Diversification brings hope to the golden fiber

Exporters are dreaming of reviving the lost glory of jute – affectionately known as the golden fiber of Bangladesh – riding on diversified jute products.

Thanks to the government policy support, they hope that the sector will be able to export goods worth $5 billion - including more diversified jute products - within the next five years.

Since the 2018-19 fiscal year, the government has also been providing a 20% cash incentive to better facilitate the export of diversified jute products, said industry sources.

The Ministry of Textiles and Jute recently published a list of 282 jute goods designated as "diversified jute products" taking into consideration their demand in local and international markets.

According to industry insiders, the new list includes around 10 new items that have sound export potential, which might help boost overseas sales, acknowledging that about 32 countries – including members of the European Union – have already banned the use of plastic bags.

"Many countries have imposed a high duty on the use of plastic bags. There is a huge potential for jute products in those international markets, as they are biodegradable and environmentally-friendly," said Md Rashedul Karim Munna, managing director of Creation Private Ltd – one of the leading diversified jute goods exporters in Bangladesh.

According to the Jute Act 2017, any jute product that uses at least 50% jute as raw material, will be categorized as diversified items. However, traditional jute goods like hessian, sacking, Carpet Backing Cloth (CBC), and jute yarn of six count or more have been excluded from this category.

To revive and modernise this sector, the textiles and jute ministry implemented the Mandatory Jute Packaging Act 2010, enacted Jute Act 2017 and framed National Jute Policy 2018.

The Ministry, in a press release issued on Sunday, said, "Thanks to the implementation of the government's action plan, the jute sector has overtaken the leather sector to secure the second position on the list of export trades last year."

Speaking with The Business Standard, Munna said, "Jute sector export earnings have been hovering near one billion dollars in the last few years, but it has the potential to expand into a $5 billion export sector within the next five years."

Though farmers are happy with the current price of raw jute, Munna voiced his concerns saying that if the government continues to allow raw jute exports, it could disrupt the earning potential of jute products.

In September this year, the Bangladesh Jute Mills Association and Bangladesh Jute Spinners Association sent letters to the Prime Minister's Office and Ministry of Textiles and Jute, demanding a cap on raw jute export as this year's jute production is low compared to local demand.

The mills require 60 lakh bales of jute annually, while another five lakh bales are used in the local market.

In the letter, the associations of private millers said they will face a shortage of around 10 lakh bales of raw jute this year due to the fall in production caused by floods and the Covid-19 crisis.

"The continued export of raw jute will further widen the gap and intensify the shortage, and a raw material crunch might force many millers to suspend production in January 2021," said Bangladesh Jute Mills Association's President Mahbubur Rahman Patwari.

According to the Export Promotion Bureau, raw jute export in the 2019-20 fiscal year was 15.48% higher when compared year-on-year.

The associations also pointed out that per tonne raw jute export can generate only 5-6 jobs, while the manufacture of jute items from every tonne of raw jute can generate employment for an additional 70-80 people.

In the letter, the mill owners urged the government to impose a $250 export duty per tonne of raw jute, take action to curb hoarding of jute by traders with no licenses, and prevent licensed traders from stocking over 37 tonnes [1,000 maunds] of the fiber for more than one month.

Bangladesh presently exports raw jute to several countries, including India, Pakistan and Brazil.

According to the Department of Agricultural Extension, Bangladesh produces 65 lakh bales of jute on average per year. The country produced 68 lakh bales of the natural fiber last year.

This year's jute production target is 82 lakh bales and farmers this season sowed jute on 7.26 lakh hectares of land, Department sources said.

Flooding submerged 13% of the land and severely damaged crops this year, read a recent Agriculture Ministry report.

"However, the Department of Agricultural Extension has yet to provide us with any data about how much of the jute crops have been damaged or harvested this year," said Md Rashedul Karim Munna.