Facilitating Smallholder Farmers’ Market Access
In the OIC Member Countries
127
Market-based institutional and organizational arrangements are needed to ensure that
modern agri-food supply chains include smallholder farmers. While private sector
investments have led the transformation of agri-food value chains, the public sector can
play an important complementary role by helping smallholder farmers expand and
upgrade their assets and practices to meet the new requirements for supermarkets and
other coordinated supply chains (see and . outlines public
and private options for strengthening smallholders’ links to markets, particularly the
investments and policies required to address different issues related to smallholders’
participation.
Smallholder women farmers are often more likely to be excluded from transforming agri-
food supply chains than men due to numerous factors, including lower mobility, less
access to training, less access to market information, and less access to productive
resources.202 In some cases where marketing opportunities have become more lucrative,
men have tended to displace women from production and marketing activities that they
traditionally perform. These factors need to be carefully considered (using tools such as a
gender disaggregated value chain analysis) to ensure that women as well as men have
equal opportunities to benefit from transforming agri-food supply chains.
BOX 7: LINKING ETHIOPIAN SMALLHOLDER FARMERS TO MARKETS THROUGH A
COMMODITY EXCHANGE
The Ethiopia Commodity Exchange (ECX) was established in 2008 to overcome barriers to transactions by
farmers and buyers in the informal market and to facilitate timely distribution of commodities from surplus
to deficit areas (predominantly from southern to northern Ethiopia). Aside from serving as a platform for
farmers and buyers to meet and trade commodity-linked contracts, ECX also functions as a third-party
guarantor of such transactions.
Farmers and buyers of commodities face serious obstacles in Ethiopia. Farmers are often located far from
markets, find it costly to transport commodities to markets, and lack market information. Access to
warehouses and storage technology is poor, commodity prices are volatile, and payment delays can be
severe. Buyers find it difficult to enforce contracts. They report that the poor quality of produce supplied by
farmers often makes it difficult to meet export obligations.
To address such constraints, ECX maintains not only a trading platform but operates a data center,
warehouse, clearing center, and delivery site for its members, who include farmers (or their
representatives) and buyers (including processors, millers, exporters, and large-scale purchasers such as
the World Food Programme). ECX enforces trading rules and standards for all members, as well as the legal
guarantees mentioned earlier. The exchange performs quality checks, grading, weighing, certification, and
further storage, thus addressing buyers’ needs for reliable supplies that meet quality and quantity
requirements. The exchange guarantees the price of transactions for farmers and provides payments and
warehouse receipts the next day. Farmers and buyers can use the receipts as collateral to obtain loans at
partner banks.
In three years of operation, ECX linked 2.4 million small-scale farmers to buyers. Trading volumes increased
more than threefold, with values reaching US$ 1.1 billion. The storage operation expanded from the initial
site in Addis Ababa to 55 sites in 17 regions, with 17 delivery sites. Farmers and buyers now obtain real-
time market data through electronic ticker boards in multiple rural areas, toll-free calls, mobile messaging,
the ECX website, and media outreach. As a result, member farmers’ shares in the final sales price increased
from 30 percent to over 60 percent of the FOB price. Farmers who do not trade directly through the
exchange use the ECX price as the reference price for their transactions. More than 15 million farmers are
202 World Bank (2009a).