Home ›› 29 Dec 2021 ›› Front
Stakeholders have identified scant government initiatives, political crises in export destinations, freight fare hikes and domestic syndicates, among issues holding back Bangladesh’s jute sector.
Despite the pandemic, jute has performed well in 2020-21 but continues to record negative growth in FY 2021-22. According to Export Promotion Bureau (EPB), export growth surged 31 per cent to $1.16 billion in FY20-21 compared to the previous FY. Most of the earnings came from hessian, sack, yarn and raw jute exports.
Meanwhile, exports decreased 17.45 per cent to $457 million in July-November this FY compared to the same period of the previous year. During this time, yarn and twine export fell 17.45 per cent, while jute sacks and bags export decreased 34.98 per cent, and raw jute export increased 33.09 per cent.
Freight fare hike hits exports
Freight fares soared four to five times during the pandemic and they are still high compared to previous years.
Stakeholders said the rise in shipping costs was one of the main reasons for a decline in export earnings from jute.
Esrat Jahan Chowdhury, director of the Bangladesh Jute Goods Exporters Association and CEO of Tulika, said that the freight fare hike pushed up the product cost in export destination countries.
“High freight fare is one of the key issues. For example, we exported jute goods worth $15,000 in a 40cft container, where the freight fare is $16,000. The goods prices more than doubled even before they reached the customers,” she explained.
Crisis in export destinations
The currencies of Turkey and Iran, key export destinations for Bangladeshi jute goods, are depreciating as they face US sanctions.
“Both countries are our main export destinations. We’re not doing well because of this reason,” Md Abul Hossain, chairman of Bangladesh Jute Mills Association (BJMA), told The Business Post.
He said Bangladesh performed well in the last FY, but in reality, the high price of raw jute made production costlier. “If we calculate, we will see that the volume decreased due to high price,” he noted.
Exporters claimed that the recent deprecation of the Lira against the USD negatively hit the jute sector.
“Our main export country is Turkey and their currency’s deprecation has almost doubled in the last three months, forcing Turkish buyers to cut down purchase. This has affected the overall export,” Esrat said.
Syndicates manipulate pricing
Jute mill owners and exporters said that syndication lies at the heart of the problem. Syndicates controlled the raw jute market for the last two years and increased prices whimsically.
In FY20-21, a maund (37.32kg) of raw jute sold for Tk 6,000-6,500 while farmers sold it at Tk 1,800-2,500 to the middlemen. Farmers sold raw jute at Tk 2,600-3,200 per maund this season.
Exporters claimed that middlemen were trying to hike jute prices again. The government has banned jute trading without a licence to ensure adequate raw jute supply in the domestic market and thwart syndicates.
Traders cannot keep more than 1,000 maunds of jute in stock for over a month, according to the jute ministry’s notification on August 9. But jute mill owners said there had been no action.
“India, for example, fixed cost to ensure farmers get fair prices. It has done everything for its industry and farmers. Bangladesh has laws to protect farmers from syndicates but they are not implemented,” Md Nazmul Haq, director of the BJMA, told The Business Post.
Esrat said the high raw jute prices pushed up goods prices. “Buyers pressure us to reduce prices but how will we do it when the raw jute cost so much?”
Lack of jute export promotion
Exporters said that their marketing capacity is lower than Indians and accused the government of not taking any initiatives for promoting jute goods even as their demands keep rising.
Industry insiders said that promoting jute goods would need market research and attending international expos in target countries. Alternatively, Bangladesh can arrange exhibitions with international participants.
“But there is no international fair. Most of our exporters are small or cottage type industries owners. Funding makes it difficult for us to participate in expos in Europe or American countries,” Esrat said.
Exporters claimed that their main competitor India imported raw jute from Bangladesh and after making finished products, they exported to various destinations in Europe, US, Canada, and Australia. Their embassies in those countries are playing key roles to boost exports.
“But most of our embassies are not aware of this issue. Some are trying to boost jute products but that is not enough,” BJGEA Chairman Mohd Shafiqul Islam told The Business Post. “There is no market research on where our exporters will get help. So, how we will perform well?”
Mohammed Mahbubur Rahman Patwari, former chairman of BJMA, said that they get incentives on export earnings. “This sector needs huge research and investment,” he said.
Commerce Secretary Tapan Kanti Ghosh said that although there is no specialised fair or exhibition for jute promotion, they have plans to boost this sector.
“It is true there is no special focus on jute promotion but some of our exporters are participating in international fairs through EPB,” Tapan said.
“We had some plans but couldn’t implement them due to the pandemic. It is difficult to arrange any international standard expo this time,” he said, adding that they have approved a schedule to participate in international expos through EPB.
