What is holding jute sector back?

Once a golden fibre and the main cash crop, now is a forgotten past limping in a regressive state – such is the scenario of jute sector that stands in sharp contrast to the development pie chart that the country has drawn over the past half a century.

Unlike other sectors that have drawn due attention of the authorities concerned, jute seems to have taken a back seat.

The industry insiders claim that unstable policy of successive governments, insufficient financial support, lack of proper marketing and research and above all non-modernisation of jute mills have hit this sector very hard.

But time is not over, and if the government pays proper attention, the industry will turn around, they said, adding that the question is whether the government really wants to develop this sector.

“We are still using age-old machines and manufacturing traditional items. There is no research, no training centre,” said Esrat Jahan Chowdhury, CEO of Tulika and director of Bangladesh Jute Goods Exporters Association (BJGEA). “If such is the condition, how will this sector move ahead?” she posed a question.

In Fiscal Year 1972-73, Bangladesh earned $ 133.84 million through jute and jute goods export when the total export earnings were $ 348 million.

In FY 2020-21 this sector fetched $ 1.16 billion while overall export earnings were $ 38.74 billion.

Most of the earnings came from hessian, sack, yarn and raw jute exports, according to the Export Promotion Bureau (EPB).

On the other hand, Bangladesh started readymade garment export on July 28, 1978 to France and after 43 years in FY 2020-21, this sector earned $ 31.93 billion.

The rise of export-oriented readymade garments (RMG) was a major reason behind the drawback of jute sector. Besides, frequent policy changes alongside decline in demand for jute goods in both domestic and international markets over time are also to be blamed, according to the Centre for Policy Dialogue (CPD).

Based on the contribution of the private sector, however, jute sector is trying to turn around bit by bit and some micro-entrepreneurs are in an effort to diversify products.

“It is true that we could not perform well compared to other sectors, although most raw materials of the jute industry are collected from domestic sources,” said Mohammed Mahbubur Rahman Patwari, former chairman of Bangladesh Jute Mills Association.

“Currently, we get incentive for export earnings but this sector needs a huge research and investment for development,” he added.

In FY21, Bangladesh produced around 90 lakh metric tonnes of raw jute, but export earnings have been on declining trend since last April.

Most export earnings from jute, however, came from raw jute and jute yarn exports.

On the other hand, India and other countries import raw jute and jute yarn from Bangladesh and make valuable products to export.

Stakeholders say it is necessary to produce diversified products from jute, and it requires huge branding through participation in international expo and regular exhibition.

“But most of our embassies overseas are not conscious about this issue. Some are trying to boost jute goods but that is not enough,” said Mohd Shafiqul Islam, BJGEA chairman, told The Business Post.

“It is very difficult for us to create new export destinations overseas without embassy support. Our competitors are doing so patronised by their government and missions abroad and are performing well,” he said.

“It is also true that our export destination countries are facing political crisis over the last two decades and some are still in civil war, but we did not create new markets instead.”

Before 1971, jute sector was controlled by a small number of private owners but after independence, the government decided to nationalise the jute manufacturing sector and took control of all the private sector jute mills.

Before independence, all jute mills used to manufacture only hessian, sack and carpet backing cloth but after nationalisation they began to produce only yarn.

After 1980, the government decided to de-nationalise a number of jute mills in line with the initiative of economic liberalisation.

A mixed trend is observed in the production of jute goods during this phase which reached the peak in 1990.

The production of yarn gradually increased in the 1980s. Most importantly, production of hessian and sacks — two major traditional products gradually declined, especially since the late 1980s, according to the CPD.

Yarn/twine now accounts for the major portion of jute goods. Its production has also been on a steady rise. During 2006, Bangladesh’s share in the global production of jute goods was approximately 18 per cent.

Currently, both public and private sector jute mills sell their products in either the domestic market or in the international market, and 38 per cent jute goods are used in the domestic market.

“After independence, the government changed policy several times. It gave permission to set up private jute mills to run on their own. State-owned jute mills were subsidized a lot but they exported goods below their manufacturing price,” said BJMA former chairman Mahbubur.

“To install new machine, its needs a huge investment, but most jute millers are not capable of that. It is a

matter of hope that some new entrepreneurs are installing modern machines and looking for new markets on self-initiatives.”

Besides, the sector people held that the millers are not interested to diversify jute goods due to low demand in the international market.

Most of the exporters think exporting traditional products is profitable and risk-free compared to the diversified jute goods.

In this regard, Tulika CEO Esrat said: “It is true that currently the demand for diversified jute goods is not very high, but it is also true that the western community is showing interest to jute diversified products gradually.”

“The trend is increasing day by day. We need to reach the western consumers, and international expo may help us in this regard.”