Chittagong, Bangladesh – May 4, 2024
Bangladesh’s cardamom market is facing a bizarre situation. While the annual demand for the spice is estimated to be under 8,000 tonnes, daily trading in Khatunganj, the country’s largest wholesale market, exceeds 1,000 tonnes. This discrepancy is fueled by a risky practice called DO (delivery order) trading.
What is DO Trading?
DO trading involves buying and selling contracts for future cardamom deliveries without ever taking physical possession of the spice. Traders gamble on short-term price fluctuations, often manipulating the market through high-volume contract purchases and sales. This speculation leads to significant price volatility, hurting both consumers and legitimate businesses.
How Does DO Trading Affect Prices?
The surge in DO trading over the past two months has destabilized cardamom prices in Khatunganj. Currently, cardamom sells for Tk 3,900 per kg, despite import costs ranging between Tk 1,200 and Tk 1,500. This massive markup highlights the inflated prices driven by speculation.
Who’s Behind DO Trading?
Spice traders believe newcomers, not involved in the traditional spice trade, are the primary culprits behind DO trading. These individuals exploit the system for quick profits, often lacking any actual cardamom inventory.
The Domino Effect
The inflated prices in Khatunganj don’t reflect the reality in other markets. For example, Dhaka’s wholesale markets sell the same cardamom varieties for Tk 500-900 per kg less. This price discrepancy further highlights the artificial inflation caused by DO trading.
Calls for Regulation
Cardamom importers, legitimate traders, and consumer protection agencies are all calling for an end to DO trading. They argue it’s a form of gambling that destabilizes the market, harms consumers, and benefits only a small group of speculators.
Authorities Take Notice
The Directorate of National Consumers’ Right Protection acknowledges the issue and plans to launch market campaigns to counter illicit trading practices. Additionally, leaders of wholesale trader associations are urging the administration to take action against DO trading.
The Future of Cardamom
The future of Bangladesh’s cardamom market hinges on regulating DO trading. Eradicating this speculative practice will protect consumers from inflated prices and ensure a more stable market for legitimate businesses.