Author : Roza Azene
Publisher :
Page : 90 pages
File Size : 27,45 MB
Release : 2018
Category : Coffee growers
ISBN :
In this paper, I study the impact of the Ethiopian Commodity Exchange (ECX) market on farm prices and farmer total revenues in rural Ethiopia. After the establishment of ECX in 2008, and its wide spread success story, unlike other African countries' counterparts, some theoretical researchers suggest that ECX has provided farmers with higher and more stable prices by reducing transactional costs and decreasing informational asymmetry. To test this theoretical hypothesis, I use a panel dataset and the non-linear as well as the difference-in-difference econometric models in search for changes made by this market and their statistical significance. I used distance from warehouses to create the treatment group definition to understand the impact between the treatment and control groups. The results are fairly consistent with the theoretical assumptions, expecialy for coffee, showing that people closer to the ECX warehouses have in fact received higher prices, and hence revenues relatively, although some of the estimators were not statistically significant. The fact that the datasest ranged until only 2009 is a major time horizone limitation of the study as the impacts made by ECX couldn't have been fully realized just a year and a half as it only had a few warehouses operating at that time. However, I hope that the research will give an empirical understanding of how a ECX has affected the primary stakeholders: the farmers. I believe, with a better set of data of wider time horizon and more variables, these analyses can be advanced to shed light on successful markets and inspire others to build systems where they don't exist especially in the agricultural sector of developing countries like Ethiopia.