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A better price of raw jute, despite the closure of most of the state-owned jute mills and Covid-induced slowdown of economic activities, brought smile to the growers across Bangladesh thanks to no flood this season with heavier rainfall and harvest of good quality fibres.
The vibrant raw jute market, however, worried the millers as they fear smuggling in the name of raw jute export and called for protective measures.
Harvest of jute began in late July and the price is higher than the same period of 2020.
Jute growers were suffering from low prices for long, but the trend began changing in 2019 and still going up. Millers said in fiscal years of 2015-16 and 2016-17, they purchased jute per maund (37.32 kg) between Tk 1,500 and Tk 1,600 at mill gate and the price was much lower at the merchant level.
This year, merchants are paying Tk 2,600 to Tk 2,700 for a maund of raw Jute and the Department of Agricultural Extension said the production cost per maund of raw jute was between Tk 900 and Tk 1,100.
“This year’s heavy rainfall contributed to yield of very good quality fibres and we think that the farmers will earn better,” AKM Monirul Alam, a director of the DAE, told The Business Post.
Jute millers forecasted that the price might reduce a bit when harvest will be in full swing. But there is no fear of massive price fall as global jute prices are high, they added.
The average price per maund of raw jute was Tk 2,200-2,300 in early August and the average purchase price reached Tk 3,400 at the mill gate in the 2020-21 fiscal year, according to the Bangladesh Jute Spinners Association (BJSA). Supply shortage was behind the increase of price in 2020 and it benefited the merchants most.
The average price of raw Jute at the mill gate was Tk 2,250 in FY 2019-20 and Tk 2,175 in FY 2018-19.
The vibrant market is also worrying the millers as they fear that syndicates of unscrupulous traders might take hold of it and two of their associations have asked the government to take steps necessary in this regard.
The Bangladesh Jute Goods Exporters Association (BJGEA) has already sent a letter to the Ministry of Commerce seeking a ban on export of raw jute till December, while the Bangladesh Jute Mills Association (BJMA) said they would ask the ministry to bar the merchants from stocking more than 1,000 maunds of raw jute in a month.
The Directorate of Jute had issued a similar notification in the previous season when raw jute prices reached as high as Tk 5,000 to Tk 6,000 per maund. Most of the jute mills at that time stopped production.
Mohammed Mahbubur Rahman Patwari, chairman of Bangladesh Jute Mills Association, told The Business Post, “We fear some of the traders might create an artificial crisis and we will suffer again. That’s why we plan to write to the ministry to issue a notification similar to the previous year.”
Esrat Jahan, CEO of jute goods manufacturer and exporter Tulika, said that they had no single order because of high production cost and their buyers were waiting for the price to decrease.
“Our findings show the middleman are the main obstacle in making the jute market stable and ensure a fair price,” said Esrat, also a director of BJGEA.
Bangladesh saw a 31.63 per cent export growth for jute and jute goods products in FY2020-21 by exporting goods worth $1,161 million, shows the Export Promotion Bureau data. It was $883 million in FY 2019-20.
India is the largest producer of jute in the world while Bangladesh is the top exporter.
Bangladesh’s jute export items feature raw jute, yarn, fabrics, and diversified products. Around 40 per cent of export earnings come from yarn followed by raw jute and fabrics. Some exporters send diversified jute products to Europe, the USA and other countries.
In January 2017, India imposed an anti-dumping duty on Bangladesh’s jute yarn, hessian and bags priced between $19 and $352 per tonne to protect their domestic industry.
Jute exporters said that the latest price of jute at the growers’ level was higher than the previous year and they thought it was enough to benefit the growers.
Syed Ali Alfe Sany Akash, director of Monami Jute Mills, said that if syndicates of unscrupulous traders became active again and the government allowed the export of raw jute before December, the domestic raw jute market would be unstable. “The government should protect domestic industry and that’s why we need all kinds of legal and policy support,” he said.
In the previous season, Bangladesh exported around 3 lakh tonnes of raw jute to India but the local industry faced a supply crisis.
Jute goods exporters said a large portion of bulk raw jute export was actually smuggled to India in the name of export and they demanded that all kinds of jute and jute goods should be exported through the seaports.
Before allowing raw jute export, the government should assess the domestic demand, said the millers.
“All our demands are logical. It is the only way to protect our jute and jute products from smuggling,” said A Barik Khan, secretary of BJMA.
Md Mehedee Zaman Sonnet, a director of the Golden Jute Industries, said Bangladesh’s prime jute product destination Turkey had initiated research to create an alternative to jute and they were expecting a result soon. “It was mainly for the high price of jute in Bangladesh and if they become successful, Bangladesh will face a new challenge in jute export,” he said.
