Subject: Agricultural marketing

Department: BK1/R1/N1/A

Group name ID number

Ahmed Mustefa UUA00349R

Amir Awol UUA00324R

Ashenafi Feleke UUA00330R

Amanuel Kibreab UUA00325R

Adnan Mohammed UUA00348R

Mohammed Ezedin UUA00823R

Abdlkaf Bedru UUA00365r

Amanuel Abebe UUA00322R

Table of Contents
Unit 1:-

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Overview of Vertical Farming and Agricultural Marketing...........................................................3
Introduction to Vertical Farming.........................................................................................................3
Worldwide Practice of Vertical Farming and Best examples.......................................................6
Future Perspective of Vertical Farming............................................................................................8
Challenges and Opportunities of Vertical Farming........................................................................9
Ethiopia’s Current Practice of vertical Faming and the Roles of..............................................18
the Government....................................................................................................................................18
Marketing Opportunities for Vertical Farming in our Capital Addis Ababa............................19
Group Reflection and Recommendation on Vertical Farming and...........................................20

Unit 2:- Ethiopian Commodity Exchange....................................................................................20

What is commodity Exchange?........................................................................................................20
Limitations of Commodities Exchanges.........................................................................................21
Evolution of Commodity Exchange.................................................................................................23
Current Operation of Commodity Exchange in Ethiopia and ECX...........................................24
Proclamation..........................................................................................................................................24
Contribution of Commodity Exchange for Agricultural Development.....................................27
Activities of Commodity Exchange..................................................................................................27
Group Reflection and Recommendation on ECX.........................................................................28
Unit 3:- Environmental Observation on Agro-Market...............................................................28
Assessment of Our Surrounding Practices of Agricultural-Market.........................................28
Challenges and Opportunities of the course Agricultural Marketing in.................................30
Our Environment..................................................................................................................................30
Group Reflection and Recommendation on the Problem observed so far............................31

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 Unit 1

Overview of Vertical Farming and Agricultural Marketing

Introduction to Vertical Farming

What is vertical farming? Vertical farming is the practice of growing crops in vertically
stacked layers. It often incorporates controlled-environment agriculture, which aims to
optimize plant growth, and soilless farming techniques such as hydroponics,
aquaponics, and aeroponics. Some common choices of structures to house vertical
farming systems include buildings, shipping containers, tunnels, and abandoned mine
shafts. As of 2020, there is the equivalent of about 74 acres of operational vertical
farmland in the world. The modern concept of vertical farming was proposed in 1999 by
Dickson Despommier, professor of Public and Environmental Health at Columbia
University. Despommier and his students came up with a design of a skyscraper farm
that could feed 50,000 people. Although the design has not yet been built, it
successfully popularized the idea of vertical farming. Current applications of vertical
farming coupled with other state-of-the-art technologies, such as specialized LED lights,
have resulted in over 10 times the crop yield than would receive through traditional
farming methods.

The main advantage of utilizing vertical farming technologies is the increased crop yield
that comes with a smaller unit area of land requirement. The increased ability to
cultivate a larger variety of crops at once because crops do not share the same plots of
land while growing is another sought-after advantage. Additionally, crops are resistant
to weather disruptions because of their placement indoors, meaning fewer crops are
lost to extreme or unexpected weather occurrences. Because of its limited land usage,
vertical farming is less disruptive to the native plants and animals, leading to further
conservation of the local flora and fauna.

Vertical farming technologies face economic challenges with large start-up costs
compared to traditional farms. In Victoria, Australia, a "hypothetical 10 level vertical
farm" would cost over 850 times more per square meter of arable land than a traditional
farm in rural Victoria. Vertical farms also face large energy demands due to the use of
supplementary light like LEDs. Moreover, if non-renewable energy is used to meet

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these energy demands, vertical farms could produce more pollution than traditional
farms or greenhouses.

There are some vertical farming techniques that are applied for the best possible result
and maximum production. Some of them are:-

Hydroponics

Hydroponics refers to the technique of growing plants without soil. In hydroponic

systems, the roots of plants are submerged in liquid solutions containing
macronutrients, such as nitrogen, phosphorus, sulphur, potassium, calcium, and
magnesium, as well as trace elements, including iron, chlorine, manganese, boron, zinc,
copper, and molybdenum. Additionally, inert (chemically inactive) mediums such as
gravel, sand, and sawdust are used as soil substitutes to provide support for the roots.

The advantages of hydroponics include the ability to increase yield per area and reduce
water usage. A study has shown that, compared to conventional farming, hydroponic
farming could increase the yield per area of lettuce by around 11 times while requiring
13 times less water. Due to these advantages, hydroponics is the predominant growing
system used in vertical farming.

Aquaponics

The term aquaponics is coined by combining two words: aquaculture, which refers to
fish farming, and hydroponics—the technique of growing plants without soil. Aquaponics
takes hydroponics one step further by integrating the production of terrestrial plants with
the production of aquatic organisms in a closed-loop system that mimics nature itself.
Nutrient-rich wastewater from the fish tanks is filtered by a solid removal unit and then
led to a bio-filter, where toxic ammonia is converted to nutritious nitrate. While
absorbing nutrients, the plants then purify the wastewater, which is recycled back to the
fish tanks. Moreover, the plants consume carbon dioxide produced by the fish, and
water in the fish tanks obtains heat and helps the greenhouse maintain temperature at
night to save energy. As most commercial vertical farming systems focus on producing
a few fast-growing vegetable crops, aquaponics, which also includes an aqua cultural
component, is currently not as widely used as conventional hydroponics.

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Aeroponics

The invention of aeroponics was motivated by the initiative of NASA (the National
Aeronautical and Space Administration) to find an efficient way to grow plants in space
in the 1990s. Unlike conventional hydroponics and aquaponics, aeroponics does not
require any liquid or solid medium to grow plants in. Instead, a liquid solution with
nutrients is misted in air chambers where the plants are suspended. By far, aeroponics
is the most sustainable soil-less growing technique, as it uses up to 90% less water
than the most efficient conventional hydroponic systems and requires no replacement of
growing medium. Moreover, the absence of growing medium allows aeroponic systems
to adopt a vertical design, which further saves energy as gravity automatically drains
away excess liquid, whereas conventional horizontal hydroponic systems often require
water pumps for controlling excess solution. Currently, aeroponic systems have not
been widely applied to vertical farming, but are starting to attract significant attention.

Controlled-environment agriculture

Controlled-environment agriculture (CEA) is the modification of the natural environment

to increase crop yield or extend the growing season. CEA systems are typically hosted
in enclosed structures such as greenhouses or buildings, where control can be imposed
on environmental factors including air, temperature, light, water, humidity, carbon
dioxide, and plant nutrition. In vertical farming systems, CEA is often used in
conjunction with soilless farming techniques such as hydroponics, aquaponics, and
aeroponics.

Types of vertical farming

Building-based farms

Abandoned buildings are often reused for vertical farming, such as a farm at Chicago
called "The Plant," which was transformed from an old meatpacking plant. However,
new builds are sometimes also constructed to house vertical farming systems.

Shipping-container vertical farms

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Recycled shipping containers are an increasingly popular option for housing vertical
farming systems. The shipping containers serve as standardized, modular chambers for
growing a variety of plants, and are often equipped with LED lighting, vertically stacked
hydroponics, smart climate controls, and monitoring sensors. Moreover, by stacking the
shipping containers, farms can save space even further and achieve higher yield per
unit area.

Deep farms

A "deep farm" is a vertical farm built from refurbished underground tunnels or

abandoned mine shafts. As temperature and humidity underground are generally
temperate and constant, deep farms require less energy for heating. Deep farms can
also use nearby groundwater to reduce the cost of water supply. Despite low costs, a
deep farm can produce seven to nine times more food than a conventional farm above
ground on the same area of land, according to Saffa Riffat, chair in Sustainable Energy
at the University of Nottingham. Coupled with automated harvesting systems, these
underground farms can be fully self-sufficient.

Worldwide Practice of Vertical Farming and Best examples

The first low-carbon, hydraulic driven vertical farm in the world was Sky Greens.

Located in Singapore, a small island city with a population of more than 5 million that
relies heavily on food imports from other countries, the farm grows veggies in A-shaped
aluminum towers about nine meters tall each. Sky Greens calls its technology the “A-
Go-Gro”. Each tower has 22-26 tiers, which are rotated at a rate of 1mm/second for an
equal distribution of natural sunlight and airflow. Sky Greens is capable of growing 800
kilos of Chinese cabbage, kai lan, spinach, and other leafy greens every day. It has
been producing these crops commercially since the year 2012.

Vertical farming in Japan

In Japan lies one of the largest vertical indoor farms in the world, built by the Mirai
Corporation, founded by plant physiologist Shigeharu Shimamura. With a 25,000 square
feet bacteria-free and pesticide-free space equipped with 17,500 LED lights, the farm
can grow up to 10,000 lettuce heads per day.

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Vertical farming in USA

The U.S is home to several vertical farms as well. The biggest ones can be found in
New Jersey, operated by the well-known firm, Aero Farms. Its global headquarters (and
9th farm) in Newark is a 69,000-square-foot indoor farm that can harvest up to 2 million
pounds of leafy greens and herbs a year. It is currently the largest indoor vertical farm in
the world.

Vertical farming on Australia

Unlike in Asia and the United States, Australia doesn’t have many commercial vertical
farms. There one private facility based in Queensland: Vertical Farm Systems. This firm
produces commercial leafy greens like baby spinach and rocket, and has developed its
own automated growing system, the XA series, which is being offered to buyers in
Malaysia and Canada and to those wanting to grow vegetables and herbs commercially.

These are not the only vertical farming industries and there are some that are still being
built like a 900-square meter vertical farm is presently being constructed in Dronten,
Netherlands.

The following explanations where given by some of the founders and leaders of vertical
farming organizations all over the world.

 “I believe that, at least technically, we can produce almost any kind of plant in a
factory. But what makes most economic sense is to produce fast-growing
vegetables that can be sent to the market quickly. That means leaf vegetables
for us now. In the future, though, we would like to expand to a wider variety of
produce." Currently, Mirai has two additional factories located in Mongolia. It is
also planning to expand in Russia and Hong Kong in the near future.” (Shigeharu
Shimamura founder of Mirai Corporation)
 “Consumers here share the same concerns about food safety and sustainability
that have made the practice so popular in the US and parts of Asia," Wilkins
said. "Australian cities are not so different – people simply care about where their
food comes from and place a higher value on food they know was grown locally.”
(Chris Wilkins founder of PodPlants)

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  The source of inspiration in urban farming is that we have to involve the
community rather than import a solution. Being in an Asian society, I believe that
“food binds” and brings the whole community together, so growing edible crops
is important. I wonder how Singaporeans can be persuaded to buy or pay more
for local produce. It is important that Singaporeans embrace our own food
growing culture (as compared to air-flown food).(Allan Lim founder of Comcrop)
 I feel that we have achieved our goal for the commercial sector. And we are fully
aware of the inequality issue if we remain only serving high-end restaurants.
Ultimately, we want to create an industry around urban farming.( Bjorn Low
founder of Edible Garden City)

Future Perspective of Vertical Farming

Everyone knows that the population of the world is the largest it has ever been. As more
and more people are born and grow to an older average age than previous generations,
citizens of the earth have a responsibility to feed this ever-growing population. One
possible solution to this is vertical farming.

Researchers estimate that the world’s population will increase by an astounding two
billion people by 2050. With more and more people comes more and more mouths to
feed.

Adding to the problem of an astronomically larger population, less and less land can be
used for farming with each passing decade. As more people are born, they not only eat
more food, they need more places to live. There is less farmable land today because of
industrial and urban development.

While humans have farmed and worked the ground as long as history has recorded
events, how humans farm has changed. From hands to primitive tools to animals to
advanced machinery, the agricultural landscape has changed drastically over the
millennia.

There is no doubt that the world faces severe problems in the future. Potentially the
largest one is feeding an ever-growing population in a feasible, affordable, and
sustainable way. Vertical farming may be the answer for which everyone is looking.

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Vertical farming is sustainable, uses less space and water than traditional farming, isn’t
dependent on the weather, and is incredibly beneficial to humans. With more research
and funding, vertical farming might become the new norm.

Challenges and Opportunities of Vertical Farming

Advantages of Vertical Farming

1. Stable crop yields

2. Protection from outside conditions
3. Crop yields all year long
4. Protection against pests
5. Fewer crop losses
6. Increase in profits
7. Protection from animals & invasive plant species
8. Ability to grow all kinds of plants
9. Savings in water
10. Vertical farming can be fully organic
11. Fewer crop imports needed
12. More efficient land use
13. Less habitat destruction
14. Energy generation through composting
1. Stable crop yields

One important advantage of vertical farming is that it assures quite stable crop yields.

If everything is set up perfectly, it is quite easy to predict how much vegetables and
fruits can be harvested in a given period of time.

Thus, it is easy to make long-term contracts with grocery stores and suppliers since
there will be a stable supply of crops and income streams due to vertical gardening.

2. Protection from outside conditions

Through vertical farming, the plants are also protected against all sorts of adverse
outside conditions.

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For instance, through outdoor farming, a high fraction of crops is lost every year due to
droughts, floods or storms.

Through the use of vertical gardening, none of those extreme weather conditions will
matter since the inside conditions will not be altered due to those conditions, at least if
those vertical farming facilities are not damaged by those extreme weather events.

Hence, if the vertical farming system had been constructed in a stable manner, there is
not too much to worry about adverse outside weather conditions.

3. Crop yields all year long

Another important upside of vertical farming is that crops can be harvested all year long.

In contrast to outdoor farming where harvest time is only a few weeks or months, crop
yields from vertical gardening are much more stable.

Therefore, these stable crop yields all year long are quite convenient since they give
farmers the assurance that they will earn a constant income.

4. Protection against pests

Since vertical farming is usually operated indoor, there are also fewer chances for the
contamination of plants with several sorts of pests.

If the workers take great care not to bring any pests inside, chances are almost zero
that pests have a chance to get inside the vertical farming system.

In turn, the absence of pests will lead to an increase in crop yields since plants can
grow in an optimal manner without being harmed by pests.

5. Fewer crop losses

In general, through vertical farming, far fewer crops are lost to pests and other adverse
circumstances compared to conventional outdoor farming.

This implies that crop yields through vertical farming will be higher and fewer crops are
lost during the growth process.

6. Increase in profits

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Since the conditions inside vertical farming systems can be optimized specifically for the
respective plants, chances are that also the profits are maximized.

If plants can grow in an optimal manner, they are able to produce high yields, which in
turn also imply high profits for farmers that engage in this kind of farming technology.

7. Protection from animals & invasive plant species

Through the use of vertical farming, the plants are not only protected from any kinds of
pests, they are also protected from animals or from invasive plant species.

For instance, a significant portion of the crops from conventional outdoor farming is lost
every year since animals eat plants or crops.

Moreover, invasive plant species try to compete with the farmed plants and may
therefore lower their nutrient supply, which may lead to lower crop yields.

Thus, through vertical indoor farming, all those issues could be prevented and crop
yields are likely to increase.

8. Ability to grow all kinds of plants

Since the conditions inside vertical gardening systems regarding humidity and lighting
can be altered as desired, there is also the possibility to grow quite exotic plant species
that could not be grown through conventional outdoor farming.

This gives farmers greater flexibility to meet the demand of people regarding certain
crops and may also increase their profits due to this high level of flexibility to adjust to
the market.

9. Savings in water

Another great benefit of vertical farming is that it is quite water-efficient.

Since it is a closed system, over 95% of water can be saved compared to conventional
outdoor farming practices.

Thus, this makes vertical gardening a great tool to save water.

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This will be especially important in the future since water will become a quite scarce
resource due to global warming, especially in the Southern hemisphere of our planet.

10. Vertical farming can be fully organic

Since there is usually no need to fight pests inside vertical farming systems, plants can
be grown in a fully organic manner.

This not only benefits consumers since they will get healthier veggies and fruits, it may
also benefit the operators of vertical farming systems since they might be able to sell
their crops for higher prices.

11. Fewer crop imports needed

Through vertical farming, also the need for countries to import large amounts of
vegetables and fruits from foreign countries could be lowered.

This would decrease the dependence on trade with other countries and could also
benefit our environment since the transportation of goods also implies the emission of
harmful gases into our atmosphere.

Thus, through local production, the overall ecological footprint of whole countries could
be improved significantly.

12. More efficient land use

Vertical farming also allows farmers to use their land in a much more efficient manner.

Through vertical gardening, the yields will be generally much higher compared to
conventional farming since multiple layers of growth systems can be planted over each
other.

Since our world population is growing quite fast, it will be quite important in the future to
use our land as efficiently as possible in order to ensure our global food supply.

13. Less habitat destruction

Through efficient land use, also the need to expand our territory will decrease, which
also implies that we can preserve more habitats of animals and plants.

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This in turn would give many animals and plant species the chance to recover their
population.

Therefore, the use of vertical farming may also indirectly mitigate the endangered
species problem.

14. Energy generation through composting

Once the technology regarding vertical farming will be mature, it might even be possible
to produce a certain amount of energy out of the compost from plant remains.

When plant remains are composted, significant amounts of methane gas are produced,
which may be used for energy production.

Disadvantages of Vertical Gardening

1. Expert needed to set up a vertical farming project

2. High upfront costs

3. Significant operational costs

4. High energy consumption

5. High labor costs

6. Significant maintenance efforts

7. Carelessness could lead to a spread of pests

8. Pollination problems

9. May need official permissions

10. Technology not mature yet

11. Infrastructure regarding processing of crops is missing

12. Only suitable for certain kinds of plants

13. Plants may contain fewer nutrients

14. Technology issues may cause huge problems

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15. People in rural areas may lose their livelihood

1. Expert needed to set up a vertical farming project

Since vertical farming projects are usually quite complex, industry experts are needed to
set up a vertical gardening system in a proper manner.

However, since the technology behind vertical farming is rather new, it might be difficult
to find someone in your local area who has the necessary level of expertise in this field.

Hence, it might be hard to find qualified staff to set up vertical farming projects.

2. High upfront costs

Another disadvantage of vertical farming is that the initial construction and installation
costs can be quite high.

Since vertical farming systems are often quite complex and require plenty of planning,
the initial costs can be huge.

Thus, companies have to take great care when it comes to the decision of whether
vertical farming will be suitable for them or not since wrong decisions can lead to
serious financial downsides in this field.

3. Significant operational costs

Also the operating costs regarding vertical farming can be quite high.

For instance, there has to be plenty of monitoring in order to ensure optimal growing
conditions.

Moreover, vertical farming systems also require sophisticated logistic mechanisms to

move and replace plants on a constant basis in order to use the space in the most
efficient manner.

4. High energy consumption

Another downside of vertical gardening is that it requires significant amounts of energy.

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Since many layers of plants have to be covered by proper lighting, the electricity bill will
grow rapidly over time.

Thus, compared to outdoor farming, the costs for energy will usually be much higher
with vertical farming.

The huge energy consumption can also be regarded as an environmental issue since
most of our energy is still produced out of fossil fuels, which in turn implies serious
greenhouse gas emissions.

5. High labor costs

Since vertical farming systems are usually quite complex, there will be the need for
highly qualified workers who have to monitor these farming processes on a constant
basis. These high efforts also imply significant labor costs related to vertical gardening.
Thus, in many cases, vertical farming will not be senseful from an economic perspective
at all.

6. Significant maintenance efforts

There are also significant maintenance efforts related to vertical farming.

Since the conditions inside the farming system are controlled in an artificial manner
through lighting and altering the humidity level, some of the devices that are used to
control these parameters may break down over time.

Thus, these devices have to be replaced and over time, this may imply serious
maintenance efforts and costs.

7. Carelessness could lead to a spread of pests

Although vertical farming setups are closed systems, some pests may enter those
systems if workers are not careful.

For instance, if maintenance workers enter the system in order to fix something, they
could bring in some pests.

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Thus, it is crucial that all the staff takes great care regarding disinfection so that no
pests can enter the closed vertical gardening system.

8. Pollination problems

Since there are no insects inside the vertical farming systems, there might be issues
regarding the pollination of crops.

Outdoor, the plants are usually pollinated in a natural manner through bees and other
insects.

However, since those insects are missing in vertical farming systems, the staff may
have to pollinate the plants manually in order to assure a satisfying crop yield.

9. May need official permissions

Vertical farming systems may also need the permission of state officials. In some states,
it may be even forbidden to construct and operate those systems if you do not have a
certain qualification level.

Thus, if you plan to engage in vertical farming, make sure to check out your local
regulations in order to avoid any trouble in the future.

10. Technology not mature yet

Even though the idea and the technology behind vertical farming are quite promising, it
is still at an early stage and there has to be plenty of time and money to be invested in
order to improve the processes and make vertical farming suitable for the production of
fruits and vegetables on a large scale.

Consequently, engaging in this field now may give you a first-mover advantage, but
might also cause several problems since the technology you will be investing might be
outdated pretty soon.

11. Infrastructure regarding processing of crops is missing

Although the idea to harvest plants through vertical farming systems in cities is quite
promising, the infrastructure to process these crops nearby is still missing.

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In most cases, these crops have to be carried many miles until they can be processed
in an effective manner.

Thus, in order to make this technology more eco-friendly, the infrastructure around
vertical gardening has to be improved and expanded.

12. Only suitable for certain kinds of plants

Vertical farming will also only be suitable for certain kinds of plants from an economic
perspective.

Since the technology behind vertical farming is not mature yet, the costs are rather high
and inexpensive food like potatoes might not justify the financial effort related to vertical
gardening.

Hence, vertical gardening might currently only be used for rather expensive plants.

13. Plants may contain fewer nutrients

There might also be the issue that plants that are raised with the help of vertical farming
systems may contain fewer nutrients compared to plants that are raised outside on the
field.

Since plants that are raised outdoor have to defend against pests and other harmful
factors, these plants often produce certain substances that might be beneficial to human
health.

However, plants from vertical gardening systems will not produce those substances.

Thus, certain minerals in plants that are grown in vertical farming systems might be
missing compared to plants that are grown outdoors.

14. Technology issues may cause huge problems

Another issue with vertical farming is that it is heavily dependent on working technology.

For instance, imagine the lighting system inside such a system collapsed.

Chances are that crop yields will suffer significantly if the lighting system cannot be fixed
in a short period of time.

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In contrast, with outdoor farming, there are no such issues since the lighting comes
naturally and power outages will not cause any problems.

Thus, the heavy dependence on technological systems of vertical farming setups may
cause serious problems in case these systems break down.

15. People in rural areas may lose their livelihood

Some people in rural areas still rely on farming as their single source of income.

With a growing market for crops from vertical farming, these farmers may be in serious
trouble since they may lose their livelihood over the long run.

Therefore, while some jobs will be created in the vertical farming industry, many jobs
may be lost in conventional farming businesses over time once the technology behind
vertical gardening becomes mature.

Ethiopia’s Current Practice of vertical Faming and the Roles of

the Government
The current practice of a vertical farming in Ethiopia is underdeveloped and it's really
hard to find any organizations that focus on the development of vertical farming.
However, there are some organizations that are trying to produce different vegetables
and fruits in households of Addis Ababa and other parts of the country. One of these
programs or organization is called the Ethiopian home Garden Network.

The Home Gardens Network was launched on 13th January 2015 at a meeting
attended by 36 participants from 29 different organizations. The Network was hosted by
two USAID-funded implementing partners the Agriculture, Knowledge, Learning
Development and Policy (AKLDP) project implemented by Tufts University and the
Technical and Operational Performance Support (TOPS) program implemented by
Mercy Corps.

Despite a decade of impressive growth rates, levels of poverty and under-nutrition in

Ethiopia remain amongst the highest in the world. The Home Gardens Network is

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committed to working with the government and its international development partners,
civil society organizations, the private sector and the people of Ethiopia to reduce
poverty and to improve household nutrition in particular for children and women.

The Network has grown to more than 150 individuals representing government
departments, private initiatives and civil society organizations who meet quarterly to
share information, knowledge and operational challenges and lessons learned and to
organize visits and training events.

The primary purpose of the Network is sharing knowledge, learning and support the
documentation of evidence-based good practice with a view to scale-up household-level
fruit and vegetable production for improved nutrition and household income outcomes.

Most of these organizations and programs are supported by the government which
means the government is working on the solutions for poverty and under nutrition and
vertical farming can play a huge role on this programs.

Marketing Opportunities for Vertical Farming in our Capital Addis

Ababa
As we all know Ethiopia is the second country in population growth in Africa which
creates a very large demand for basic needs. Our country also suffers from high levels
of unemployment, joblessness and poverty. Vertical farming not only can solve these
problems, it can also create a very large agricultural export Market for the country's
economy. Ethiopian Traditional farmers also benefit from vertical farming by
modernizing their farming techniques and producing high-quality agricultural products.
Ethiopian scientists could also provide ways to produce agricultural products that are
healthy and organic. This also benefits different vertical farming businesses in the future
to create job opportunities for the people of Ethiopia and market their product easily to
their customers by providing quality agricultural products.

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Group Reflection and Recommendation on Vertical Farming and

Marketing Practices
Our group see vertical farming as the future of Ethiopia because of increase in our
population. From what we discussed in the above section the best vertical farming
techniques that we can apply in Ethiopia are aquaporin vertical farming technique and
controlled environment agriculture. We recommended the aquaporin technique
because of the abundant Water Resource that's the country have and for the controlled
environment agriculture, it's because there are many buildings in our country that can
be used for vertical farming without spending too much. We can also encourage people
to plant fruits and vegetables that are easy to grow in their households. We believe
vertical farming can also create a lot of job opportunities and create new markets four
agricultural products.

Unit 2

Ethiopian Commodity Exchange

What is commodity Exchange?

A commodities exchange is a legal entity that determines and enforces rules and
procedures for trading standardized commodity contracts and related investment
products. A commodities exchange also refers to the physical center where trading
takes place. The commodities market is massive, trading more than trillions of dollars
each day.

Traders rarely deliver any physical commodities through a commodities exchange.

Instead, they trade futures contracts, where the parties agree to buy or sell a specific
amount of the commodity at an agreed upon price, regardless of what it currently trades
at in the market at a predetermined expiration date. The most traded commodity future
contract is crude oil.

There are several types of modern commodities exchanges, which include metals,
fuels, and agricultural commodities exchanges.

Commodities exchanges are the central location where commodities are traded. The
commodity markets began with the trading of agricultural products such as corn, cattle,
wheat, and pigs in the 19th century. Chicago was the main hub for this kind of trading,

20
due to its geographical location near the farm belt and because it was a key east-west
transit point with railroad access. Modern commodity markets trade many types of
investment vehicles, and are often utilized by various investors from commodity
producers to investment speculators.

Two of the best known commodity exchanges in the United States are the Chicago
Mercantile Exchange (CME) Group and the New York Mercantile Exchange (NYMEX).
CME Group is the world's leading and most diverse derivatives marketplace, handling
three billion contracts worth approximately $1 quadrillion annually, while the NYMEX is
one part of the CME Group.

The most well-known commodity exchange in Europe is the Intercontinental Exchange

(ICE). Similar to CME and NYMEX, ICE is an electronic commodity exchange with no
physical trading floor. In a cost competitive environment, electronic exchanges are
becoming more prevalent. The only physical commodity trading exchange left in Europe
is the London Metal Exchange (LME). The LME is the world center for the trading of
industrial metals—more than three quarters of all non-ferrous metal futures business is
transacted there.

Limitations of Commodities Exchanges

The nature of commodities exchanges is changing rapidly. The trend is in the direction
of electronic trading and away from traditional open outcry trading, where traders meet
face-to-face and trade in what is known as a trading pit. With the open outcry system,
traders communicate buy and sell orders through hand and verbal signals, just like an
auction.

For example, in July 2016, CME Group closed down the NYMEX commodities trading
floor, the last of its kind, after all but 0.3% of its energy and metals volumes shifted to
computers. A year earlier, CME decided to shut down the commodity trading floor in
Chicago, ending a 167-year-old tradition of face-to-face trading in favor of fully
electronic trading.

Types of Commodities

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A commodity is a basic good that is interchangeable with other commodities of the
same type. They are generally used in the production of goods and services.

We may not realize it, but commodities have a very important place in our everyday
lives. Consider the cotton that makes up your clothing, the lumber that makes up the
frame of your home, or even the metal in your electronics.

The following is a list of some of the most traded commodities in the world.

Crude Oil: One of the most important commodities in the world, crude oil is an
unrefined petroleum product that occurs naturally. It is used to produce different
products including gasoline and petrochemicals. The price for crude oil generally
reported in the U.S. is based on the NYMEX futures price. Contracts are based on
1,000 barrels and trade in U.S. dollars per barrel. The third business day before the
25th calendar day of the month preceding the delivery month is the last trading day for
crude oil.

Gold: This is one of the world's most widely-traded precious metals. While investors
can buy and sell the physical commodities, traders typically trade gold futures contracts
on commodities exchanges. Contracts are generally sized at 100 troy ounces, and are
priced in U.S. dollars per troy ounce. The last trading day for gold is the third last
business day of the delivery month.

Lumber: This industry has two main products for the end user—softwood and
hardwood. Softwood is used primarily in construction, while hardwood is used in flooring
and furniture construction, and to make panels and cabinets. Contract sizes for lumber
are generally 110,000 nominal board feet and are traded in U.S. dollars per pound. The
business day immediately preceding the 16th calendar day of the contract month is the
last trading day for lumber.

Natural Gas: This commodity is used to heat homes, help generate electricity, and also
has other uses in the commercial and industrial industries. Natural gas contracts are
sold by 10,000 million British thermal units (mmBtu). All contracts are traded in U.S.
dollars per mmBtu. The final trading day of the month for natural gas is three business
days prior to the first day of the delivery month.

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Cotton: Cotton is the most widely-used fiber in the world. Cotton fibers are collected
and made into yarn and other textiles for clothing and other household goods. Cotton
contracts are sized at 50,000 pounds, and trade in U.S. dollars per pound. The very last
day of trading for cotton is 17 business days from end of spot month.

Other commodities that trade on commodities exchanges include silver, platinum, rice,
sugar, orange juice, oats, cattle, corn, copper, cocoa, soybeans, and coffee. This,
however, is not an exhaustive list of what you can find on an exchange.

Evolution of Commodity Exchange

Commodity-based money and commodity markets in a crude early form are believed to
have originated in Sumer between 4500 BC and 4000 BC. Sumerians first used clay
tokens sealed in a clay vessel, then clay writing tablets to represent the amount—for
example, the number of goats, to be delivered. These promises of time and date of
delivery resemble futures contract.

Early civilizations variously used pigs, rare seashells, or other items as commodity
money. Since that time traders have sought ways to simplify and standardize trade
contracts.

Gold and silver markets evolved in classical civilizations. At first, the precious metals
were valued for their beauty and intrinsic worth and were associated with royalty. In
time, they were used for trading and were exchanged for other goods and commodities,
or for payments of labor. Gold, measured out, then became money. Gold's scarcity, its
unique density and the way it could be easily melted, shaped, and measured made it a
natural trading asset.

Beginning in the late 10th century, commodity markets grew as a mechanism for
allocating goods, labor, land and capital across Europe. Between the late 11th and the
late 13th century, English urbanization, regional specialization, expanded and improved
infrastructure, the increased use of coinage and the proliferation of markets and fairs
were evidence of commercialization. The spread of markets is illustrated by the 1466
installation of reliable scales in the villages of Sloten and Osdorp so villagers no longer

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had to travel to Haarlem or Amsterdam to weigh their locally produced cheese and
butter.

The Amsterdam Stock Exchange, often cited as the first stock exchange, originated as
a market for the exchange of commodities. Early trading on the Amsterdam Stock
Exchange often involved the use of very sophisticated contracts, including short sales,
forward contracts, and options. "Trading took place at the Amsterdam Bourse, an open
aired venue, which was created as a commodity exchange in 1530 and rebuilt in 1608.
Commodity exchanges themselves were a relatively recent invention, existing in only a
handful of cities.

In 1864, in the United States, wheat, corn, cattle, and pigs were widely traded using
standard instruments on the Chicago Board of Trade (CBOT), the world's oldest futures
and options exchange. Other food commodities were added to the Commodity
Exchange Act and traded through CBOT in the 1930s and 1940s, expanding the list
from grains to include rice, mill feeds, butter, eggs, Irish potatoes and soybeans.
Successful commodity markets require broad consensus on product variations to make
each commodity acceptable for trading, such as the purity of gold in bullion. Classical
civilizations built complex global markets trading gold or silver for spices, cloth, wood
and weapons, most of which had standards of quality and timeliness.

Through the 19th century, he exchanges became effective spokesmen for, and
innovators of, improvements in transportation, warehousing, and financing, which paved
the way to expanded interstate and international trade.

Reputation and clearing became central concerns, and states that could handle them
most effectively developed powerful financial centers.

Current Operation of Commodity Exchange in Ethiopia and ECX

Proclamation
Many developing countries, particularly the least developed ones, rely heavily on
agricultural commodity production. Rural regions account for over 75% of global
poverty, and many of them are involved in commodity production to some level. The
market for agricultural commodities has followed a predictable trajectory during the last

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few decades. Long-term price declines and short-term price fluctuations are both
possible outcomes. Commodity prices are decreasing and unstable, which is bad and

it will have a negative impact on developing countries that rely on agricultural

commodities. These countries frequently rely on earnings from only one or two
agricultural commodities for survival, hence Individual producers and governments alike
are harmed by falling and variable pricing, as both are facing reduced returns and a
high level of danger in decreasing agricultural commodity prices might worsen the debt-
to-export ratio, putting the economy at risk.

Ethiopia is one of these Agricultural Commodity Dependent Developing Countries and

face all the above mentioned problems. That’s why the Ethiopian commodity exchange
was formed to solve these problems.

Despite its inexperience, Ethiopia Commodity Exchange (ECX) is one of the exchange
marketplaces available in undeveloped countries. Ethiopia is now pursuing an
Agricultural Development Lead Industrialization (ADLI).This government strategy
promotes both farmers and commercial investors to develop marketable goods
that focused commodities in order to achieve long-term industrial development.
However, such a vision can only be fulfilled by hard work and when a proper marketing
system, rules, and policies are in place.

The Ethiopian Commodity Exchange System was established through proclamation to

address market-related issues and to support a transparent, efficient, and creative
marketing system that protects the interests of both producers and consumers. With an
end-to-end integrated system of central trading, warehousing, product grade
certification, clearing, settlement, delivery, and market information distribution, ECX's
system is the first of its type in Africa. Furthermore, on April 24, 2008, ECX began live
trading. It creates a marketplace where buyers and sellers may meet to trade with the
guarantee that quality, delivery, and payment will be met. The exchange is a public-
private collaboration with the Ethiopian government as its principal supporter and
trading and intermediary members owning membership seats privately. The Exchange
is administered by a private-public board of directors and professionally managed by a
team of international specialists.

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The proclamation that established the ECX (No. 550 / 2007) mandates the ECX to set
out its own rules for self-governance of its various operations. At the same time,
proclamation No. 551 / 2007 established an outside regulatory body for the ECX – the
Ethiopia Commodity Exchange Authority (ECEA).

Types of Trading in Commodity Exchange

Commodities that are traded are typically sorted into four categories broad categories:
metal, energy, livestock and meat, and agricultural.

Metals

Metals commodities include gold, silver, platinum, and copper. During periods of market
volatility or bear markets, some investors may decide to invest in precious metals–
particularly gold–because of its status as a reliable, dependable metal with real,
conveyable value. Investors may also decide to invest in precious metals as a hedge
against periods of high inflation or currency devaluation.

Energy

Energy commodities include crude oil, heating oil, natural gas, and gasoline. Global
economic developments and reduced oil outputs from established oil wells around the
world have historically led to rising oil prices, as demand for energy-related products
has gone up at the same time that oil supplies have dwindled.

Investors who are interested in entering the commodities market in the energy sector
should also be aware of how economic downturns, any shifts in production enforced by
the Organization of the Petroleum Exporting Countries (OPEC), and new technological
advances in alternative energy sources (wind power, solar energy, biofuel, etc.) that aim
to replace crude oil as a primary source of energy, can all have a huge impact on the
market prices for commodities in the energy sector.

Agriculture

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Agricultural commodities include corn, soybeans, wheat, rice, cocoa, coffee, cotton, and
sugar. In the agricultural sector, grains can be very volatile during the summer months
or during any period of weather-related transitions. For investors interested in the
agricultural sector, population growth–combined with limited agricultural supply–can
provide opportunities for profiting from rising agricultural commodity prices.

Contribution of Commodity Exchange for Agricultural Development

These are some of the contribution of commodity exchange for agricultural
development:-

 Commodity exchange provide lower transaction cost for agricultural products

 It facilitate efficient and transparent means for price discovery
 It help to managing risks related with prices volatility of agricultural products
 It provide a forum for exchanging information about supply and demand
condition.

Activities of Commodity Exchange

Commodity exchanges perform the following important functions and activities:

1. Providing a Market Place: A commodity exchange provides a convenient place

where the members can meet at fixed hours and transact business in a commodity
according to a certain well established rules and regulations. This type of facility is very
important for trading in such commodities as are produced in abundance and cover a
very wide field as far as trading therein is concerned.

2. Regulating Trading: As organized markets commodity exchanges establish and

enforce rules and regulations with a view to facilitating trade on sound lines. The rules
define the duties of members and lay down methods for business transaction.

3. Collecting and Disseminating Market Information: The buyers and sellers on the
commodity exchange enter into deals for settlement in future after making an
assessment the trends of price and the prospects of a rise or fall in prices of a com-
modity. The commodity exchange acts as an association of these traders collecting the
necessary information and the relevant statistical data and publishing it for the benefit of
traders all over the country.
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4. Grading of Commodities: Commodities which are traded on the commodity
exchanges have, to be graded according to quality. In this manner, the dealers can
quickly enter into agreements for the purchase and sale of commodities by description.

5. Settling Disputes through Arbitration: The commodity exchange provides

machinery for the arbitration of trade disputes.

Group Reflection and Recommendation on ECX

ECX is a very important organizing for our countries commodity exchange. But it is at its
infant stage or under developed and need a lot of work by the government and different
organizations to reach its potential. These will make export and import market go
smoothly and efficiently.

Unit 3

Environmental Observation on Agro-Market

Assessment of Our Surrounding Practices of Agricultural-Market

There are a lot of agricultural products that we use in our day-to-day lives these. These
products most of the time come from rural areas of our country. In order to understand
the agriculture marketing of these agricultural products, first we need to classify them
broadly into two categories. The first one is fruits and vegetables and the second one
meat and animal products.

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Fruits and vegetables

In Addis Ababa fruits and vegetables are sold in many places there are different types
of retailers who sells this products. According to the information we gathered from this
retailers said that they buy fruits and vegetables from place called Aetkelt Tera in
Merkato.

Merchants from different parts of the country come to Merkato to sell their goods and
some of these goods are like vegetables and fruits. They sell these products to the
wholesaler in Atkelt Tera and different retailers buy this product from that place and
bring it to different parts of Addis Ababa.

We can also divide the type of retailers into two types. The first one is retailers that
have their own shop and have legal documents and the other types are people who sell
fruits and vegetables in the streets.

The people who sells their fruits and vegetables in their shops usually have relatively
speaking a higher quality products than people who sells on the streets. The quality of
the shops also different from place to place. Some areas have a very big and modern
shops that have a good cooling system for the fruits and vegetables and can maintain
them for some time before they get spoiled. However other places doesn't have this
luxurious. They have to sell their products as fast as possible before the fruits and
vegetables get spoiled. But the good thing about the retailers who sell vegetables and
fruits in their own shops is that these agricultural products have relatively smaller
contact with the sun and don’t get spoiled easily.

The other category is people who sell fruits and vegetables out in open on the streets.
This people usually doesn't have a legal documents and they don't take care of their
product which caused this agricultural products most of the time to get spoiled. But still
some of these people sell this agricultural products to the public which could cause a lot
of health problems.

Meats and animal products

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In Ethiopia meat is one of those products that everybody consumes. Despite the fact
that they are expensive still people in the Country consume this product. According to
the butcher shops we asked, some of them bring their meats from a place called kera
here in Addis Ababa and other said that they buy animals and sell their meats to
customers.

When it comes to milk and better, there are numbers of companies who specialize on
sterilized milk production. Some of this companies produce mix like Mama sterilized
milk, shola sterilized milk, and Holland sterilized milk and so on. But this is not the only
way to buy milk. There are different households who provide natural milk in our
surroundings. These people usually have their own cows and charge people based on
how much liters of milk they buy.

Challenges and Opportunities of the course Agricultural Marketing in

Our Environment
These are some of the challenges faced by agricultural marketing in our country:-

1. A lack of marketing skills and resources

Reaching customers is one of the most difficult parts of operating any business. Even
experienced marketers have trouble conquering these challenges. Marketing isn’t
cheap, either. It requires a significant investment of both time and money to be
successful.

Embracing new marketing strategies will require farmers to reassess how they
spend their time and money. They will have to make time to build marketing skills
and execute marketing plans while maintaining their daily farm operations. They
will also need to take a close look at the finances of their farm.

2. Too many middlemen

The presence of too many middlemen and the exploitation of farmers by them.
On one hand, these middlemen exploit the farmers by purchasing the produce at
lower prices, and on the other hand, they exploit the customers by demanding

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 higher prices from them. The only aim of a number of commission agents,
brokers etc. is to derive a higher income from the middle processes. These
middlemen take advantage of the poor farmer on the basis of their financial
resources.
3. Lack of Financial Resources
In rural areas, there is a lack of financial resources, due to which even their
emergency requirements are not fulfilled. In such conditions, the farmers sell
their produce before its ripening in case of fruits.
4. Lack of Organized Marketing System
Agricultural marketing is also very defective in Ethiopia because organized
marketing is not in vogue, like, cooperative societies, government marketing
activities, regular markets, etc. As a result, the farmer remains entangled in
exploitation. Thus, the lack of an organized marketing system is harmful to the
farmers.
5. Inadequate storage facility of food grains,
6. Improper transportation
7. Inefficiency in the wholesale markets etc.

Group Reflection and Recommendation on the Problem observed so

far
Agricultural market not only can Bering solutions to these challenges but it can also help
farmers to find an efficient way of producing agricultural products.

Some of the solutions are:-

 Educating farmers on how to sell their products

 Eliminating middlemen that exploit farmers
 Providing financial support for farmers and so on.

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