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Raw jute prices have fallen drastically this season to Tk 1,700 – Tk 2,600 per maund (around 41 kg) in the domestic market, causing farmers to incur heavy losses despite having a good harvest thanks to favourable weather.
The golden fibre prices were Tk 2,800 – Tk 3,600 per maund last season.
A number of farmers say the prices traders are currently offering are the lowest in two years, and do not cover raw jute production costs. Many farmers are at risk of suffering financial ruin as they have to repay loans to lenders.
Farmers said that traders offering prices are not only lower than last two years, but also below production cost. That is why they are under pressure on how they will run the family wheel and pay credits to lenders.
It should be noted that the country has witnessed diminishing earnings from jute and jute goods exports in the last two fiscal years due to the global economic crisis, and this trend continues to this very day.
An analysis of local market prices show premium quality raw jute is being sold for up to Tk 2,600 per maund, while low grade jute is being sold for Tk 1,700. Traders are offering Tk 2,100 –Tk 2,200 to the farmers for medium quality raw jute.
Mofizur Rahman, a farmer form Pabna, said, “Traders are offering Tk 2,400 per maund for high quality raw jute, but the figure is very close to my production costs. With these prices, how will I be able to cover my family’s expenses and pay back my loan?”
Mofiz, another farmer from Rajshahi, said, “Traders are offering Tk 1,700 for per maund of low quality raw jute, and Tk 2,000 for medium quality. But my production cost is higher than the offered prices. We are facing serious financial trouble.”
Department of Agricultural Extension (DAE) officials said the low prices this season will negatively impact the next season’s production.
On condition of anonymity, a DAE official said, “Farmers cultivated jute on less land this year due to the low demand. They had been hoping for better prices this season. But prices have dropped significantly.
“Farmers are disappointed, and the situation will impact next year’s production target.”
DAE Additional Deputy Director (Control Room) Humayun Kabir said, “Jute production currently costs almost Tk 2,300 per maund, but traders are paying Tk 2,000 – Tk 2,500. Besides, a huge amount of jute is in stock at the warehouses.”
Former chairman of Bangladesh Jute Mills Association (BJMA) Mohammed Mahbubur Rahman Patwari said, “The country’s jute sector is 85 per cent export dependent. As their exports are decreasing since FY22, everyone – from millers to farmers – is facing losses.
“Despite the crisis, the government is collecting 2 per cent advance income tax at the raw jute trading level and 1 per cent source tax during exports. The move is also creating barriers for Bangladesh to compete in the global market. Besides, Bangladesh’s top export destinations for jute, especially Turkey, Iran and Sudan, are facing financial crises.”
He added, “The government should implement the Mandatory Jute Packaging Act soon, which will create a big market locally. India has already implemented this system. We are seeking export-friendly policy support from the government, similar to the apparel and textile sectors.”
How’s the market?
Jute is a major part of Bangladesh’s export basket, and hundreds of thousands of farmers are involved in jute cultivation. Besides, hundreds of traders are involved in the jute trading business as well.
Bangladesh has 268 jute mills, and among them, 31 are state-owned. In July 2020, the government announced closure of the state-owned jute mills for privatisation, and three such mills are now being run by different companies.
According to jute ministry data, there are currently 178 jute mills in operation, and hundreds of thousands people are working there. The mills basically produce traditional items such as jute yarn, bags, and sacks.
These products are exported to the Middle-East, Africa, Eastern Europe, and China.
Some entrepreneurs are also manufacturing diversified jute goods, though the earnings are not very large.
According to the DAE, Bangladesh produced 84.58 lakh tonnes of raw jute in 7.3 lakh hectares of land this season, which was 84.32 lakh tonnes in 7.27 lakh hectares in the previous season.
Farmers produced 11.59 tonnes of jute per hectare this season, which was 11.59 tonnes last year.
DAE officials said this season’s raw jute quality is far better than previous seasons thanks to rain on time, which also helped increase production per hectare.
Meanwhile, data from the Export Promotion Bureau (EPB) show that export earnings of jute and jute goods fell by 19 per cent to $912 million in FY23, compared to $1.12 billion recorded in FY22.
This figure was $1.16 billion in FY21, when the world encountered the deadly Covid-19 crisis.
As Bangladesh witnessed a good amount of export earnings in FY21, per maund raw jute price jumped up to Tk 6,000 in the local market, and the price was up to Tk 4,000 in last year.
But due to the severe decline in exports last fiscal year, farmers decided to reduce production, as traders had a huge volume of raw jute and finished products in stock. Many traders had also failed to release their raw jute stocks due to the low demand.
The situation hit the raw jute market this season too.
Bangladesh Jute Goods Exporters Association Director and Tulika Eco Chief Executive Officer Esrat Jahan Chowdhury said, “India imposed anti-dumping duty on jute product imports from Bangladesh.
“If our government manages to remove this barrier through the diplomatic channel, we would earn more than a hundred million from the market. As eco-friendly goods, jute has a huge demand in western markets. The government’s policy support could help us to capture the markets.”
