Thwart the jute syndicate

It is worrying to note that a syndicate is holding the jute sector hostage and raising prices of raw jute at its whim. The prices jumped by Tk 800 a maund (37.32kg) in the local market in recent weeks without any good reason, selling for Tk 3,700-3,800, which was Tk 2,800-3,000 only a few weeks ago.

In the first half of FY22, export earnings from the jute sector fell by 15.47 per cent to $590 million from $668 million in the same period of the previous FY. Md Abul Hossain, chairman of Bangladesh Jute Mills Association (BJMA), said they met the director-general of jute and requested him to save them from the syndicate and urged to fix raw jute price as per law. The government said it was trying to keep the raw jute market stable and continued monitoring and operating mobile courts.  Industry insiders said the high price of raw jute since last January discouraged buyers from sourcing from Bangladesh, affecting export earnings. On the other hand, the syndicate increased raw jute prices again after an unofficial announcement that India would import 1,00,000 bales from Bangladesh. Besides, in early 2021, per maund raw jute cost Tk 6,500-7,000, which was Tk 2,000-2,500 in August 2020, prompting most jute mills to stop production. They sought the government’s permission to import raw jute for the first time. But in the new season, raw jute prices decreased and per maund sold at Tk 2,500-3,200 in August-December.

In FY21, the jute sector earned $1.16 billion, which was 33.23 per cent higher than FY20. Esrat Jahan Chowdhury, director of Bangladesh Jute Goods Exporters Association (BJGEA), said that although the amount was higher, the volume has fallen. Freight fare increased four to five times and Bangladesh’s export destination countries are facing political and inflation crises.  She said the government should assist them and protect the raw jute market from the syndicate. Otherwise, export earnings will fall further. Jute millers and exporters claimed that jute production decreased in the last season but its export increased simultaneously, which triggered a supply crunch. The syndicate took advantage of the artificial crisis and hiked raw jute prices, pocketing hefty profits in the process. A Bakir Khan, secretary-general of BJMA, said that they heard the Indian government had decided in principle to import 1,00,000 bales of jute from Bangladesh. When this news spread, the syndicate became active again and tried to destabilise the market by hiking prices. Millers and exporters claimed that there would have been no such development if the government enforced the law. Traders and jute goods exporters said they would not have had any objection if farmers benefit from the price hike. The middlemen are earning higher profits and making the market unstable. It is, in turn, pushing up the production cost and discouraging buyers to source from Bangladesh.

On its part, the government on August 9 last year issued a notification banning jute trading without a licence to protect the raw jute market from the syndicate. Traders are not allowed to keep over 1,000 maunds of jute in stock for over a month. The notification said that district and upazila administrations would operate mobile courts to prevent traders from mixing sand and water with raw jute. Monitoring will continue to thwart the syndicate and illegal trading. Although jute millers said there had been no visible action, Mohammad Ataur Rahman, director-general of jute, said the millers’ claim was baseless and that they were monitoring the market, operating mobile courts and sparing no wrongdoers. He argued that the demand to fix raw jute was unrealistic. Since it is almost impossible to arrest price hikes of raw materials through price fixing in Bangladesh’s context, they are focusing on enforcing administrative power to stabilise the market.

The situation deserves serious attention from the authorities concerned. Jute, once hailed as the “golden fibre” of Bangladesh, holds immense potential that should be unlocked with proper policy support. The government must step in to rein in the chaos in the jute sector by taking effective steps and implementing the law. It must do all it can to dismantle the sinister syndicate, ensure that farmers get fair prices and jute gets back its lost lustre.