problems & prospects of jute industry in bangladesh

7/31/2019 Problems & Prospects of Jute Industry in Bangladesh

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Problems & Prospects of Jute Industry in Bangladesh

Subrina Mahfuz

Syeda Bashira Khatun

Mrinaliny Bhoumick

Farjana Jerin

ABSTRACT

Bangladesh being one of the leading jute producers of the world enjoyed the monopoly in marketing of jute and jute goods in the world

market till mid-seventies. Bangladesh produces 5.0-5.5 million bales of raw jute annually out of which 2-2.5 m bales are exported and

the rest are consumed by the local jute mills. About 70-75% of the total jute goods produced in the country is exported. Bangladesh still

meets 50-60% of the world's demand of jute goods and 90% of raw jute. More than 150 composite and twine jute mills in public and

private sector of Bangladesh are producing more than 6.5 lac. A huge demand for various diversified jute products viz. carry/shopping

bags, shoes, composite materials, geo-textiles, home textiles, handicrafts, gift items, pulp and paper etc. is continuously increasing in

both local and foreign markets. The future prospect of this eco-friendly natural fiber-jute is expected to increase day by day with

effective support from the national governments of the producing countries through adoption of appropriate policies like banning of

synthetic packaging materials and enactment of regulations favorable towards its cultivation, diversification and marketing.

Key Words: Bangladesh Jute Mills Corporation (BJMC), Bangladesh Jute Mills Association (BJMA),

Bangladesh Jute Spinners’ Association (BJSA), Coastal Embankment Project (CEP), Jute Sector

Adjustment Credit (JSAC), Jute Sector Restructuring Program (JSRP), Adamjee Jute Mills (AJM).

Adamjee Export Processing Zone (AEPZ), Export Promotion Bureau (EPB), Bangladesh Bank (BB), Jute

Diversification Promotion Centre (JDPC), High yielding variety (HYV), Balancing, Modernization and

Rehabilitation (BMR), Human Resource Development programme (HRDP), Research & Development

(H&D).

1. INTRODUCTION

Bangladesh with her location in south East Asia has a long and rich historical and cultural heritage. The jute industry in Bangladesh is primarily export oriented. Raw fiber is exported along with jute

manufactured goods. She has a population more than 140 million. Total area of the country is above

147,570 sq km of which about 11.3 million (79%) hectare is flood plain. Bangladesh is an agro-based

economy accounting for 30% of countries GDP and employing 65% of labor force. Jute is one of the major

cash crops in Bangladesh. It is a rapid growing, photo-reactive crop only 120 days are needed for its

harvesting. The Government owned BJMC at present with about 20 mills, running the bulk of the

operational looms and the semi-privately owned BJMA with a total of 78 member mills. On the other hand

there is the BJSA with over 50 spinning mills. The downfall of jute was accompanied by the

implementation of the CEP, which enclosed the entire southwest coastal region of Bangladesh within about30 polders with 1566 km of high earthen embankments and 282 sluices.

The authors are the current students of the Department of Business Administration, Northern University Bangladesh.3.

2. OBJECTIVES OF THE STUDY

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The objectives of this research are:

To know the present status of the jute industries.

To identify the problems as well as the prospects of the jute industry.

To suggest measures for the healthy growth of jute industries.

3. METHODOLOGY

This paper has been prepared relying on primary and secondary information. Primary information has been

obtained through a simple survey conducted on a number of public and private jute industries and farmers

who cultivate jute or not. Interview was conducted with the concerned personnel of the respective

organizations with the help of a semi structured interview schedule. Sources of pertinent secondary

information included the various publications of Bangladesh university journals, newspapers and websites.

4. RESULT AND DISCUSSION

4.1 Overview of Bangladesh Jute Industry

Jute industry is one of the strong industrial sectors in Bangladesh. This will enhance local demand for jute

and give farmers and millers a buffer against a fall in demand abroad, where about 90 percent of

Bangladesh jute is now sold. Employer of nearly 150,000 workers, suffered a nearly 20 percent slump in

export earnings in fiscal 2008-09 due to a fall in prices.Exports were on the rebound in 2009-10, spurred by

a rise in the price of the natural fibre on the world market. Exports soared 76 percent to $736 million in

fiscal 2009-10, from $417 million the year before.

After Bangladesh’s independence in 1971, the government pursued a program of nationalization of large

manufacturing enterprises. In the early 80s, some rethinking led to a partial reversal of this policy and over

50 percent of the mills (35 out of 66) under BJMC were privatized. In the 90s, the government focused

again on the jute sector problems through a restructuring program in order to create a commercially viable

jute industry.

“In Switzerland as well as European market, it is the quality, not quantity, that matters and Bangladesh

should explore market for four to five quality jute products,” said Adrian Brestcher, a SIPPO expert.

In the 90s, the government focused again on the jute sector problems through a restructuring program in

order to create a commercially viable jute industry. Supported by the World Bank’s Jute JSAC, the

government put together a JSRP in 1993 to rationalize the cost structure in the jute industry and to

introduce mechanisms through which financial discipline and accountability could be established.

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0

10

20

30

40

50

60

70

80

90

1961 1981 2000 2002 2007

Years

Sale in domestic & international market (%)

Domestic sale

International sale

Figure: Sales of Jute

In 2002, jute sector reforms got a new lease of life with the closure of AJM. This alone led to a decrease in

BJMC’s losses from Tk.3.9 billion in FY2002 to Tk.2.1 billion in FY2003. It also led to an increase in

BJMC’s productivity, which jumped from roughly Tk. 25,000 per employee in FY2001 to Tk. 39,000 per

employee in FY2003. The conversion of AEPZ in 2006 is a landmark in the country’s economic

management and industrial development history. All developed plots have been allocated to both local and

foreign companies and as of January 2007, industries in operation have created direct employment for

34,000 people. Once fully operational, AEPZ is estimated to employ 70,000 people. The closure of AJM

resulted in loss of 25,000 permanent jobs and 5,000 temporary jobs.

The deteriorating performance of BJMC mills did not have an unfavorable effect on the total production of jute, which has remained relatively stable between 500,000 to 600,000 metric tons. Instead, there has been

major product re-orientation: from traditional products such as hessian, sacking and CBC, to yarn and

twine. The share of traditional products in total production has fallen from 80 percent in the early 90s to 45

percent in FY2006, with yarn/twine now making up more than half of total production. Since FY2000,

export earnings of the spinning sector have grown at an average 12 percent annually and account for 60

percent of export earnings (US$180 million) from jute goods.

4.2 Exports of jute goods

Bangladesh exports raw jute and jute products in around 150 countries while only raw jute goes to Turkey,

Belgium, Iran, Spain, Syria, Uzbekistan, China, India and Pakistan. The price of raw jute in international

market is $1200 per tone while it was around $600 during the same period in the previous year, according

to the industry sources. But now Bangladesh Govt. wants to increase the profit of jute goods. So they

emphasize on exporting jute goods rather than raw jute.

Jute and jute goods export set a new record in the outgoing fiscal year, mainly due to hike in prices of raw

jute in international market and growing demand of eco-friendly diversified products across the globe.

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Carpet yarns, jute sackings and jute bags are the top selling products, now enjoying huge demand in East

Jute, or burlap, is reclaiming its lost glory as consumers find in it an environmentally friendly alternative to

plastic shopping bags. Europe, Middle East, and central Asian countries. The country's export of jute and

jute goods posted 76.43 per cent growth in July-June period of 2009-10, earning a total of US$736.44

million, according to statistics by EPB. Export of jute yarn and twine enjoyed 88 per cent rise in the same period in fiscal year 2009-10 against the corresponding period of the previous fiscal, earning $397.69

million. Besides, export of raw jute enjoyed 32.46 per cent growth in outgoing fiscal year than the previous

year. The earnings from raw jute were $196.27 million in 2009-10 while $148.17 million in 2008-09. The

EPB statistics revealed Monday that the jute and jute goods have secured the position of the second largest

export item from Bangladesh. The government disbursed about Tk 16 billion as cash incentive among

selected export sectors in the just concluded 2009-10 fiscal (FY '10), according to the final data of BB. The

amount was the highest in a single year since 2001-02, a top official in the BB said. Central bank figures

show, only Tk 06.0 million was disbursed as cash incentive in 2002-03, Tk 10 million in 2003-04, Tk 40

million in 2004-05 and Tk 14.11 billion in 2005-06.

Table-2: Production and Export of Raw JuteTable-2: Production and Export of Raw Jute

Year Production Export

World

(Avg)

Bangladesh

(Avg)

Share of

Bangladesh

(Avg)

WorldWorld

(Avg)

Bangladesh

(Avg)

Share of

Bangladesh

(%)

2000-2001 126.65 45.26 35.74 16.83 15.55 92.39

2001-2002 148.81 51.37 34.52 16.47 14.11 85.67

2002-2003 150.59 56.85 29.27 26.03 25.19 96.77

2003-2004 155.62 53.30 34.25 19.17 19.05 99.37

2004-2005 - 49.86 - - 17.04 -

2005-2006 - 63.26 - - 24.47 -

exports of rawjute

75

80

85

90

95

100

105

2000-

2001

2001-

2002

2002-

2003

2003-

2004

year

E x

p o r t s s

export share %

Figure: Exports of Raw Jute

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Table-3: Production and Export of Jute Goods

Year Production Export

World

(Avg)

Bangladesh

(Avg)

Share of

Bangladesh (%)

World

(Avg)

Bangladesh

(Avg)

Share o

Bangladesh (%)

2000-2001 - 4.83 - 6.44 4.24 66

2001-2002 - 5.36 - 6.43 4.41 692002-2003 - 5.16 - 6.76 3.98 59

2003-2004 - 5.17 - 7.16 3.89 54

2004-2005 - 5.24 - - 4.20 -

2005-2006 - 5.69 - - 4.40 -

Jute goods exports

0

10

20

30

40

50

60

70

80

2000-

2001

2001-

2002

2002-

2003

2003-

2004

Year

E x p o r t s

Export share %

Figure: Export of Jute Goods

From the diagram it appears that the exports of raw jute has been increasing over the years. While export of

jute goods has been decreasing. But export of jute goods can much increase if steps of Govt. have taken

appropriately.

Problems of jute industries in Bangladesh

Farmers in about 10 upazilas of greater Faridpur district are facing serious problem of absence of adequate

water in canals and beels (pond with static water), as they are unable to carry out rating of jute.

This problem has given birth to a new practice. Jute farmers are taking ponds on lease wherever available

in villages, for a month at the rate of Tk 500 – 800. These ponds were then filled with water with the help

of low lift power pump for rating jute (paat jag).This new practice or trend is widely practiced in Alfadanga, Saltha, Nagarkanda, Boalkhali, Madhukhali,

Mokshedpur, Bhanga, Sadarpur, and Kashiani. Government has made a budgetary allocation of Tk 300

million to encourage cultivation of jute in 28 districts for adoption of a technology called ribbon-retting,

which is introduced by the Bangladesh Jute Research Institute to lessen wastage.

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In recent weeks much has been written about the "collapse" of the jute industry in Bangladesh, including

heart-rending reports detailing the human tragedy in the jute mills in Khulna. This collapse relates to the

financial non-viability and the eventual closure of the publicly owned jute mills.

The jute industries are as follows:

Unavailability of high yielding varieties of jute seed leads farmers to use poor quality seed

resulting in lower productivity.

Low price of raw jute for which the farmers are losing interest to continue production of jute.

Higher production cost compared to competing countries.

Absence of cost effective modern jute cultivation systems motivates farmers to take up other

agricultural activities resulting in decreased jute production.

Lack of practical experience for jute retting in modern system.

Lack of advanced technology/machines and unavailability of spare parts in some jute mills lead to

use of obsolete machines resulting in reduced production efficiency.

Old machineries, low productivity, irregular power supply, labour unrest and political unrest in

the manufacturing sector.

Continued financial crisis in the public sector jute mills.

Competition of substitute synthetic products in international market as well as in the domestic

market.

Low export price of jute goods in the overseas market.

Lack of skilled labour and skilled designers in the jute sector leads to production of inferior

quality products resulting in loss of competitiveness in the export market.

Inadequate R & D facilities at both public and private levels in the Jute sector leads to absence of

continuous product innovation resulting in loss of growth opportunities.

Inadequate backward linkages in the Jute sector leads to import of accessories by local producers

resulting in higher cost of production.

Lack of market development knowledge by the exporters lead to ineffective promotion of products

in both international and domestic markets resulting in loss of potential market opportunities.

Lack of awareness of Jute diversified products in the domestic market.

Bangladesh Jute Research Institute (BJRI) lacks close coordination with the Ministry of Textiles

& Jute as well as Jute Industries as it is under the Ministry of Agriculture. This lack of coordination creates

a problem in maintaining the supply chain of certified jute seeds on which the quality of Jute fiber vis-a-vis

the production of quality Jute goods depends.

India imports jute bags from Bangladesh alone, such new order seems to have issued by the Indian

authority for discouraging jute-bag import from Bangladesh.

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Farmer problems

29

7

25

10

5

15

0

5

10

15

20

25

30

35

w a t e r

C a p i t a

L a b o

r

F e r t i l i z e

P r e s t i c i d

S e e

d s

Variables

N u m b e r o

f f a r

Series1

Figure: Problems from Farmers Opinion

Employees problems

27

810

12

2630

0

5

10

15

20

25

30

35

Electricity Raw

materials

Modern

Technology

Govt. policy Local

demand

International

Demand

Variables

N u m b e r o f E m p l o y e e

Farmer

Figure: Problems from Employees Opinion

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Labour

2927

15 15

30

18

0

5

10

15

20

25

30

35

Good wage trade union safty

allowance

Welfare

programe

continious

wage

conflict

Variables

N u m b e r o f

L a b o

Series1

Figure: Problems from Labors Opinion

Measures to Overcome the Problems BJMC needs reforms and restructuring to improve productivity and efficiency and make use of the

potentials for regaining the past glory of jute.

Encouragement of domestic use of jute goods, enhancing research and development activities,

developing a Technology Up gradation Fund, strengthening the search for jute goods market, ensuring

adequate funds for repayment of all arrears of workers and dues to suppliers, amortization of debt, ensuring

greater autonomy to BJMC mills privatization of jute mills in a cost-effective and efficient manner .

HYV of Jute seeds should be available at farmers’ level.

The Jute industries in Bangladesh need immediate BMR Programme to increase the productivity

and lowering down the production cost.

The remunerative price of Jute fiber should be ensured at growers’ level.

The Government should take strategic policy measures for the promotion of jute sector in short,

medium and long terms.

The Jute industry lacks adequate trained human resources at all levels of production, a need

assessment and comprehensive (HRDP).should be prepared in consultation with the Industry and

implemented through the channels of exiting educational/training Institutions.

In view of the banning of polythene, there is an urgent need for development of cheaper jute bags.

For these R&D organizations both government and private should put their concerted efforts into suchdevelopment.

The Government should be approached to set up some sort of mechanism to maximize internal

usage of diversified new jute products including usage by the relevant government departments.

The Government should give mandatory order to use Jute bags as packaging materials for specific

sector like food grain, cement, sugar, fertilizer etc.

The government may consider creating a technology up-gradation fund for the jute sector.

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Diversified Jute Products

Bangladesh is very rich in bio-diversity. A wide range of flora is found here. Though Bangladesh is

famous for jute and allied fibers, garments industries swept in and have developed due to relative advantage

& cheap labor cost. As there is the Multifiber concept of blending jute with other natural and synthetic

fibers, jute has bright future for using them in the various textile areas. Taking in view the prospects, TheGovt. of Bangladesh has started the diversification of jute uses with its limited resources. It needs wide

support for production and marketing of such diversified products. Consequently the Govt. of Bangladesh

initiated policy programme for the production of diversified jute goods through private sector. To execute

this programme, JDPC. The objective of JDPC is to provide extension services to the private sector for

establishing Industry for the production of high value added diversified jute products. Among the various

diversified jute products, floor covering, new textiles, technical textiles, geotextiles, jute nonwovens jute

reinforce composites, pulp & paper, particle boards, shopping bags, handicrafts, fashion accessories,

apparels ect. have potential for wider use & application.

Prospects of Jute Industries

Exciting prospects are now there for new jute-based products. Among other products can be made of jute,

paper is now reported to be one that may use jute plants as a superior raw material for its production.

The 21st century is the century of biology which is mainly focused by genome research. The developed

countries have already captured this drift of this research and many developing countries are underway to

follow them. Being a developing country, it’s high time for Bangladesh to start actively thinking about this.

If appropriate moves are taken at the international level, the use of synthetic fibers can be prohibited world-

wide and opportunities can also be created for the use of natural fibers, instead. Many prospects could also

be created then for the use of jute products in the automobile industry. But the exploiting of all such

opportunities would require sound plans and their implementation. Jute is best cultivated in the country,

but we do not utilize it here, rather the yarn mills export all the yarn.

There is a good prospect of Jute and Jute products which is described in brief below:

A global consciousness has already developed against the use of artificial fibers and synthetic

products, which are now being replaced by the environment friendly jute goods.

The Govt. of Bangladesh banned production, sale and use of polythene from 01 March, 2002. As a

result the demand of Jute & Jute goods is increasing.

There is a huge local demand of jute stick as a primary substitute for diesel/wood. Moreover, Jute

sticks are very useful material for various purposes as fencing and roofing materials for making sheds.

Due to increasing price of Jute & Jute goods more entrepreneurs (SMEs) are entering the market

for Jute business and introducing new Jute Diversified Products.

Jute is a rapidly growing crop with 120 days for its production. In addition, Jute and Jute products

are renewable, biodegradable, eco-friendly, easily disposable and natural commodity.

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Bangladesh jute industry is based on old technology and machinery. New technologies for

production of diversified jute products are now available.

Jute is one of the most versatile natural fibers used as raw material for packaging, textiles, the non-

textile and agricultural sectors.

Some jute products are naturally fire resistant.

The first and foremost strength of the Bangladesh Jute Industry is that it is based on the raw

material that is available at the doorstep. Bangladesh is the natural abode of jute cultivation on account of

its climatic situation and soil condition.

The farmers should made conscious about the jute cultivation, how to grow, how to rip, how to get

good jute & how will be the jute color good etc.

Challenges

The cultivable land is decreasing due to increase of population day by day.

To meet the demand farmers motivate to take up high earning agricultural activities resulting in

decreased Jute production.

Water is necessary for Jute retting. Scarcity of water will threat jute retting in future resulting

motivates farmers to take up other agricultural activities.

Other countries have successfully established a favorable image of their jute diversified products

in the international market.

Indian, Chinese and Vietnamese jute diversified goods are more popular because of their product

range and depth, colors, designs and quality.

Extensive governmental support in the jute sector by neighboring countries made their Jute

products more competitive in international markets.

Conclusions

Bangladesh can claim as a country of jute as every where in this country jute and allied fibers can be

grown. Bangladesh has got relative advantage on the production of best quality jute fiber. Though uses of

traditional jute products are declining jute has versatile intrinsic and extrinsic properties. So a wide range of

diversified jute products can be produced by exploring these properties. These diversified products are

biodegradable, photo biodegradable, non toxic, non plastic, acidic, hydrophilic, high absorption of UV

capacity & moisture, eco-friendly and easy disposability. These products not only preserve environment but

also help to protect environment from degradation. Mulitfiber-Composite Concept with vertical and

horizontal diversification application areas of jute & jute products can be explored in wide dimension. In

fact scientific and technological information of production of these diversified jute products are more or

less available. It needs concerted and international intervention to develop marketable diversified jute

products on needs basis. A huge potential market of these products is created in the developed countries.

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Last we forget, the jute industry was the life blood of our economy for several decades & continues even

today. About 15 million farmers are involved in growing this cash crop & several million more of our

population, perhaps an equal number, is involved with its processing, transportation, conversation etc.

The era of jute is not ended. It is the beginning of jute in new Dimensions & Perspective.

References

The Prothom Alo, July25, 2010.

The Ittefaq, June30-July7, 11, 13, 14, 24, 2010.

The Daily Star, July, 2010.

Fibre2Fashion News Desk, July 01, 22, 2010.

The Financial Express, July29-August5, 2010.

The Daily Times, July25, 2010.

On Internet various webpage’s on jute.

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