Jute sees dry spell in global market, prices drop locally

A low demand for raw jute and jute goods in the global market has brought the prices of the golden fibre down in the domestic markets in recent months, but still the farmers are making a good profit at the current price.

On the other hand, the inflow of comparatively low work order left exporters in trouble as they fear further decline in placing orders by their buyers.

According to the sector people, on average per maund (37.32 kilogramme) of raw jute is now sold at Tk 3000, which was Tk 3,300 last week.

In early harvesting season, per maund raw jute was sold at Tk 2500 to Tk 2700 based on the quality and location.

Prices of raw jute recorded the highest price at Tk 5000 to Tk 5,500 per maund in April this year.

The buyers offer low price which is not enough to meet the production cost let alone making profit, according to some jute millers, who said they are producing jute goods slowly, claiming that a persistent low price will make them loser.

According to the Export Promotion Bureau (EPB), the export earnings from jute and jute goods declined by 34.66 per cent to $ 128 million during July-August of 2021, which was $ 195 million in the same period a year ago.

However, in FY 2020-21, jute sector earned $ 1.16 billion registering 31.63 per cent export growth.

“Jute goods and shipping freight rates are way high. So, the buyers do not place new order, but they are waiting. If goods prices and freight cost decline, the buyers will be at play again,” BJMA Chairman Mohammed Mahbubur Rahman Patwari told The Business Post.

“We have to wait till December to determine the volume of jute goods we will be able to export. It is true that the buyers must return to us after a period,” he added.

The Department of Agriculture Extension, however, said in this season the farmers made quite a good profit at current raw jute price.

“If the raw just price falls to Tk 2000 per maund, nevertheless the growers will be able to make a profit of minimum Tk 500 to Tk 800 per maund, because this year the cultivating rate of jute is very good compared to that in the previous two or three years,” AKM Manirul Alam, director (field wing) of the DAE, told The Business Post.

What farmers said

The jute growers said they are happy with the current price and have started selling, but most farmers stock their produce for better price.

“I cultivated a 7-bigha land (.50 decimal) to grow jute and harvested around 90-maund raw jute, with an average production cost Tk 1600 a maund. I sold per mound raw jute at Tk 3375 in the middle of August. It was Tk 2200 in the previous year,” Mukter Mollah, jute farmer at Salta, Faridpur, told The Business Post.

“I did stock an amount of 70-maund jute to get better price,” he added.

A Mymensingh jute farmer Bablu Mia explained that he cultivated jute in his five-bigha land and harvested 60 to 62 maund jute. His cultivation cost per maund was around Tk 1400.

“The traders give me Tk 3000 against per maund of jute and I expect that the price will increase again. I have already sold around 30 maunds,” said Bablu.

The main area of jute cultivation is Faridpur. The DAE claimed that the farmers spent Tk 1550 to Tk 1600 on per-maund jute cultivation and they are selling it at Tk 3000 to Tk 3200 a maund.

“It was Tk 3500 per mound before some days, but over the past two to three days the price has fallen a bit due to low demand, but I am sure that every farmer will be able to make a good profit in the current prices,” said Md Hazrat Ali, deputy director of the DAE, Faridpur.

Present situation of jute and jute goods export

The main destination of raw jute is Turkey, Iran, Egypt and other Middle East and African countries. Besides, some European countries import jute-diversified goods from Bangladesh.

Bangladesh basically exports volume into four categories.

The main destination of raw jute is India. Every year, Bangladesh exports around 3 lakh tons of raw jute. This season Indian importers are yet to start jute import.

In addition, Bangladesh cannot export jute goods to India for the last five years due to the latter’s anti-dumping duty.

The members of the Bangladesh Jute Mill Association basically manufacture traditional jute products, hessian, sacking bags and carpet-backing cloth.

Bangladesh Jute Spinners Association members manufacture and export jute yarn.

All of them export their goods to Turkey, Iran, Egypt and other Middle East and African countries. The main export earnings come through those millers.

In the current season, the buyers do not place import orders and that’s why the export has fallen.

“Due to the high price of raw jute in the last season, some buyers found alternative goods to replace jute. Present raw jute prices are higher than the buyers offering price,” said Syed Ali Alfe Sany Akash, director, Monami Impex.

The member of Bangladesh Jute Goods Exporters Association basically send diversified jute goods to Europe, USA, Australia and some Middle East countries.

“We contacted buyers and tried to convince them to place new orders, but they did not respond. If raw jute price increases again, they will further be reluctant to place new orders,” said Esrat Jahan, CEO of Tulika and Director of Bangladesh Jute Goods Exporters Association.

“Not only we but also all exporters will face an order crisis if the government fails to rein in raw jute prices from the clutch of syndicate,” he added.

“We urged the buyers to carry jute goods through packet role until freight cost goes down. Its helps both parties to reduce cost,” said A Barik Khan, secretary general of the BJMA.