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Declining export earnings from jute worry industry insiders

A strategic marketing plan is necessary for the promotion of jute and jute products in the global market.

Bangladesh produces one of the best jute in the world. Jute is Eco-friendly and closely linked with the livelihood of farmers as a cash crop. Better and diversified use of jute can eventually contribute to the overall economy as it has the highest scope of value addition, right from raw jute to finished products made out of jute.

jute & jute goods export declined
Figure 1: Bangladesh is facing continuous negative growth in the jute sector.

But export earnings from jute and jute goods declined by 26.66 percent in the first half of the current fiscal year (July-December 2018) compared to the corresponding period of last fiscal year (FY). The sector insiders said lower demand for jute and jute products in the global market was mainly responsible for the sluggish trend.

The scenario of export earnings from jute and jute goods
July-December of FY18 July-December of FY19 Decline (percent)
$574 million $421 million 26.66

The country’s third biggest export earner involves around 10 million people at different stages from production to export while the farmers grow 1.44 million tons of raw jute annually. The country exported jute and jute products worth $421 million in July-December period of the FY’19 which was $574 million in the first half of the last FY, according to the latest figures of Export Promotion Bureau (EPB).

Shipments of jute yarn, the key export earner, dropped to just $256 million in the first half of the current FY which was $360 million in the same period of FY’18. Jute sacks and bags export also witnessed a 40 percent plunge. Around 1.2 million tons of jute and jute products worth US$ 1.02 billion were exported in the last fiscal year.

Expressing the reasons behind such negative growth, Lutfur Rahaman, Senior Vice-Chairman of Bangladesh Jute Goods Exporters’ Association (BJGEA), said, “African countries used to import huge quantities of jute bags from us. But we’re losing the market due to the high import duty of 15 percent.”

Bangladesh jute industry
Figure 2: Bangladesh jute industry at a glance.

He also described, “In the global market, local currencies are depreciating against the dollar. But the taka is getting stronger against the dollar. So, we fell short in terms of exporting goods compared to our competitor countries.”

Shahidul Karim, Secretary of Bangladesh Jute Spinners Association (BJSA), said that the demand for jute yarn witnessed a decline amid a global economic slowdown and the country exports 0.6 million tons of jute yarn annually, of which Turkey imports nearly 40 percent for its carpet industry.

He expressed, “Turkey holds the major share of global carpet markets worth $5.0 billion. Saudi Arabia and the USA were the key buyers of Turkish carpets who have minimized their import from the country in recent years. Following an economic slowdown in Europe, other major importers of Bangladeshi jute yarn like Iran and China, have also reduced their orders. The two countries import Bangladeshi yarn for making carpets targeting the western markets.”

The Indian anti-dumping duty imposed on a number of Bangladeshi jute products was also responsible for the export downtrend.

Mohammad Shahjahan, Chairman, Bangladesh Jute Spinners Association

Chairman of Bangladesh Jute Spinners Association (BJSA), Mohammad Shahjahan, said, “The Indian anti-dumping duty imposed on a number of Bangladeshi jute products was also responsible for the export downtrend. And the country imposed anti-dumping duties ranging from $20 to $360 per ton on different jute products since January 2017. The government’s target to fetch $1.85 billion from the sector would be difficult to achieve this FY amid the dull business.”

Abdul Barik Khan, Secretary General of Bangladesh Jute Mills Association (BJMA), said, “The government should impose higher duty on raw jute export due to a fall in domestic production. The country’s jute mills were struggling hard to get quality jute this year. I urge the government to convince India through the diplomatic channel for removing the anti-dumping duty.”

However, when asked how to get rid out of such negative growth, Rahaman said, “The government should ink a bilateral trade policy to support agreement with other countries to reduce the import duty. Also, the Generalized System of Preferences (GSP) facilities should be given in this sector in order to increase the export performance.”

“A strategic marketing plan for the promotion of jute and jute products in the global market is essential for us at this moment,” he concluded.

Also Read: ‘Jute viscose project’ will change the history of Bangladesh’s jute industry

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