The Ethiopian Commodity Exchange (ECX) is seen as a model for other African countries, where most commodity exchanges are languishing. Although new, the number of studies on the ECX is rising and many are negative. African agricultural markets can certainly benefit from improvement: transaction costs and risks in these markets are high. A commodity exchange is seen as an institutional arrangement that would solve many of these problems. But it is difficult to "get right" and introduces new problems.
See the history of commodity exchanges in the US. The first step in developing a "futures market" is to first develop contract for future delivery of a "real" commodity. Even when such contracts are in place there are significant obstacles to development. Search the literature for a futures contract for peanuts and note the issues involved.
Thank you for you answers and suggestion on the peanut case. Intriguing.
By the way, the commodity exchanges in Africa (expect South Africa) do not yet function as a futures market, but as an "open cry spot market". In Ethiopia it is linked to warehouses and "primary transaction centres" to make the whole marketing system from farmer to consumer more efficient.
Coul dyou clarify "...but it is rare to say that as ECx is monopolized "?
The Atlanta Ga farmer's market is an example that you might want to examine.
A lot of them were introduced to former USSR and Eastern Europe 30 years ago. A fad, pushed by people who knew nothing about them except that they seemed to work in Western Europe and USA, but were keen to get the consultancy income. I never saw an analysis of how many stayed in business more than a year or two, or how many people lost their savings. Or on what caused the failures. Perhaps you should ask the aid agencies. But they never mention their failures do they?
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