Home ›› 04 Jan 2022 ›› Front
Raw jute prices soared by Tk 800 a maund (37.32kg) in the local market recently, even though export earnings from jute and jute goods slumped in the current fiscal year’s first half.
Jute millers blamed a syndicate for the price hike and sought the government’s intervention to fix raw jute prices. A maund of raw jute currently costs Tk 3,700-3,800 in the local market, which was Tk 2,800-3,000 a few weeks ago.
In H1 of FY22, export earnings from the jute sector decreased 15.47 per cent to $590 million from $668 million in the same period of the previous FY.
“We met the director-general of jute and requested him to protect us from the syndicate. We also urged to fix raw jute price as per law,” Md Abul Hossain, chairman of Bangladesh Jute Mills Association (BJMA), told The Business Post.
He questioned why the government was not fixing the prices while the sector faced a crisis.
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.
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.
“The volume has fallen. Freight fare increased four to five times and our export destination countries are facing political and inflation crises,” Esrat Jahan Chowdhury, director of Bangladesh Jute Goods Exporters Association (BJGEA), told The Business Post.
“So, the government should assist us and protect the raw jute market from the syndicate. Otherwise, earnings will fall further,” Esrat added.
Why raw jute market jumped?
Jute millers and exporters claimed that jute production decreased last season but its export increased simultaneously, triggering a supply crunch.
The syndicate took advantage of the artificial crisis and hiked raw jute prices, pocketing hefty profits.
“We heard that the Indian government decided in principle to import 1,00,000 bales (one bale equals 180kg) from Bangladesh. When this news spread, the syndicate became active again and tried to destabilise the market,” A Bakir Khan, secretary-general of BJMA, told The
Business Post.
Millers and exporters claimed there would have been no such development if the government enforced the law.
“We won’t object if farmers benefit from the price hike,” Esrat said. The production cost of one maund jute is Tk 1,200-1,400.
“The middlemen are earning higher profits and making the market unstable. It is pushing up our production cost and discouraging buyers to source from Bangladesh,” she added.
What the govt says
The jute ministry issued a notification on August 9 outlawing 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.
BJMA’s Hossain said there had been no visible action.
But Mohammad Ataur Rahman (Additional Secretary), director-general of jute, said they were monitoring the market and operating mobile courts.
“The millers’ claim is baseless,” he said. “I took part in monitoring and none was spared.”
“Their demand to fix raw jute price is unrealistic. In Bangladesh’s context, it is almost impossible to arrest price hikes of raw materials through price fixing. So, we are focusing on enforcing administrative power to stabilise the market,” he added.
