Bangladesh

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Jute growers may face price fall, Indian jute to thrive

Shakhawat Hossain  | Published: 00:37, Jul 06,2020

 
 

At least 10 state-owned jute mills are operating in India while the government of Bangladesh has closed all the 25 public sector jute mills, which would result in adverse impacts on both the domestic and international markets of the country.

Jute growers and jute goods exporters feared that Bangladesh jute goods might lose their market in African continents to the lone competitor, India, because of the closure of the Bangladesh Jute Mills Corporation jute mills since July 1.

BJMC’s jute goods have been facing challenges in keeping their dominance in the African niche market in Sudan, Somalia, Egypt, Italy, Ethiopia and Gambia because of the presence of Indian sacking there, thanks also to the existence of strong Indian communities in those countries.

Bangladesh Jute Goods Exporters Association chairman M Sajjad Hussain Sohel said that the Indian jute goods producers and exporters had many advantages, including high demand for sacks in the local market under the mediatory jute packaging policies.

Technical aspects like trade routes and currencies favour Indian exporters in the export market, he said.

Local jute and jute goods exporters, aided so long by the BJMC mills and over 150 units in the private sector, sent 20.82 per cent higher products in July-January period of FY2019–20 to the international market compared to the same period of the last fiscal year.

They fetched $602.49 million in the July–January period of FY2019–20 in place of $498.66 million in the corresponding period of the previous fiscal year, thanks to the revival of popularity for the environment-friendly golden fibre, 93 per cent of which is grown in Bangladesh and India.

The six Indian public sector jute mills — Kinnison, Khardah, National, Alexandra and Union, located in the states of West Bengal and Bihar — are run by the National Jute Manufacturers Corporation Ltd, established in 1980.

There are also 70 other Indian jute mills — four under state governments, two under cooperatives and 64 under private ownerships —accounting for an annual turnover of rupees 6,500 crore and contributing rupees 1,000 as export income.

Former chairman Sk. Farook Hossain of the Bangladesh Jute Association said that the closure of the BJMC mills would prompt the domestic and international market players to redevise  their strategies in the coming days.

The demise of the behemoth-like BJMC will have many negative impacts, said Hossain, now a director at the Jute Spinners Association.

The BJMC was the country’s single biggest raw jute buyer although the quantities bought were drastically falling in the last two years.

Still, the BJMC was the main player in setting the price of raw jute, one of the main agricultural crops for thousands of farmers in the impoverished country.

Bangladesh Jute Growers Association president Fazlul Hoque Sarker said that the scope for private buyers of raw jute had been enhanced, enabling them to further control the raw jute market.

Raw jute prices, he feared, are likely to drop in the current season to begin soon.

Established in 1972, the Bangladesh Jute Mills Corporation used to operate 79 mills in 1979, including the world’s largest Adamjee Jute Mills.

The 52-year-old Adamjee Jute Mills was closed down in 2002 rendering around 25,000 workers jobless.

The latest government decision to shut down the remaining 25 mills under the BJMC would cut another 25,000 regular jobs and almost a same number of irregular jobs.

A jute market report by the WGC, standing for the Germany-based Natural Fibres Worldwide, the BJMC has incurred losses in 44 of the 48 years after the 1972–73 fiscal year.

The cumulative loss of the BJMC stood at Tk 106.74 billion in the 2018–19 fiscal year since 1972.  

However, the closure of the BJMC mills would create a vacuum of demand for raw jute in the local market.

Admitting the consequence, Centre for Policy Dialogue research director Khondaker Golam Moazzem said that the private jute mill operators should fill the vacuum.

He noted that the proper compliance with the provision for compulsory use of jute bags in preserving or transporting 20 kilograms or more of 17 commodities could increase the jute demand in the local market.

He pointed out that the local market of India consumed 80 per cent of its jute goods.

In 2018, India produced 2.1million tonnes of jute and Bangladesh 1.6 million tonnes. 

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