Jute Industry Worries Deep Sufferers Due to Political Turmoil
Jute is a influential sector from economical, agricultural, industrial, and commercial point of view in Bangladesh. Once upon a time jute was called the ‘Golden Fibre’ of Bangladesh. But due to continuous loss every year, the present and future prosperity and growth of this industry is in a vulnerable condition. There are different causes behind this situation. This sector has a good potential to earn a lot of foreign currencies for Bangladesh. Because at present, people are very cautious about environment and jute is an environment friendly product. But Political turmoil has hit again exports and local trade of jute hard by 20-30 per cent in the last couple of days, with the sector bleeding an estimated Tk 5.1 billion.
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| Farmers take jute from jute plant |
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 Md Shahjahan 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 26 days 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, Chaina, India, Pakistan, Bulgeria, Portugal, Russia, Turkey, Belgium, Nederlands, 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.
Besides another thing is the jute batching oil (JBO) price. 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.
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| Fig- Year-wise details of local & export sales of the mills under BJMC from 2009-2010 to 2014-2015 compared to budget (Source-BJMC) |
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.
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. According to the Export Promotion Bureau (EPB) data, exports from the sector amounted to US$824 million in FY'14 marked And the target for jute and jute goods exports were set at $1163.45 million in the current fiscal. To achieve the export target researcher thinks that, the sector should be given with adequate support as it had passed through a tough time and incurred crores of taka losses in the past few months, the government should offer cash incentives to the sector against its exports. Though jute yarn and jute bags get cash incentives for exports, raw jutes which accounts for almost one-third of total export earning of the sector is yet to get such facility. We know that 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.
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