Assesment On Benefit, Challenge And Prospects Of Commdity Exchange In Case Of Jimma Branch.

Abstract

Commodity exchange can play a major role for agricultural development as an instrument to bring efficient agricultural market by providing lower transaction cost, efficient and transparent means for price discovery, managing risks related with prices volatility and provide a forum for exchanging information about supply and demand condition. The objectives of the present study are to assess the benefit of commodity Exchange with that of specific Challenge and its outlook /c ontribution of ECX. The primary data were collected via questionnaire form suppliers and officers. In order to achieve the stated objectives, the focus of the study was on the benefit of commodity exchange in relation with reducing transaction cost, increasing market liquidity, risk of price transfer and trust, integrity and order in the market. The Challenges of ECX in providing market information, grade and standard, contract enforcement, storage, ordering the market, and price discovery etc. Regarding the outlook growing of new cooperatives, increasing farm size, and agro-processing and Exporter Firms. The sampling design of the study purposive sampling/non probability. Data collected through questionnaire were analyzed quantitatively using descriptive statistics with the help of SPSS version 20. The research result indicated that the lack of accurate, complete and relevant market information, lack of warehouse that accommodates on suppliers request, grading and sampling system of the company has a problem of bias, there is high penalty cost imposed by ECX for delaying of withdrawing the commodities on time; highly centralized system of the company and lack of sufficient communication network to run the business. Finally, to enhance complete contribution to the suppliers the researcher recommended to make grading avoidance of imposing exaggerated penalty cost and empowering the branch with limitation for daily activity.