesbitt, said.

“The system will analyze incoming client coffee quality needs and match that with the needs of buyers across the globe.”

Africa, a continent that largely depend on commodities for revenue, only has two commodity exchanges in South Africa and Ethiopia.

According to data from the African Development Bank, there have been plans to create a commodity exchange in at least 28 African countries in the last 25 years, but none of them has moved beyond the concept and studies phase.

Lack of commodity exchanges on the continent has forced many farmers to sell their produce through middlemen at very low prices compared to the true market value. This could be as low as a tenth of the value of the commodity, Mail & Guardian Africa reported.