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The Financial Express

Harnessing the prospect of jute industry

| Updated: October 23, 2017 06:50:18


Harnessing the prospect of jute industry

It did sound good to hear the state minister for textiles and jute forecasting phenomenal growth prospect of the jute sector in the next five years so much so that it beats the country's largest export industry, readymade garment (RMG). Forecasting on any matter has the advantage of not being accurate or near-accurate as there are many ifs and buts that ultimately determine the actual outcome. The state minister has taken this advantage, and no one would have bothered about his wishful thinking, had he not made it public.
What evidence is there for the minister to trigger such a more-than-ambitious projection? No doubt, jute -- the prime asset of the country, has the potential to bring immense benefit in a host of economic fields, not just in exports. But what have we done to explore its potential in order to get close to the reality that has remained illusive for so long? 
While nationalisation of jute mills with no clear roadmap caused havoc to the world's largest jute industry, subsequent privatisation did not help repair the damage. More importantly, the private hands which gained control over the mills were in many instances not eager to explore the potential. As a result, at a time when global demand, driven by consumer preference for natural fibre is more pronounced than ever, our jute industry has remained content with export of mostly raw jute, yarns and twines and sacks. In the domestic market too, jute as a manufactured product has not been able to cause any mentionable impact because of little or no investment in research and development (R&D) to produce diversified products.
The state minister made his comment at a seminar titled 'Prospect of jute sector in economic growth' in the capital a few days ago. It is, however, easier said than done. 
The seminar, however, came out with some important observations.      Speakers spoke and laid emphasis on diversification of jute products not only for the export markets but equally or even more importantly, for the domestic market. Knodokar Ghulam Moazzem, research director of the Centre for Policy Dialogue (CPD), mentioned in his keynote paper that a domestic-guided market need to be ensured for jute and jute goods as these are facing anti-dumping duty in export market. He said that jute sector of Bangladesh was struggling between emotion, politics and market pressure. 'Bangladesh needs to change its narrative on the jute sector by putting emphasis on establishing a competitive jute industry,' he said. He suggested rationalising the public sector jute mills in terms of size as large-scale mills were getting non-viable. Citing the performance of public sector jute mills, he lamented that the production cost of the mills of the Bangladesh Jute Mills Corporation (BJMC) was much higher than that of the private mills.
Despite providing financial support, the BJMC mills were still being operated in huge losses, he added. He recommended for redesigning overall incentive structure, allocating more resources for foreign investment, technological upgrade and creating skilled professionals for the jute sector.
The country's jute sector is facing many problems -- some indeed highly challenging. Default bank loans, mounting stock piles, export slump have been causing serious difficulties for the entire industry. It has been reported that total bank loans availed by the jute sector stand at around Tk 15.0 billion, a good portion of which has now become default. Stockpiles have hit a nine-year high. Down-turn in exports by nearly 20 per cent in the last fiscal owing to declining overseas demand from major markets has left things more uncertain than in the recent past. Depressed international market and domestic demands have forced more than a dozen mills to shut down in the past few years, and those that are in operation have drastically reduced production. 
The problems with the jute sector are often seen as a mix of maladies relating to productivity, product development and marketing. There was hardly any systematic plan for continuous research to develop and diversify jute products in keeping with consumer tastes and preferences at home and abroad. Stray initiatives were there, but lack of concerted efforts coupled with fund constraints did not allow these to materialise in a commercially viable manner. No wonder, despite being the second largest producer of raw jute, Bangladesh is still in the age-old sack business.
There is no short-cut to revamp of the jute industry. It needs comprehensive planning on how to go about. While modern technology is a must, massive investment in R&D should be in place to produce value-added diversified products. This is not to demean the sack business, but to explore the true potential of the golden fibre that it is capable of delivering to the economy.
If the policy-makers are prepared to go for that,  one can hope to write a new and refreshing narrative of the jute industry. 
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