The Financial Express

Diversifying the jute products

Lankabangla and Fianancial Express Lankabangla and Fianancial Express
Diversifying the jute products

As many as 28 countries of the European Union (EU) as well as New Zealand and Canada have taken an initiative recently to ban single-use polythene bags in their territories. Some countries like Luxemburg and Denmark have already imposed taxes on these bags. There is a demand for non-plastic bags worth Tk 47.5 billion in the EU alone. When these bans come into force, jute bags can replace plastic bags in these countries as a cheap and environment-friendly alternative. According to the international think-tank 'Research and Marketing', the global market for jute bags till 2018 was US$ 1.80 billion, which is expected to rise to US$ 3.10 billion by 2024. Apart from bags, the use of jute goods is increasing in other areas as well. The five leading producers of luxury vehicles in the world have announced that jute would be applied in manufacturing a substantial part of their internal structures. Jute sticks have also emerged as a new commodity in the international market in recent times. Charcoal produced from jute sticks is being used both as fuel and photocopier ink. Besides, application of jute goods is on the rise in gardening and household chores.  

In the above backdrop, the labour-intensive jute sector of Bangladesh holds a huge potential for the future. About half the raw-jute produced in Bangladesh is used by the existing 148 jute mills of the country. After India, Bangladesh is globally the second-largest producer of jute as well as a leading exporter in the world. More than 96 per cent of global jute production is concentrated in India and Bangladesh. The area under jute harvest in Bangladesh was 651 thousand hectares during 2018-19, as against around 800 thousand hectares in India, with the former having higher yields and better-quality jute.

In fact, Bangladesh 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.  Jute and jute products accounted for over 3.0 per cent of all exports in Bangladesh during 2017-18 (Bangladesh Economic Survey 2019). Export of jute products from Bangladesh stood at US$ 794 million in 2016-17 and US$ 633 million in 2017-18. But export of jute-cum-jute goods decreased by 20.41 per cent from US$ 1020 million in 2017-18 to US$ 816.20 million during 2018-19. However, low value added and traditional products accounted for around 98 per cent and the diversified jute commodities constituted only about 2.0 per cent of jute sector exports. The private sector contributed about 80 per cent of the export volume.

Bangladesh has a huge potential to diversify its jute products and realise higher value added from its jute resources. Despite the small share of diversified jute products relative to the jute sector as a whole, there is a wide range of products within the subsector. Currently, around 750 small and medium enterprises in the country are producing various types of diversified products like bags, carpets, shoes, saris, curtains etc. The markets for these commodities are expanding both in the domestic and foreign markets. The use of polythene and synthetics are gradually declining all over the world due to increased awareness about the environment, and these are being replaced by commodities like jute goods. Whereas, export of traditional jute goods brought between US$ 1,500 and 1,800 per ton, the figures for diversified jute products were between US$ 3,000 and 10,000. But major reasons for the failure of Bangladeshi entrepreneurs in capturing a significant portion of the global market for these products have been limited production of jute fabrics, dearth of innovation and research initiatives as well as financing problems. 

Manufacturers and exporters of jute products are often involved in both traditional and diversified production. The predominant categories of Bangladeshi jute products are: yarn and twine (55.4 per cent), followed by jute sacks (30.5 per cent), while Indian jute products primarily consist of jute sacks (64.9 per cent) and Hessian cloth (19 per cent). 'Hessian' is a cloth made from finer yarns which weighs half as much as sacks. Some Hessian is used to make finer sacks and bags and the rest for a wide variety of applications from wrapping plants to furniture and support-cloth for linoleum flooring.

Due to its ability to produce high volumes of yarn, Bangladesh is better poised than India in the area of diversified non-traditional jute goods. Although India has the first-mover advantage in diversified jute goods and perceived globally as more fashion-oriented compared to Bangladesh, the latter has not yet realised its full value added potential in this sub-sector. Diversified jute products with the greatest projected growth potential include decorative and household furnishings (+3,900 per cent), webbing (+233 per cent), market garden products (+233 per cent), felt (+200 per cent), jute carpets (+200 per cent) and geo-textiles (+100 per cent) (World Bank 2013).

The jute packing law enacted by parliament should be enforced strictly by the Government of Bangladesh, as is the case in India. This will result in increased domestic demand for jute and jute goods, and enhanced exports, employment and output. Development partner financing may be considered to stimulate further R&D (research and development) for the growth of additional diversified fabrics and for reducing the cost of currently available high-end fabrics. Issues like marketing, research and branding can be addressed on a regional basis with India and Nepal. If the South Asian countries get together and share marketing, branding and research costs under a regional approach, this can be helpful and synergistic for all the parties.

The export volume of diversified jute products from the country is currently quite small, but there is much scope for enhancing this manifold. More advanced technology needs to be applied for reducing production cost. The small entrepreneurs need to be brought together under various synergistic platforms. Side by side, new commodities need to be innovated. More researches should be undertaken for product development, and training institutes ought to be set up for grooming workers. Establishment of new factories is required and the government should come forward in the area of financing by setting up a credit fund for the development of diversified jute products. 

Dr. Helal Uddin Ahmed is a retired Additional Secretary and former Editor of Bangladesh Quarterly.

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