Despite having an ample opportunity to earn a huge amount of foreign currency from jute and jute goods exports, Bangladesh failed to cash the advantage and recorded a 2.91 per cent negative growth to $1.12 billion in the last fiscal year.
According to the Export Promotion Bureau (EPB) data, in the fiscal year 2021-22 Bangladesh recorded a 2.91 per cent negative growth to $1.12 billion in exports earning from jute and jute goods products. It was $1.16 billion in FY21.
Of the total amount, raw jute earned $216 million, up 56.48% from last year’s export receipts of $138 million. Jute yarn and twine, the largest contributor to the sector, earned $698 million, posting a 12.67 per cent negative growth compared to the previous fiscal year earnings of $799 million.
On the other hand, jute sacks and bags witnessed a 14 per cent decline to $ 119 million, which was $138.66 million.
Commenting on the export performance of the jute and jute goods sector, exporters and economists blamed lack of diversification and research and innovation to move for value added products.
On the other hand, there was a shortage of yarn as traders focused on raw jute exports.
“In the FY22, export earnings from jute goods and yarn and twine declined as there was a shortage of yarn due to the crisis and supply shortage,” said Mohd. Shafiqul Islam, Chairman of Bangladesh Jute Goods Exporters Association (BJGEA).
On the other hand, Indian government’s non-tariff and tariff barriers such as anti-dumping duty expedited the negative growth, said Shafiqul.
But we are hopeful to return to the positive earnings this year as our target is to penetrate in Singapore, Malaysia and Middle-East and European markets with large volume with diversified goods, he added.
Meanwhile, the rise in freight cost and supply chain disruption is another reason for the decline in export earnings as buyers place less orders.
“Shipping rose sharply, while the supply chain disruption hit the exports imports across the globe. Buyers were slow in placing work orders and were offering less prices due to soaring transportation cost,” Esrat Jahan Chowdhury, owner of Tulika, an exporter of jute goods, said.
In addition, higher prices of the raw jute in the domestic market caused by manipulation left exporters in trouble. As a result, they lost competitiveness in the global markets, said Esrat, also a Director of BJGEA.
How to restore the glory of jute
“Exports of jute and jute goods did not increase as much as expected, but the prices of goods saw a rise. As the demands were higher than the previous year, producers got better prices from foreign buyers,” said Md Rashedul Karim Munna, managing director of Creation Private Limited, a jute goods manufacturer and exporter.
Due to the environmental issues, consumers are more interested in buying jute products. But due to lack of policy support and innovation, we are not able to cash the opportunity, said Munna.
“As it pays more, we have to pay attention to jute diversified products rather than exporting raw jute. It is high time to concentrate on the value addition of jute products.”
At present 80 per cent of the export of this sector is raw jute. The share of jute products should be increased more than raw jute in the export basket, he added.
“Bangladesh attained the $50 billion export target in 51 year. It is a good indicator that the country joined the $50 billion exporters club. Now it is time to set the next target and come up with measures to attain this to become a developed country,” Khondaker Golam Moazzem, Research Director at Centre for Policy Dialogue (CPD) said.
Bangladesh needs to do four things – product diversification, market diversification, technology upgradation and diversify investment in prospective sectors such as jute, leather and ceramics.
The Jute sector could be a game changer as the raw materials are collected fully from domestic sources and the value addition is 100 per cent. The sector needs research and innovation to move towards producing diversified jute goods and value added products, said Moazzem.
The government should offer special benefits for the diversified products as multifold earnings could be fetched through goods exports instead of raw jute, he adds.
On the other hand, exporters as well as the government have to explore new buyers and markets as the demand for environmentally friendly jute goods are increasing sharply in the developed countries, said Moazzem.