Simple solution for seemingly complex issues

There was a time when jute was called the 'Golden Fiber of Bangladesh' and was one of the major foreign currency-earning sectors. This was because Bangladesh produced-and still produces-65 per cent of the world's raw jute.

Moreover, the strength of the jute fiber produced in this land is 40 per cent higher than that of the remaining 35 per cent produced in other regions, such as West Bengal and Assam-not to mention its superior color quality. Tossa jute, one of the varieties produced in Bangladesh is considered to be the finest quality.

This reality turned into a fairy tale in the early 2000s when the Government of Bangladesh decided to shut down state-owned jute mills due to recurring annual losses, primarily caused by systemic failures.

As a natural consequence, a supply chain gap emerged in the international market, creating a dream-come-true scenario for neighbouring countries involved in jute product manufacturing.

And Bangladesh? From being a leading manufacturer of jute products, the country was reduced to merely a raw material exporter-a vicious cycle it has yet to break.

A paper published on the ResearchGate on Bangladesh's jute industry in 2021 showed the impact of the industry's decline that was visible both economically and socially. Bangladesh earned US$ 600 million from jute exports in 1990, a 5 per cent contribution to gross domestic product (GDP). But the numbers never grew from there and jute exports came down to US$ 150 million only in 2020, with less than 1 per cent contribution to the GDP.

In the same time period, jute industry employment came down from 3 million to less than a million.

Currently, Bangladesh exports approximately 40 per cent of its raw jute at an average rate of US$610 per ton. These same raw materials, once converted into jute products by other countries, are sold at around US$1,080 per ton to international buyers.

Despite producing 65 per cent of the world's raw jute-and of superior quality-Bangladesh has minimal stake in the global jute market. As a result, prices are dictated by countries that produce only 35 per cent of the total raw jute.

Although the Government of Bangladesh (GoB) has taken steps to provide cash incentives to jute mills, the damage was already done during the supply chain collapse of the early 2000s, and new major players emerged.

CAN THE TABLES BE TURNED: The answer is both simple and complex. Simple, because the decisive factor is the Government of Bangladesh itself. Complex, because the question remains: can the government remain firm in its decision, or will it create another policy blunder like the so-called 'Hilsa Fiasco'?

Turning the tables can be straightforward. Since Bangladesh still produces and exports more raw jute than any global competitors, priority should be claiming the global market position back.

First, the government has to focus on increasing raw jute prices. Since stopping raw jute exports may not be feasible, Bangladesh can impose an export tax on raw jute.

Second, the government needs to restrict export to sea routes only-any other mode should be considered smuggling, and the product should be confiscated and resold in the domestic market at a lower price.

Implementing both means Bangladeshi manufacturers would automatically gain a price advantage over foreign competitors.

Additionally, the government may consider reinvesting the levies collected to increase incentive rates for local jute manufacturers. This will enable Bangladeshi manufacturers to offer the most competitive prices globally, and the market will certainly open up. Bangladesh can also look at other Asian countries for good case studies of interesting and encouraging policies and initiatives.

For example India's government buys about Rs 12,000 crore of jute sacks yearly for foodgrain storage, effectively guaranteeing demand. A similar state procurement policy could stabilise Bangladesh's jute mills.  India's government likewise enforces a strict packaging law: in Dec 2023 it mandated 100 per cent of foodgrains and 20 per cent of sugar be packed in jute bags. These norms use approximately 65 per cent of India's jute output and support roughly 4 lakh workers and 40 lakh farmers. With more business opportunities comes more investment and investment generates employment opportunities. Jute being a labour-intensive industry, can generate employment for thousands at a stretch.

Though not a major jute producer, the Philippines offers a comparable case in its government-supported abaca-Manila hemp industry. The Philippine Fiber Industry Development Authority (PhilFIDA) provides subsidies, R&D, and quality certification schemes that allowed abaca fiber exports to thrive, contributing over US$130 million in 2022. Bangladesh could explore establishing a similar jute-specific authority with R&D and market access mandates.

The European Union's Green Deal and Circular Economy policies increasingly favour natural fiber packaging and biodegradable alternatives. While specific figures vary, there has been a notable rise in demand for jute-based goods, particularly in countries like Germany and the Netherlands. Bangladesh can align with these trends by branding itself as a climate-responsible jute producer and investing in green product standards. Additionally, Turkey stands as a significant importer of Bangladeshi jute. These markets present opportunities for Bangladesh to pursue more business opportunities, targeted product diversification and value-added jute manufacturing.

Just to cite an example: if daily production increases in our country by 500 tons, i.e., 13,000 tons per month (which is minimal), an additional 15,000 unskilled labourers from the marginal class will have employment opportunities. While automation is eating up low and unskilled people's jobs in many sectors, jute industry can be the one to accommodate a large number of such employees.

If the policymakers take these initiatives to gain global market price competitiveness for Bangladesh's raw jute, we can expect employment opportunities for approximately 45,000-55,000 unskilled people by 2027. And by 2030, jute might stand next to the RMG sector in employment.

If the GoB can sustain such policies and initiatives until 2035, the country could once again reclaim its position as the leader of the global jute market, having employed at least a million people as blue-collar workers.

But the question remains, will the GoB walk that path of claiming lost glories?

The author is a writer, novelist, business enthusiast and a pro-Bangladeshi thinker. He is the Chief Strategy Officer of Jute Alliance Limited. alquazi@jutealliance.com.bd