Jute output may fall as fair price eludes growers

On the one hand, the jute production cost is increasing gradually due to high labour cost and energy price hike, on the other hand, farmers are being deprived of fair prices due to negative export earnings in the last two fiscal years.

Amid such a situation, farmers are reducing the cultivation of the environment-friendly golden fibre which may put impact on the overall jute production during the upcoming season.

According to Department of Agricultural Extension (DAE), the government set a target to bring 18.88 lakh acres of land under jute cultivation in the current fiscal year and expected to produce 89.87 lakh bales of jute. But farmers cultivated jute on 18.38 lakh acres of land, down by nearly 50,000 acres of land than that of the target of 18.88 lakh acres.

Besides, weather condition was not favourable for jute cultivation. That is why jute production may fall this fiscal year, according to DAE.

Commenting on the matter, DAE Additional Deputy Director (control room) Humayun Kabir told The Business Post that farmers show reluctance to cultivate jute due to its low prices. So, they are now unwilling to cultivate jute on a large scale.

“Currently, jute production cost is almost Tk 2,300 per maund. But traders are paying Tk 2,400-Tk 2,500 to the farmers per maund. Besides, a huge amount of jute is in stock at the warehouses.”

“I think if the downward trend in jute prices continues, its production will decline further in the next season,” said Humayun Kabir whose family is also involved in jute cultivation.

When Bangladesh witnessed a drastic fall in export earnings during the Covid-19 pandemic, it saw a 31 per cent year-on- year growth in jute and jute goods exports in FY21 and earned $ 1.16 billion.

During this period, millers faced a shortage of jute supply and urged the government to allow its import for the first time. Even many mills were also bound to suspend production due to a shortage of jute.

During this time, the price of jute rose up to Tk 6,000 per maund from Tk 2,200.

As the farmers were able to make good profits from jute, they got encouraged to cultivate jute on more lands. Though the country witnessed 2.91 per cent year-on-year negative earnings in FY22 and earned $1.12 billion, farmers were able to earn good profits by selling jute as traders paid them Tk 3,500-Tk 4,000 per maund.

In the last fiscal year, the country produced 84.58 lakh bales of jute, while the figure was 84.32 lakh bales in FY22. It meant that Bangladesh posted a 0.3 per cent year-on-year jute production in the last fiscal year, according to the Bangladesh Bureau of Statistics (BBS).

The BBS data showed that farmers cultivated jute on 18 lakh acres of land across the country in the last fiscal year, which was 0.35 per cent higher than the previous FY. It was 17.83 lakh acres in fiscal year 2021-22.

In the last fiscal year, jute production rate declined by 0.04 per cent year-on-year. During the period, the country produced 4.69 bales of jute per acre which was 4.73 bales in FY22.

Due to the ongoing global economic crisis caused by Russia-Ukraine war, Bangladesh got lower orders. Besides, due to drought and excessive rainfall, the quality of jute also gets damaged.

That is why Bangladesh failed to export premium quality jute and jute goods, which was severely impacting export earnings from the sector.

In the last fiscal year, export earnings from jute and jute goods declined by 19.1 per cent to $912 million year-on-year. It was 28.73 per cent lower than the target set by the commerce ministry, according to the Export Promotion Bureau (EPB).

Exporters said that they are still facing order shortage and some factories already cut their production, and laid-off workers. Akij Jute cut 6,300 jobs in November last year.

Monami Impex Executive Director Syed Ali Alfe Sany Akash said, “Due to the ongoing economic crisis, our major export destinations such as Turkey, Iran and African countries are facing USD crisis. That is why we are experiencing order shortages.”

“The situation will not improve unless the global economic crisis is resolved,” said Akash, also director of Bangladesh Jute Goods Exporters Association.