… cardamom to be traded as trial
Bhutan Commodities Exchange Initiative (BCEI), a commodities market for agri-products, will resume in July this year, two years after the pandemic stopped its operation.
Potato trading on this platform has been growing between 2016 and 2020 when the pandemic struck the country. Potato trading of 12,658 metric tonnes (MT) worth Nu 0.38 million (M) in 2016 grew to 73,292MT or Nu 1.95M in 2019.
An official from the Royal Securities Exchange of Bhutan (RSEB) said that potatoes have huge potential for export. “Bhutan exported more than 30,000MT of potatoes in a year.” About 70 percent of exported potatoes go to Nepal.
Cardamom will also be added to the trade basket as a pilot project in Norgaygang gewog, Samtse to begin from August this year.
A commodity exchange is a centralised and organised marketplace in which multiple buyers and sellers trade commodity-linked contracts on the basis of rules and procedures laid down by the exchange.
Compared to the traditional market system, the online exchange of commodities reduces the costs in the commodity economy.
An official said that the farmers do not have to segregate potatoes manually in the online method because it is done by the potato grading machine which can grade 10MT of potatoes per hour installed in the auction yard.
In a conventional auction, an official said it usually takes more than two weeks’ time to sell his goods and get the cash.
“The time to sell his goods and to get the cash has been reduced to three days online,” he added.
An official also said that buyers buy potatoes at one rate irrespective of the grades of potatoes in conventional methods. However, he said online trading gives differentiated prices.
It was found that a farmer gains Nu 30,000 to Nu 40,000 per truckload compared to the conventional auction method.
This initiative also aims to link agriculture with financial markets.
BCEI is a joint initiative of the RSEB, Food Corporation of Bhutan, and Department of Marketing and Cooperatives.
Among the stakeholders of the initiative, FCB manages the warehouse and storage facility and transport, and the Ministry of Agriculture and Livestock can provide supply-side interventions, quality standards specification and sensitisation.
The initiative plans to look for newly-licensed brokers and install grading machines at the source.
However, an official said the existing challenges of informal trading between the farmers and the middleman exist which means that the middleman gives the farmers cash and kind before the harvest. He added such issues can be addressed by online auctioning platforms.
Another challenge, he said, is securing funds for procuring grading machines, low volume of traders, and difficulties in finding new members or brokers.
An official said that the ultimate objective of the initiative is to come up with a separate legal entity based on the commodities exchange model to support the agriculture sector.
There are also plans to include ginger, cordyceps, oranges and apples in the online commodity trading basket.
