Enormous prospects, yet untapped
All the jute mills – both state-run and private – are still producing the same old products such as traditional yarn and sack that have no demand internationally
The demand for jute is growing with consumers worldwide moving towards green rejecting carbon-intensive plastic products. But Bangladesh has not yet woken up to capitalising on the big opportunity.
The country can seize the global market with a production of diversified jute products, thus bringing back the past glory of the golden fibre, stakeholders and entrepreneurs believe.
After the successful genome sequencing of jute by Bangladeshi scientists in 2013, many upgraded varieties of yarn and golden bag as well as many diversified jute products have been invented. These products have a good demand in the global market.
However, all the jute mills – both state-run and private – are still producing the same old products, such as traditional yarn and sacks, that have no demand internationally.
Time is a big factor here, said Dr Mohammad Samiul Haque, chief scientific officer at the Bangladesh Jute Research Institute (BJRI).
"Taking a new variety to the farmers is time-consuming. First, the innovation of a new variety, then experimentation with its cultivation, quality assessment and finally, making the seeds available to farmers – this process takes several years," he explained.
Samiul said the BJRI had invented around 300 diversified jute products, including different types of bags, panjabis, sarees, curtains and sofa covers.
Mohammad Usman Gani Miaji, director of technology at the BJRI, told The Business Standard, "Neither state-run nor private mills have gone for commercial production of that yarn."
In order to boost exports, the government provides 20 percent cash incentive for diversified jute products, which is seven percent for jute yarn and 12 percent for hessian fabric and jute sacks.
In the July-February period of the current fiscal year, the country's earnings from exports of jute and jute goods rose by around 25 percent to $560 million over the same period a year before.
Only a few organisations have so far diversified their product lines.
Among large companies, Sonali Aansh Limited, which produces diversified jute products, in the last fiscal year exported such products worth nine million US dollars.
Products such as shoes, bags and sofa covers have drawn the attention of buyers at different international trade fairs.
"It is not an easy task to transform a traditional jute mill into a mill that can produce diversified products," the company's Managing Director Mohammad Mahbubur Rahman Patwary told The Business Standard.
Mahbubur said ensuring compliance is a must for export-oriented production but this is absent in most of the jute mills.
Mahmudul Haque, managing director of Janata Jute Mills, said, "The diversified product market is good but that is only one wing of the jute sector. It is not possible to move forward with diversified products alone if the whole jute industry is not developed."
Most of the jute mills do not dare to invest in diversified products by taking bank loans with high interest rates, according to mill owners.
Sarwar Hossain, managing director of Keraniganj Jute Fibres, said product diversification needs big investments.
"Making my factory ready for producing diversified products requires an additional investment of Tk10-15 crore. I will have to manage this money by taking out bank loans. The current interest rate is high even though the possibility of being successful is low," he explained.
Sarwar believes declaring the jute sector an agro-based industry could be a way forward.
Shahidullah Karim, secretary general of the Bangladesh Jute Spinners Association, told The Business Standard, "The government needs to conduct a survey on jute products that are in great demand and on the prospects for such goods."
He said a policy should be formulated in accordance with survey outcomes, adding that the government then needs to formulate a tax structure and provide incentives.
Worker leaders at the mills said just buying jute on time, implementing the mandatory use of jute bags and declaring jute as an agriculture-based industry will help the BJMC make profit.
Products worth Tk600 crore are stored in the warehouses of the jute mills.
Exports of jute products to Sudan, Iran and Syria have remained suspended for the last few years. Meanwhile, India imposed an anti-dumping duty on jute products in 2017.
Besides, very slow progress in implementing the Mandatory Jute Packaging Act-2010 has not been helping this industry.
The government had planned to make use of jute bags mandatory through marketing 19 types of products by implementing this act.
BJMC Director Md Ali Ahsan said, "Steps have been taken to produce yarn by mixing cotton with jute. An initiative is also there to produce environment-friendly polybags and viscotch."
He expressed his hope that the BJMC will start making profits if these initiatives are successful.
However, the Centre for Policy Dialogue (CPD) thinks that the use of old technology, excessive production cost, lack of skills and corruption have put so much strain on the corporation that it cannot be kept alive by being given financial support year after year.
Dr Khandaker Golam Moazzem, additional research director at the CPD, said at first the BJMC should be downsized. Then, industries should be set up on the unused land belonging to the jute mills through the Bangladesh Economic Zones Authority or some other agency.
He also said the BJMC should pay all the dues, including salaries and bonuses, to all its employees, even if the corporation has to sell some of its assets.
But downsizing the BJMC does not mean shrinking the jute industry. There are tremendous possibilities in the world market for jute, and the industry's expansion must be led by the private sector, he added.
The BJMC said it owes Tk1,900 crore to jute workers.
Md Towhid Hasanat Khan, the corporation's director (finance), told The Business Standard, "We do not have any money right now. We have sent a letter to the finance ministry, seeking funds for paying pending salaries, gratuities and provident funds of the workers. We will be able to pay all the dues once the ministry approves the allocation."
In fiscal year 2018-19, the BJMC suffered a loss of Tk573 crore, which was Tk76 crore more than its loss in the previous fiscal year, according to the annual reports of the corporation. It also has to carry a burden of loans amounting to Tk9,356 crore.
The export earnings of the Bangladesh Jute Mills Corporation have declined – from Tk642 crore in fiscal year 2001-02 to Tk264 crore in 2018-19 – even as the private sector has experienced growth.
The export earnings of the Bangladesh Jute Spinners Association went up by 589 percent in that period.
The Bangladesh Jute Mills Association and Bangladesh Jute Association have also seen their export revenues grow during that period.
National Jute Day 2020 will observed today for the fourth time across the country.