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Bangladesh Textile Today - A Comprehensive Publication for the Textile & Apparel Industry
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Jute sector crumbles further by blockades

Jute is an influential sector from economic, agricultural, industrial, and commercial point of view in Bangladesh. Once upon a time jute was called the ‘Golden Fiber’ of Bangladesh. But due to continuous decay every year, the present and future prosperity has been questioned even by the government and the industry is facing negative growth. Before the liberation, Jute comprised 90% of Pakistan’s export earnings and Bangladesh (at that time East Pakistan) was the home for many big industries in Asia. However many of those have been closed but still the Bangladeshi climate and its lands are suitable producing jute fiber. This is the textile raw materials the country can produce while now we are well known as textile products producer but for some reasons we are not that famous for jute based products. Many of our jute fiber are being exported to neighboring India as raw fiber while they are adding value on that and earning huge export earnings. Picture 1: The nature has blessed Bangladesh with the appropriate climate of producing abundance of jute but the country is failing to use those in value addition. On the contrary this sector have a great potential to grow even further for earning a lot of foreign currencies for Bangladesh because of its environmental and technical advantages. Recently jute is being widely used in composite materials even in making car and aircrafts. But Bangladesh is not looking forward to such level of value addition. If they don’t do so the country is indeed wasting its valuable ‘Golden Fiber’. Presently, there are 249 jute manufacturing units in the country. Of them, 96 private spinning mills produce jute yarn, while 24 state-owned mills and 145 private jute mills manufacture hessian, sacks and bags. Jute export has suffered huge export decay in the financial year 2013-2014, which is less than 20% of the previous years’ export. While at the same period total export earnings of the country increased by 11.65% and RMG export increased 13.83%. The figures shown in table 1 suggest that Jute is not running as per the other sectors of the country while definitely the jute sector has even greater potentiality. Table 1: Export performance of Jute & Jute goods Tenure Export in Million USD % Change over previous same tenure July-June 2012-2013 1030.61 6.54 July-June 2013-2014 824.49 -20 July-Jan. 2014-15 499.7 7.19 Source: Export Promotion Bureau Recent Political turmoil has hit again the export and local trade of jute hard by 20-30 per cent recently. A report has said that the sector is bleeding an estimated Tk 5.1 billion loss this season. The Bangladesh Jute Mills Corporation (BJMC), Jute Mills Association (BJMA), Jute Spinners Association (BJSA) officials said nearly 249 jute mills in the country have been forced to cut production by 42,000 tonnes owing to the blockade enforced since January 5. Supply shortage of raw jute, Jute Batching Oil and diesel due to halt in transportation has hampered production and exports. BJSA estimates that 96 mills under the association have cut production by 22,608 tonnes worth Tk1.7 billion since the blockade began. According to BJSA chairman MdShahjahan jute yarn factories need approximately 16,000 litres of JBO per day, but supply has almost halved. He seems exporters have also halted shipment as transportation cost from the factories to Benapole and Chittagong port increased by 100 per cent while orders have also fallen significantly. He said many yarn factories have cut production by 20-30 per cent. As said by BJMA secretary A Barik Khan 145 mills under the association have cut production by 20,000 tonnes worth Tk1.45 billion in the first 26 days of blockade. Many mills have cut production by more than 30 per cent. An official at state-run BJMC told that stockpile of the government-owned factories increased further. BJMC's 24 mills cut production to 400 tonnes a day from 700 tonnes last year for weak demand for jute goods, mainly sacks. He further said the blockade has caused nearly a 10,000 tonnes additional to the stockpile worth Tk 700 million. According to Bangladesh Jute Association (BJA) secretary Abdul Kaiyum, exports fell to 1.98 million bales (bale=180 kgs) in 2013-14 from 2.05 million bales in FY'13. He said normally in October-March period, the association members export nearly 0.1-0.15 million bales per month. The shipment of raw jute faced serious setback in January as export has decreased by more than by 80 per cent. He thinks that jute and jute sector is highly fire-sensitive, so they can't take risk in the highways. According to Khulna Export Promotion burro and BJMC, Jute from Khulna division exports to 24 to 25 countries including Japan, Greece, Italy, Spain, China, India, Pakistan, Bulgaria, Portugal, Russia, Turkey, Belgium, Netherlands, Canada, USA, Korea, Poland, Austria, And Belarus. But now export is hanging up from those jute mills. There is 19 thousand metric ton Jute has been reserved from 9 government jute mills in Khulna division. On the other hand, the government's decision to increase the price of jute batching oil (JBO) comes as a big blow to the jute sector which has already hit hard by drastic fall in export orders. Terming the 62 per cent hike as unrealistic, the jute businesses said the sector will count additional Tk1.47 billion (147 crore) annually following the price hike of JBO. Jute exporters both from the private and public sectors, however, urged the government to reconsider the decision for the betterment of the sector that contributes nearly $1.0 billion to the export basket annually. Source-BJMC Fig- Year-wise details of local & export sales of the mills under BJMC from 2009-2010 to 2014-2015 compared to budget According to the Bangladesh Petroleum Corporation (BPC), from February 4 this year, the corporation increased price of JBO to Tk110 per litre from Tk 67.70 earlier to stop the adulteration of soybean oil mixing this industrial oil. According to key kitchen markets in the city, soybean oil was sold at Tk102 per litre (bottled) and Tk102-104 per kg (loose) on February 15. JBO is a petroleum by-product, which comes from the Eastern Refinery Limited (ERL), the country's lone fuel oil refinery. The jute mills use the oil to soften the raw jute to process. BJSA chairman said the sector is passing through a crucial time as orders for jute goods from fixed destinations fell significantly in recent times. The decision of raising the price by nearly 62 per cent is nothing but a torture on the spinning sector that needs 18,000 tonnes of JBO alone, he stated. He also feels country's jute mills use 30,000 tonnes of JBO annually and the cost of production will increase by nearly Tk 1.47 billion. ‘The sector is not in a position now to bear the additional cost,’ he added. However, BJSA has sent a letter to the ministry of Textiles and Jute (MoTJ) and Ministry of Power, Energy and Mineral (MoPEM) to reconsider the decision and keep the JBO's earlier price. August-March is the peak season for jute harvest, trading, mills' production and exports. Industry insiders said if political turmoil continues, jute factories will not be able to repay bank loans in time and many of them will become defaulters.

 

February 2015
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