Political turmoil in Middle East and global recession to blame
Despite having good days in the last few years, the country’s jute sector is likely to face hard times in the coming days due to the political turmoil in the Middle East and global recession. Thousands of jute growers and employees of the jute sector have already started to feel the pinch with the fall in prices of both raw jute and jute goods. The prices of jute goods have fallen by 20 per cent in the international market, and in the coming days the situation may worsen, experts said.
About 50 million people of this land are directly or indirectly involved in various activities related to jute and jute manufacturing. Nearly 35 million farmers are engaged in cultivation of jute, and 0.3 million skilled workers are directly associated with the manufacturing process. Besides, about 0.2 million people are directly engaged in trading of jute, jute goods, transportation and other related business.
Contribution of the jute sector in the GDP is about 5 per cent and contribution of jute and jute manufacturing in the national employment is about l0 to l5 per cent.
Presently, there are 226 jute manufacturing units in the country. Of them, 90 private sector spinning mills are engaged in producing jute yarns, 27 state owned mills under the Bangladesh Jute Mills Corporation (BJMAC) and 109 private sector mills under the Bangladesh Jute Mills Association (BJMA) are producing hessian and sacks.
Projecting the industry forecast, Bangladesh Jute Spinners’ Association officials said, ninety per cent of the jute yarn produced by the BSJA mills are used in
manufacturing carpets, which are basically luxury items.
As the recession has seriously affected the Euro zone and main jute-buyer countries like Egypt and Syria are experiencing unrest, the demand for yarn has fallen significantly, former BSJA president Sabbir Yusuf Chowhury told The Independent.
“When people are on the run, they never dream of using luxury items like carpet.”
He said that though the jute yarn exports this year mark a slight rise than the last fiscal’s 4.85 lakh metric tons, the industry is getting negative signals from the buyers who are quoting far less prices than the previous year.
Production costs of the jute exporters have risen significantly. “For example, in recent times, labour wages
have risen by 100 per cent, transport costs by 20 per cent, spare parts by 10 per cent and prices of Jute Basic Oil by 10 per cent. On the other hand, rise in lending rate and depreciation of the US dollar are seriously affecting the sector,” BSJA chairman Shamsus Zoha said.
Moreover, due to the appreciation of the dollar against the Indian rupee, Indian buyers are not showing interest in buying raw jute. “India is the largest buyer of raw jute from Bangladesh”, he added. Official data shows that raw jute production has declined by 850,000 bales in the past two years. Besides, there was a 21 per cent fall in exports of jute goods in the last fiscal year.
Bangladesh Jute Association figures show that raw jute exports have declined significantly. It fell to 1.5 million bales during the 2012-2013 fiscal, from 22 million bales in 2011-12.
Industry insiders said the trickle-down effect of the fall in prices of raw jute is resulting in severe miseries for the jute growers.
In the Mymensingh region, the largest jute producing area of the country, farmers are selling raw jute at around Tk. 1,000 per maund on an average, whereas the production cost of per maund jute this season stands at around Tk. 1,050.
“If we add transportation costs, we have to incur losses by selling our produce”, a farmer in the Ishwarganj area of the district said.
In Rajshahi, farmers cultivated jute on 12,100 hectares against the target of 13,514 hectares, sources in the Department of Agriculture Extension (DAE) of Rajshahi said.
But farmers in this area said additional irrigation expenses and rise in labour wages pushed up production costs, though selling prices remain unchanged.
Farmers in the Rajshahi region get six to eight maund of jute from each bigha, against the production cost of Tk. 8,000 to 9,000. But in the wholesale market of this area, prices range between Tk 870 and 1,200, which makes the entire exercise futile, farmers told our local correspondent there.
Bangladesh produces around 1.26 million tons of raw jute annually, of which 0.86 million tons are for the local market and 0.30 million tons are exported.
Bangladesh’s jute and jute products are preferred around the world for its colour, texture, lustre, length and strength.
Going back in history, the British East India Company was the first jute trader. The company traded mainly in raw jute during the 19th century. The company was dissolved in 1874. Later, the Dundee jute industry entered the field. The Dundee jute industry fell when jute barons started to invest money in setting up jute mills in the Indian sub-continent, making the products cheaper by utilising the cheap labour of India.
After the fall of the British Empire in 1947, most of the jute barons moved out of India, leaving behind the industrial setup of the jute Industry. Most of the installations were taken over by Marwaris. Indian business giants the Tatas and Birlas also had jute businesses.
On the other hand, after the partition of the Indian sub-continent, several Pakistani families, including the Bawanis, the Adamjees, the Ispahanis and the Maniyas, came into the jute business by setting up several jute mills in Narayanganj.
-With The Independent input
