Jute price hike has dealt a double blow to the volatile rice market as fibre sacks have skyrocketed in recent months, causing a further price surge of the staple.
The hike in sack prices is causing an escalation in rice prices by Tk 1.0-1.5 a kilogram wholesale.
Its impact on the retail market is Tk 2.0-3.0 a kg, according to the Bangladesh Auto Major Husking Mill Owners Association (BAMHMOA).
Price of jute sack, which is mandatory for packaging rice and 18 other products, has been raised to Tk 70-80 apiece (50-kg size), up from Tk 24-30 three months ago.
Osim Dam, a Nilphamari-based rice wholesaler, said he was fined by a mobile court for having rice in largely imported plastic sacks.
The government agency has been active at milling hubs and district wholesale outlets to monitor the use of jute sacks in rice packaging.
Mr Dam spoke of a scarcity of jute sacks in the market as prices shot up to Tk 70-80. "Even old sacks are being traded at Tk 70 apiece."
Shahidur Rahman Patwary, a Dinajpur-based miller and BAMHMOA executive member, said the surge in jute sack prices hiked up Tk 1.0-1.5 a kg wholesale and Tk 2.0-3.0 at retail level.
He said retail rice prices could be reduced by Tk 2.0-3.0 a kg if the use of jute sacks be relaxed for the next few months.
"Supply of jute sacks has reduced markedly with the beginning of Aman harvesting season in November."
Local rice millers and traders need more than 300-million pieces of sacks annually.
According to the BAMHMOA, course rice is selling at Tk 43-52 and medium variety at Tk 48-60 a kg countrywide.
The current prices of rice are 13-25 per cent higher than the 2020 level, said the Trading Corporation of Bangladesh.
Bangladesh Jute Mills Association secretary Barik Khan said the jute packaging law-2010 has helped increase domestic demand for jute and jute goods, and also export, employment and output.
Jute millers need 7.5-8.0 million bales of jute annually when the production fell to just 5.5-million bales in 2020 amid cyclone Amphan and spells of flood.
Mr Khan said raw jute prices zoomed up to an all-time high of Tk 6,500 last week.
Although factories were forced to reduce production for scarcity of raw jute, he said, 200 mills still have the capacity to supply sacks to the domestic market.
He said it took the government a decade to force rice millers and others to extensively use jute sacks, thanks to the packaging law that took effect in 2017.
"The problem might last until the next jute harvest. So, the government must strictly enforce the law for the greater good of the sector and the environment."
Mr Khan also pointed out that most rice importers were using low-cost plastic bags to supply the staple which has hardly put any impact on the retail market.
"Then how can we say that the use of plastic bags helps reduce prices?" he questioned.
Value chain expert Mohammad Moziball Hoque said packaging is one of the key components of product costing of any agribusiness as it impacts 'cost of goods sold' (COGS), sale price and quality of a particular commodity.
Rice market is passing through a volatile period as prices rose even in Aman harvest time, he told the FE.
"The government should focus on logical cost-cutting at every stage of rice supply chain to give consumers some sort of relief," said Mr Hoque, also senior manager (supply chain and business development), Netherland-based Solidaridad Network Asia, Bangladesh.
"The government could allow millers to use plastic bags for an interim period, only if they (millers/traders) ensure that the impact of cost-cutting at packaging stage is reflected both at wholesale and retail levels."
"Strict monitoring will also be needed to keep prices of the staple rational," Mr Hoque cited. He further said that it was a great initiative of the government to implement the packaging law which was feasible considering both the environmental and business perspectives.
"But agribusiness sector had a long demand for supplying low-cost jute sacks and bags so that those could hardly put any impact on prices," he said.
Mr Hoque suggested that the government promote research in developing low-cost jute products for local market to help minimise prices of essential commodities.
"Biodegradable Sonali bag, which was developed as an alternative to polyethylene bag, should promptly be marketed in large volume at a reasonable rate."
