Govt mulls capping raw jute export

The price of jute has been rising steadily in anticipation of a one-third drop in jute production owing to the effects of Covid-19 coupled with countrywide floods.

Demand for Bangladesh's raw jute and jute yarns and other jute goods has skyrocketed in the global market with jute production being disrupted in various countries including India, Pakistan, Belgium and Brazil.

In this situation, the government is going to control the export of raw jute this year and focus on the export of finished jute products like jute yarn and jute goods considering their high-value addition.

According to private-sector jute mill owners, this year's jute production – affected by Covid-19 and floods – cannot meet the demand for raw materials from the country's mills. So, even in peak season, raw jute is selling at more than Tk2,000 per maund.

If raw jute exports continue, Indian millers will import all jute from Bangladesh, resulting in the closure of local mills in next January-February in the absence of adequate raw materials, local millers fear.

Therefore, local mill owners have proposed stopping the raw jute export or impose a $250 duty on per tonne export this year.

Their proposal was discussed at a meeting of the National Jute Sector Coordination Committee with Textiles and Jute Minister Golam Dastagir Gazi in the chair on Thursday. The meeting emphasised exporting high value-added jute goods by controlling the export of raw jute.

The meeting was attended by secretaries of various ministries, senior officials and exporters of jute and jute products.

Jute Minister Golam Dastagir Gazi said last year the opportunity was given to export raw jute with a significant fall in jute prices. But, this year, prices have gone up because of low production.

"We shall decide on the export of raw jute in the interest of all parties. If the mills can purchase all jute produced in the country, it will be excellent. Otherwise, the surplus jute will be exported," the minister added.

In the last fiscal year, the country has produced 84 lakh bales of jute. Of these, private jute mills used 60 lakh bales in manufacturing yarns and jute products, while state-owned mills used 12 lakh bales. The remaining eight lakh bales of raw jute were exported.

This year, the country is likely to witness a production of 55 lakh bales of jute. However, the demand for jute in the country's private mills is 60 lakh bales per year.

The jute mill owners said the sacks bought by the Indian government from the country's mills have to be produced from jute imported from India. As jute production in India has declined this year, their mill owners have appealed to the government to buy sacks made from imported jute.

If the Indian government agrees to their demand, the export of raw jute from Bangladesh will go up significantly and the Bangladeshi mills will face a raw jute shortage, they added.

They said if the local price of jute goes up further, the production costs of jute goods will increase.

They now fear that their exports might face disruptions owing to a shortage of raw materials.

Against this backdrop, they demanded that the export of raw jute be controlled.

Sheikh Nasir Uddin, chairman of Akij Group, said exports of jute and jute goods are now raking in $1 billion a year. Jute yarns are exported at Tk3-Tk5 lakh per tonne. If raw jute exports continue this year, the mills will face closure in a few months.

A tonne of raw jute is exported at $800-$900 while per tonne jute yarn is exported at $1500. In this case, the rate of value addition is more than 40%. Some 4-5 people are employed in the export of one tonne of raw jute whereas 80-85 people work to produce yarns from one tonne of jute. Therefore, it is crucial to stop the export of raw jute, considering employment, investment and foreign currency earnings, he added.

Sheikh Afil Uddin, a jute mill owner, said Faridpur, Tangail and Lalmonirhat grow good quality jute and yarn exports from those jute earn $2000-$3000 per tonne. But raw jute from those areas is being exported to India at $900 per tonne.

He proposed case-by-case approval to check raw jute export.

Echoing Afil Uddin, Gemcon Group Vice-Chairman Kazi Nabil Ahmed said export of raw jute would drag down jute product exports drastically, leaving four lakh private jute mill workers jobless.

In the meantime, President of Bangladesh Jute Mills Association Mahbubur Rahman Patwari said India did not impose any duty on Bangladeshi raw jute. But the country levied $300 anti-dumping duty on per tonne of Bangladeshi jute products, including yarn, fabric and jute sack.

"We are exploring new markets. But the inflated raw jute price or a shortage would hurt our export efforts," he added.

He said raw jute production might stand at 55 lakh bales (5 maund = 1 bale) owing to the pandemic and flooding while the mills used 60 lakh bales of raw jute last year. This means jute production falls short of the demand this year.

He attributed that jute yarn export would stop if the raw jute price crossed Tk2,300 per maund. Therefore, the mills would be under closure risk if raw jute export is not stopped.

Hafizur Rahman, director general of the WTO Cell to the Ministry of Commerce said an export ban on a product often leads to customers moving away to other sources. He suggested introducing an export quota system or case-by-case approach instead of slapping an outright export ban on raw jute.

Secretary of Textiles and Jute Ministry Lokman Hossain Mia said demand for raw jute is on the rise as jute production dipped this year. Excessive raw jute export could put the local mills into trouble.

National revenue board Chairman Abu Hena Md Rahmatul Muneem also said they encourage export of jute products instead of raw jute. He said, "Jute product manufacturing generates employment, draws investment and helps raise export earnings."

In the meantime, Planning Commission Member Shamsul Alam and Labour Secretary KM Abdus Salam advocated for assessing the actual production and demand of the private mills before jute product exports. They feared that otherwise the jute growers would suffer.

Referring to field visits, Director General of Bangladesh Jute Research Institute Anwarul Huq projected that this year production might fall 10-15% compared to that in the previous years.

Defending the current raw jute price, he said that according to the Bangladesh Agriculture Research Council, a farmer has to spend Tk1,857 to produce a maund of jute.

The raw jute exporters oppose export ban or imposing a duty. They said favouring a group by harming another group's interest is not fair.