First-ever jute commodity exchange starts operation from this month

FE Team | Published: August 04, 2013 00:00:00 | Updated: February 01, 2018 00:00:00

Jasim Uddin Haroon The first-ever jute commodity exchange will start its operation on an experimental basis in four districts from this month (August), sources familiar with the exchange told the FE Saturday. The districts are Madaripur, Rajbari, Pabna and Kurigram. There will be five pilot projects in total. Earlier, the government approved the establishment of a single-crop commodity exchange on a pilot basis. This is the country's first move to float a commodity exchange aimed at ensuring transparency and competitiveness in commodity trading. Local Deshbandhu Group, along with Dubai-based Pride Group, the owning company of the commodity exchange, will conduct the pilot projects. "After piloting this year, we expect to launch commercial operation of the commodity exchange from the next season," Rahman Habib, chief investment officer of the Deshbandhu Group, told the FE. Bangladesh is the world's largest jute exporting nation with more than US$ 1.0 billion export receipts a year. Bangladesh produces 7.6 million bales (each bale is equivalent to 180 kilogrammes) of jute. A consortium of local and international investors will, however, expand its commodity exchange for other commodities like main staple rice, wheat, potato, corn and soybean in the agricultural sector and gold and silver in the precious metal sector. Commodity exchange ensures transparency in the trading of crops. Jute & Hessian Commodity Exchange in Kolkata is one of the oldest exchanges in the region. The commodity exchange in Dhaka is to be called "Bangla Mercantile Commodity Exchange or BMEx". Meanwhile, jute goods manufacturers said such type of exchange might help bring transparency in the raw jute trading as middlemen take much of the dividends of the crop. Chairman of Bangladesh Jute Mills Association (BJMA) Najmul Huq told the FE: "A successful commodity exchange will help ensure fair prices for the jute growers." Mr Huq, also managing director of Janata Jute Mills, said: "We want just a replica of Kolkata jute exchange in the land as it is one of the oldest in the region and a very successful one." He also said their cost of doing business will fall as they now need much money in collecting raw jutes. "Definitely, it will reduce our headache significantly," said Mr Huq who represents the country's private sector jute mills. On the other hand, Bangladesh Jute Mills Corporation (BJMC), the government organ in procuring and manufacturing of jute goods, said there is little scope for opening up new purchasing centres by the Deshbandhu Group and its Dubai-based alliance. BJMC Chairman Major General Humayun Khaled said: "We've already established 170 purchasing centres across the country for this season." The jute season lasts three months ending in October. However, Mr Habib of Deshbandhu Group, said his company will join with the purchasing centres. He said: "We've taken adequate preparation to run operations on a pilot basis after Eid." Commodity exchanges enable buyers and sellers to enter different contracts including spot, future and forward deals.