SUNDAY SPECIAL

Spinning a golden dream

Once known as the ‘golden fibre’, jute—for the past two decades—has lost much of its sheen in the export basket of the country. A long period of neglect and unequal competition with synthetic fibres had put the jute sector in turmoil.
This is, however, changing now. Jute mill owners are now blessed with government policy favours, with the commitment of the revival of the past glory of the country’s ailing jute industry. In the last two fiscal years, 2015–16 and 2014–15, earnings from the export of jute and jute goods stood at USD 822.7 million and USD 791.0 million respectively, showing a 3.59 per cent and 4.26 per cent growth from the previous years.
Experts, however, say that there is still a long way to go to revive the glory of jute. It is necessary to modernise and diversify the jute industry to achieve that. Besides, the policymakers need to tackle issues like the implementation of the mandatory Jute Packaging Act, and the anti-dumping duty imposed by India, the largest export destination of Bangladesh.
Golden era beckons
After India, Bangladesh is the second largest producer of jute in the world, and the leading exporter of jute and jute products. The total global production of jute was estimated at over 4 million metric tonnes in 2014. More than 56 per cent of the global jute production is concentrated in India and Bangladesh, which produced 55.1 per cent and 41.9 per cent respectively of the world output in 2014.
The area under jute cultivation in Bangladesh was 466,800 hectares as against 790,000 hectares in India, with the former having a higher yield and producing jute of better quality. The production capacity for jute (raw and processed) is currently higher than demand, indicating an opportunity to add value and manufacture products in demand in the domestic and international markets, said experts.
Bangladesh, however, is a bigger player than India in the jute export market. The former exports 60 per cent of its jute products, while India exports only 10 to 12 per cent of its output. However, low value added and traditional products account for around 99 per cent of Bangladesh’s jute exports. Therefore, diversified jute products currently constitute only about 1.8 per cent of jute sector exports.
Experts, however, said that it is the diversification of jute products that could help Bangladesh grab the foreign market and enter a new era in the country’s golden fibre.
Diversified products needed
Khondaker Golam Moazzem, additional research director at the Centre for Policy Dialogue, the local think-tank, believes that to revive the country’s jute sector, products need to be diversified with innovation, taking the market demand into consideration.
He said that there is a need for manufacturers to participate in the expositions, and to conduct research into the diversification of the products, as consumers are changing their choices everyday.
“We have to understand that environmental concerns across the world have brought a change to the consumers’ choice of products. They now increasingly prefer more green products like jute products.”
He said that jute products are popular in developed countries as biodegradable produce. “Many developed countries will replace the use of plastic goods, especially shopping bags, with environment-friendly products. Bangladesh has a great chance to grab that market,” he said.
The global demand for shopping bags is estimated to be 500 billion pieces, worth around USD 500 billion a year, according to the International Jute Study Group. The US, Europe, and China would be the biggest markets for shopping bags once the ban on the use of plastic bags fully comes into force in a few years.
Local manufacturers and exporters fear that they would lose the market to India, as entrepreneurs in the neighbouring country have built factories that can produce quality yarn, fabric, and diversified products.
Talking to The Independent, Md Rashedul Karim Munna, the convener of Bangladesh Diversified Jute Products Manufacturers and Exporters Association, said, “We are getting less value from jute exports. But the diversified products can increase the value of the exports 10 times.”
Bangladesh earns USD 600 million by exporting a tonne of jute. This amount will rise to USD 1,200 if it is yarn, he said. “Manufacturers can earn USD 1,500–1800 exporting sacks and bags from a tonne of jute. On the other hand, diversified products can earn USD 3,000–10,000 with a tonne of jute, depending on the quality and type.”
“If we want to increase export earnings from jute and jute goods, there is no alternative but to go for product diversification, as the demand for such products is increasing every day,” said Munna.
Obstacle race
The stakeholders in the jute industry have long been questioning the government’s sincerity in implementing the Jute Packaging Law on a large scale. The law was enacted in 2010 and the rules of the law were formulated in 2013, stipulating that all traders, as well as government organisations, must use jute bags to pack paddy, rice, pulses, wheat, fertilisers, and sugar.
The law makes it mandatory for manufacturers to use packaging materials made of at least 75 per cent jute fibre. Also, first-time rule violators face Tk. 50,000 in fines or a year in prison, while second-time offenders face both. However, the rules are not being followed in the market.
Dr Md Mahmudul Hasan, chairman of the Bangladesh Jute Mills Corporation (BJMC), said the government has made it mandatory to use jute as a packaging material from October last year. “Still, there are lots of industries that do not abide by this Act and opt for plastic.”
He said that the issue of implementing the Act was discussed at the recent conference of deputy commissioners (DCs). “The DCs were asked to ensure the implementation of the mandatory packaging laws,” he said.
Meanwhile, the jute sector faced another blow from India—the largest jute export destination of Bangladesh. Following the anti-dumping investigation into the import of jute goods from Bangladesh in 2015, India’s directorate general of anti-dumping and allied duties (DGAD) has proposed the imposition of anti-dumping duty on jute items imported from Bangladesh after the Indian Jute Mills Association complained about lowered prices and injury to the domestic industry.
The anti-dumping authority of India proposed a 25 to 30 per cent duty on the jute imported from Bangladesh and Nepal based on the investigation outcome, though there is no clear finding of injury caused by Bangladesh’s exported price and volume on India’s local produce.
Talking to The Independent, Hussain Khaled, the president of Dhaka Chamber of Commerce and Industry (DCCI), said Bangladesh usually exports jute and jute goods, i.e. yarn, twine, sacks, and bags worth around USD 900 million to many world destinations, of which 20 per cent is to the Indian market.
“Twenty per cent of our jute exports to India accounts for 8 per cent of the entire Indian local market share. If this proposed anti-dumping duty comes into effect, it could have adverse impacts on our local growers, producers, and exporters, and spur further trade imbalance of Bangladesh with India.”
At a recent programme, commerce minister Tofael Ahmed asked the Indian authority to lift the proposal of anti-dumping duty on Bangladeshi jute. 
Mirza Azam, state minister for jute and textiles, also said that his ministry would take all possible steps to help lift the anti-dumping duty.
“Jute has long been in turmoil. The present government is very sincere about reviving the lost glory of jute. We are taking some extensive plans for jute. Jute will be considered as an agricultural product from March 2017, and this will give an immense boost to the sector.”

SUNDAY SPECIAL

Spinning a golden dream

Once known as the golden fibre, jutefor the past two decadeshas lost much of its sheen in the export basket of the country. A long period of neglect and unequal competition with synthetic fibres had put the jute sector in turmoil. This is, however, changing now. Jute mill owners are now blessed with government policy favours, with the commitment of the revival of the past glory of the countrys ailing jute industry. In the last two fiscal years, 201516 and 201415, earnings from the export of jute and jute goods stood at USD 822.7 million and USD 791.0 million respectively, showing a 3.59 per cent and 4.26 per cent growth from the previous years. Experts, however, say that there is still a long way to go to revive the glory of jute. It is necessary to modernise and diversify the jute industry to achieve that. Besides, the policymakers need to tackle issues like the implementation of the mandatory Jute Packaging Act, and the anti-dumping duty imposed by India, the largest export destination of Bangladesh. Golden era beckons After India, Bangladesh is the second largest producer of jute in the world, and the leading exporter of jute and jute products. The total global production of jute was estimated at over 4 million metric tonnes in 2014. More than 56 per cent of the global jute production is concentrated in India and Bangladesh, which produced 55.1 per cent and 41.9 per cent respectively of the world output in 2014. The area under jute cultivation in Bangladesh was 466,800 hectares as against 790,000 hectares in India, with the former having a higher yield and producing jute of better quality. The production capacity for jute (raw and processed) is currently higher than demand, indicating an opportunity to add value and manufacture products in demand in the domestic and international markets, said experts. Bangladesh, however, is a bigger player than India in the jute export market. The former exports 60 per cent of its jute products, while India exports only 10 to 12 per cent of its output. However, low value added and traditional products account for around 99 per cent of Bangladeshs jute exports. Therefore, diversified jute products currently constitute only about 1.8 per cent of jute sector exports. Experts, however, said that it is the diversification of juteproducts that could help Bangladesh grab the foreign market and enter a new era in the countrys golden fibre. Diversified products needed Khondaker Golam Moazzem, additional research director at the Centre for Policy Dialogue, the local think-tank, believes that to revive the countrys jute sector, products need to be diversified with innovation, taking the market demand into consideration. He said that there is a need for manufacturers to participate in the expositions, and to conduct research into the diversification of the products, as consumers are changing their choices everyday. We have to understand that environmental concerns across the world have brought a change to the consumers choice of products. They now increasingly prefer more green products like jute products. He said that jute products are popular in developed countries as biodegradable produce. Many developed countries will replace the use of plastic goods, especially shopping bags, with environment-friendly products. Bangladesh has a great chance to grab that market, he said. The global demand for shopping bags is estimated to be 500 billion pieces, worth around USD 500 billion a year, according to the International Jute Study Group. The US, Europe, and China would be the biggest markets for shopping bags once the ban on the use of plastic bags fully comes into force in a few years. Local manufacturers and exporters fear that they would lose the market to India, as entrepreneurs in the neighbouring country have built factories that can produce quality yarn, fabric, and diversified products. Talking to The Independent, Md Rashedul Karim Munna, the convener of Bangladesh Diversified Jute Products Manufacturers and Exporters Association, said, We are getting less value from jute exports. But the diversified products can increase the value of the exports 10 times. Bangladesh earns USD 600 million by exporting a tonne of jute. This amount will rise to USD 1,200 if it is yarn, he said. Manufacturers can earn USD 1,5001800 exporting sacks and bags from a tonne of jute. On the other hand, diversified products can earn USD 3,00010,000 with a tonne of jute, depending on the quality and type. If we want to increaseexport earnings from jute andjute goods, there is no alternative but to go for product diversification, as the demand for suchproducts is increasing every day, said Munna. Obstacle race The stakeholders in the jute industry have long been questioning the governments sincerity in implementing the Jute Packaging Law on a large scale. The law was enacted in 2010 and the rules of the law were formulated in 2013, stipulating that all traders, as well as government organisations, must use jute bags to pack paddy, rice, pulses, wheat, fertilisers, and sugar. The law makes it mandatory for manufacturers to use packaging materials made of at least 75 per cent jute fibre. Also, first-time rule violators face Tk. 50,000 in fines or a year in prison, while second-time offenders face both. However, the rules are not being followed in the market. Dr Md Mahmudul Hasan, chairman of the Bangladesh Jute Mills Corporation (BJMC), said the government has made it mandatory to use jute as a packaging material from October last year. Still, there are lots of industries that do not abide by this Act and opt for plastic. He said that the issue of implementing the Act was discussed at the recent conference of deputy commissioners (DCs). The DCs were asked to ensure the implementation of the mandatory packaging laws, he said. Meanwhile, the jute sector faced another blow from Indiathe largest jute export destination of Bangladesh. Following the anti-dumping investigation into the import of jute goods from Bangladesh in 2015, Indias directorate general of anti-dumping and allied duties (DGAD) has proposed the imposition of anti-dumping duty on jute items imported from Bangladesh after the Indian Jute Mills Association complained about lowered prices and injury to the domestic industry. The anti-dumping authority of India proposed a 25 to 30 per cent duty on the jute imported from Bangladesh and Nepal based on the investigation outcome, though there is no clear finding of injury caused by Bangladeshs exported price and volume on Indias local produce. Talking to The Independent, Hussain Khaled, the president of Dhaka Chamber of Commerce and Industry (DCCI), said Bangladesh usually exports jute and jute goods, i.e. yarn, twine, sacks, and bags worth around USD 900 million to many world destinations, of which 20 per cent is to the Indian market. Twenty per cent of our jute exports to India accounts for 8 per cent of the entire Indian local market share. If this proposed anti-dumping duty comes into effect, it could have adverse impacts on our local growers, producers, and exporters, and spur further trade imbalance of Bangladesh with India. At a recent programme, commerce minister Tofael Ahmed asked the Indian authority to lift the proposal of anti-dumping duty on Bangladeshi jute. Mirza Azam, state minister for jute and textiles, also said thathis ministry would take all possible steps to help lift theanti-dumping duty. Jute has long been in turmoil. The present government is very sincere about reviving the lost glory of jute. We are taking some extensive plans for jute. Jute will be considered as an agricultural product from March 2017, and this will give an immense boost to the sector.