Prospects of Jute and Jute Products in Bangladesh BY TASNIMA IQBAL ‘ute or Golden Fibre isa valuable asset for Bangladesh with glorious past and has come back again with a” ‘country. Up to the 1960s, Bangladesh 033 225,458 63,578. 1,953 used to produce nearly 80% of the worlds (3.7) (86.3) (95.5) (73.3) jute, Jute export was the largest contributor to the foreign exchange ‘eamings. Though gradually the prosperous 1992-05. 87,968 196,839 177 days ofthe golden fire faded (99.5) (72.7) (89.7) significa il thas dynamic penal ot le parethses nda export percentage ot production oh period. Tablet toposes fr postive crmomi Sued an IMC (197.80 205.9, AIM (10873197870, BMC ote export observed during the1970s (899 per Figune-! shows year wise jute Goods Overview of the Jute Industry — ory in 1973). This isthe result of many Export of in Quantity by BMC, BIMA & Jute manufacturing industry is one of national and intemational reasons BISA, the oldest manafactring sectors of including liberation war, political tamil, Fx? shows the Hye Bangladesh. The county is one ofa very change of policies regarding jute and jute oF jute mee few counties that produce and export products, emergence and global reference nds of fe goods lad igh quality jute and jute products. of symbetc fibres ete. ae ‘Table-2 presents a elearer idea of jute Favorable climate, ideal land type, low eae cost manpower and domesic and forisn Je gegxt regen export of Bangladesh over the last four ‘demand for Jute and Jute products made decades. ‘Bangladesh once a paradise of jute industry. Wise Jute Goods Export of in Quantity by BIMIC, BJMA & BJSA ee as Bangladesh) in the early 1950s. In 1960 ar — ais aa ‘and 1970s, major share of national income eee | and manufacturing employment was ue cs | langely contributed by Jute sector, Export of jute and jute products was ; the most important sourees of foreign exchange of Pakistan during the 1960s. However, both share and importance of jute and jute goods in manufacturing, export and overall foreign exchange earings, and the Gross Domestic Product (GDP) have gradually declined over time. In the year 2009, this sector accounted for pan! L a more 3.9 per cent of the country’s total 1983/24 1986/87 1989/90 1982/92 1995/96 1998/99 2001/02 2004/05 2007/08 2030/11 ‘Quantity: LakhM.Ton suai e a | export, whic is of exmemely low INC: Bangladesh ute Mils Corporation, MA Bangladsh Je Mis Asocaton, Ferd compared to its contribution in the overall 2/54: Bangladesh Jute Spinners Association Sanvary 2013 Cotten 13Production of Different Kinds of Jute Goods, 1960-2006 eae | tein sacking Source: BIMG, BIMA and BISA. “308.6 ‘Soureg: Export Promrion Bares (EPB) Table? Wor Book varions years Itis apparent from table-2 that in 1970s jute was the single most important expo product of Bangladesh. But over the next few decades the export share of ‘both raw jute and jute products first saw a sharp dectine and then faced gradual decline until the fiscal year 2009-10 when. the export trend of jute products has see a slight upward trend, Table-3 sums up the export growth (in percent) of jute and jute products over the last few decades. ‘Table-3 shows that in 1970s export growth of jute and jute items was 6.8 per cent. But in 1980s and 1990s, it show negative growth of -) 14 per cent and (2) 14 per cent respectively. Then between FY2000-01 and FY2009-10, export growth of raw jute and jute goods were 133 per cent and 6.4 per cent respectively. This positive comeback of the jute sector as an important export commodity now emphasizes the reason for renewed attention in fo this sector (One interesting thing is observed in the trend during the global financial crisis inthe fiscal year 2008-09, export of raw te and jute poods suffered significantly and posted negative growth rates of (-) 10.5 per cent and (-) 154 per cent respectively. However, in FY2000-10 both the items were able to regain positive and high growth rates, and attained 32.5 per cent and 100.6 per cent growth rates, respectively 14 Cotta ace e—Twintvam Total domestic pruction Figure2 Though in recent years, the export of jute product from Bangladesh has seen ‘an upward trend but the variety of product exported is not diversified yet. yam of jute or textile bast fibres, woven fabric of jute’ bast fibres, ropes and cables, carpets floor covering, sacks and bags, packages ete. Figure-3 shows the comparison of ‘export share of jute and jute items of the ‘year 1990 and 2009. Prospect of Jute and Jute products of Bangladesh From the above graphs and tables it is clear that though Bangladesh and {ntemational market for jute and jute products has seen some downward trends inthe past but lately market for jute and jute products is experiencing an upward ‘rend, This trend if utilized properly will provide Bangladesh with better ‘opportunity in expert in coming years Some of the factors contributing to the prospect of jute and jute products of Bangladesh are as follows: > Climate and Environmental Issues: Environmental sustainability and climate change is a big issue in today’s world. Previously numerous human activities towards profit making and industrialization has created both health and environmental hazard such as deadly diseases, global warning, climate change and many ffequently occurring natural disasters. Now people all around the ‘world are looking for environment friendly ways of doing business. The need for eco-iriendly, bio degradable packaging material is rejuvenating. Now the whole world is Jooking into natural fibres for everyday use, The United Nations declared 2009 as the 'Year of Natural fibre’ in order to popularize the use of natural bres in ‘manufacturing goods. Consumers are now ‘more interested to go for eco-iiendly natural goods rater than synthetic ‘materials which is now creating a positive ‘rend for jute and jute products. UN sponsored International Jute Study Group (LISG) and the organization said jute-made shopping and food grade bags, composite, sg0-extiles, pulp and paper have a huge ‘market potential in the face of rising environmental consciousness and demand for green products. Cua eee eins men eco! ‘Source: Estimated from the Export Promotion Burcau (EPB) data. Share of Jute Export Items eee ee ere Sowren: UN Cao Date 2020), January 2013 Table-3 i ie ag | =>> Possibility of western countries to ban polythene Due to rising environmental concems, renewed interest is been shown by. Buropean Union and South and North American countries on jute and jute products. There is a very good possibility for European Union and South and North American States to ban plastic bags and accept jute as a substitute for potythene in essential packaging and shopping bags. ‘This will boost the cument demand for {jute and jute products and Bangladesh can casily be a beneficiary ofthis positive trend, According to USG the fimare demand of jute bags is likely to be 32 million bags a year, while the present supply i only 12 million bags, Large industry leader shopping mars like Wal- “Mart and Tesco are switching to jute bags as well. > Discovering diverse usage of jute products worldwide The global market for jute has moved beyond simple packaging materials. The rage of products includes shopping bags, rugs, wall coverings, apparels, etc. With the right touch of colors combined with the artisans skills, jute fabric could be transformed into aimost elegant but ecoftiendly product. A number of industries ranging from fashion to automobile have started to see new possibilities in jute. Another interesting development has been in the field of jute apparels i, Indian fashion designers have Jed the way in experimenting with a wide variety of clothing ranging ftom sarees to suits made of jute. The blending of jute ‘with cotton produces a material called Tuco can be used to make clothing, accessories and home furnishing items ‘The third major application for jute is geo- textiles, These are permeable mesh-like fabrics that generally find uses in civil and coastal engineering applications due to their ability to separate, filter, reinforce, ‘protect, or drain efficiently Jute as a geo- textile (IGT) is being used for soil erosion contol, vegetation consolidation, agro- ‘mulching, reinforcement, protection of riverbanks and embankments, and in road pavernent construction, According to recent studies, JGT enables a cost reduction of almost 30-40% when used for reinforcing road construction due to its higher moisture retention capacity, ease of installation, and superior flexibility. Our existing jute mills can be diversified to produce geo-textiles, the demand for hich is bound to grow in fiure > Emergence of new markets Apart from growing demand in ‘westem countries, the demand for jute is consistently increasing in many Asian countries like Thailand, Japan, and Vietnam ete. According to Md. Shamsul “Haque, director (marketing) of state- owned Bangladesh Jute Mills Corporation, “Thailand has emerged as a new market _for our jute sacks along with Vietnam. ‘Thai government has started buying a huge quantity of rice in jute bags to fulfill the pledge of providing a guaranteed price to farmers. Mr. Haque said, “We have recelved orders for supplying two crore (20 million) pieces of jute sacks from millers in Thailand,” ‘The gain of Indian Rupee against our ‘currency in recent months made the Indian imporers to buy more jute and jute ‘goods. The demand and the price of jute and jute products in Bangladesh has been increasing and there by increasing the ‘prospect of Bangladeshi jute import. > Price competitiveness ‘Bangladesh is one of the few countries that grows and produces jute and jute products, Bangladesh became second largest producer of jute affer India, and ‘one of the top supplier of the bio- degradable natural fibre. Thus, Bangladesh's entrance into diversified foreign markets will not be a great challenge, Labor costs in Bangladesh is vvety cheap compare to other countries one of the most competitive in the world and the economies of scale play a pivotal role in keeping cost of Jute diversified products at a minimum, > The discovery of genome sequencing of jute Recently new genome sequence of jute was discovered by Bangladesh. This ‘will hopefully play tole in producing bulk amount of quality jue in lower cost. All these ftctors play significant role in ‘opening up greater opportunity for jute and jute products of Bangladesh in global market, Possible Bartiers for Bangladesh Along withthe rising opportunites Bangladesh faces certain barriers in jute export. Some ofthe main barriers could bee > Tariff Barriers awhile Kenya and Iran impose the very high taf of 73.4 per cent and 50 per cent respectively. For raw jute Bangladesh faces highest tariff rate in Singapore, Colombia and Vietnam with 10 per cent, and Brazil with 8 per cent. Twine and ropes have highest duty in the range of 15 pet cent in Venezuela 10 per cent in Philippines and Barbados. For fabric, highest duties are levied by Algeria (30 per cent), Tanzania and Kenya (25 per cent), Brazil and Iran (20 per cent) Bangladesh has to fave high tariff for exporting sacks and bags of jute in Iran (65 per cent), Kenya (59 per cent) and ‘Vietam (40 per cent). Brazil imposed very high anti-dumping duty (ADD) on sacks and bags of jute. These have limited ‘Bangladesh's export opportunites in those countries, > Nontariff Barriers According to a CPD (Centre for Policy Dialogue) report published in 2011 called Global Market Opportunity in Export of Jute, Bangladesh faces number of Non ‘Tariff Barriers (NTB) hampering its export, Some of them are: a. NTBs similar to sanitary and phytosanitary (SPS) measures b. NTTBs related to consular information ¢, NTBs related to technical barriers to ‘trade (TBT) measures <4, Quantitative restrictions including ban . Labeling requirement £ Rules of Origin g. Visa requirement Also there are obligatory compliance requirements like health, saféty, working January 2013 Cottam 15hours, working condition, safety, child Tabor, wages and benefits, safety, environmental factor etc > Substitute of jute products Even though there is an increased ‘demand for jute and jute products stil ‘there are substitutes for jute products such as natural fibres from kenaf, hemp, sida and sunhemp, coir and abaca ct. “These natural fibres as well as some synthetic fibres may emerge as new substitute for jute products in near future hampering its growth. » Lack of proper attention by the government ‘Affer 1980s this sector has seen much decline and some of the government policies also added to negative growth of the industy. IF government fails to provide necessary attention to this industry the growth and ‘development of the industry may face serious challenges in near funare, > Lack of proper support from the countrymen Lack of proper support from the countrymen for jute product will hamper the domestic growth of the of jute related products which will ‘ultimately have an adverse effect con overall jute industry. > Lack of proper knowledge ‘One of the main problems for Jute Diversified Product manufacturer in Bangladesh is lack of proper knowledge, experience, and exposure to standard of international markets which is hindering ‘many small and medium enterprises to enter into the intemational market and hampering overall export. > Lack of financial resources Lack of financial resources of small and medium enterprises is resulting in ‘imitation rather than innovation of Gifferent types of products which is also hampering automation and productivity and hindering the proper growth. Ways to overcome the barriers ‘Some measures could be taken to ‘overcome the current barriers faced by the industry. Some of the possible measures 16 Cotta are as follows: > Removing trade barriers Both tari and non tariff barriers ‘hamper export for this sector, These barriers should be removed through negotiation and policy formation. Attempts should be taken to resolve dispute with the trading counties to facilitate export of {jute and jute products > Proper branding of jute products Proper branding and marketing should be done to promote Bangladeshi jute and jute produets in both domestic ‘and intemational markets to enhance the ‘growth of jute industry. Awareness Campaigns should be done to attract more domestic consumers. Extensive marketing campaign to promote the quality of our jute and jute products should be done for both national and international markets. » Strategy formulation to capture new markets, ‘Both long term and short term strategies should be formulated by government and private sector as a team to capture and sustain in domestic and intemational market > Facilitating research and development in this sector In this era of technology and development, itis essential to focus on research and development to survive in the dynamic market. Investment needs to be made in R&D to create new and diversified applications of jute fibres. Jute research organization should come forward with better variety of seeds, new technology to enhance production of better quality of high yielding jute. January 2013, Otherwise Bangladesh will soon lose its ‘competitiveness in the market as competitor countries are focusing on R&D to increase their jute quality and yield. > Introducing new technologies in this sector Introducing new technology in jute sector has become a necessity to survive in the competitive market. Bangladesh jute industry is lagging behind because of obsolete old technology used in ‘manufacturing products in this sector: To ‘meet the future demand and hold on to ts competitive position, introduction to new technology is very essential > Encouraging innovation and diversification of the products diversified jute products, The industry is sil focusing on traditional jute prodtuets. But the intemational market demand has ‘become more dynamic. Demand of diversified and innovative products ike paper from jute oF soil erosion control proxkict ‘made out of jute etc, are increasing, Bangladesh should also focus on innovating variety of jute product. Thus ‘encouragement and help for both govemment and private sector is needed. > Supporting small and medium enterprises in this sector ‘Small and medium enterprises in this industry are suffering from lack of capital, financing, and automation, proper market information which is affecting the whole industry. These SMEs need proper attention and help from goverment to recover from current situation. There are both opportunities and barriers in the development of current jute industry of Bangladesh, Even wit all the barriers present, the industry has started t0 experience positive growth in recent years. Bangladesh eamed $736.44 million in 2009-2010 fiscal by exporting jute and jute products, which is 76.43 percent more than that in fiscal 2008-08, as per the Export Promotion Bureau report, If we ccan take the nevessary steps to remove or mitigate the barriers we can expect for a ‘golden fire for jute and jute products of ‘Bangladesh in coming years. 2