Jute growers are left in the lurch this peak season as their biggest buyer, Bangladesh Jute Mills Corporation (BJMC) has shied away from the market due to fund constraints.
The state-owned company has opened over 140 jute purchase centres across the country early this month, but it could hardly buy any jute for want of money.
In a depressed market, producers are now left with no other option but to sell the natural fibre at non-competitive prices to the middlemen, market sources said.
The middlemen, who are stockpiling raw jute, would be the ultimate beneficiaries as they would be getting premium prices at the fag end of the season when the BJMC would eventually be able to manage funds.
The biggest employer in the country's industrial sector with nearly 90,000 people on its payroll, the BJMC operates 24 jute mills and buys nearly 1.5 million bales of raw jute annually through 174 purchasing centres.
The company sent five letters to the jute ministry between July 8 and August 4 seeking Tk 500 crore for timely purchase of jute and providing the farmers with price support, BJMC sources told The Daily Star yesterday.
In response, the finance ministry has recently released only Tk 100 crore. The paltry fund comes in sharp contrast to the fact that the BJMC already has outstanding dues of Tk 213 crore.
“We're wondering whether we should go for fresh jute purchase this season or pay up the dues first,” said a BJMC official wishing not to be named.
A sluggish market is dictating the prices at a time when breakthroughs in jute genomics opened up new avenues for further growth of the “golden fibre”, and jute has been made mandatory in manufacturing many packaging products.
BJMC sources said since December 2012, the corporation had to pay an extra Tk 720 crore to its mill workers in arrears, thanks to a government-announced wage hike last year and that also with retrospective effect from 2009.
“Of the amount, the government provided us with only Tk 400 crore and the rest were borne by us. Otherwise, we wouldn't have walked a tightrope,” said another BJMC official.
Besides, the government owes BJMC over Tk 131 crore more in outstanding subsidy expenditures for the reopening of three mills closed since January last year.
Contacted, BJMC Secretary Abdun Noor Muhammad Al Firoz claimed that they were trying their best to persuade the government for early release of fund. Otherwise, he feared, the sluggish jute market would act as a disincentive for the growers.
Firoz's fear is well reflected in the words of seasoned jute broker Shukur Ali.
A trader from Tangail, Shukur buys jute from different markets and supplies it to wholesalers and stockists on a commission.
“I've seen from my 20-year experience that the jute prices increase in markets every year just after the farmers' stocks are exhausted. Wholesalers and stockists make the real profits, not the farmers,” he pointed out.
According to the daily monitoring of the BJMC, a quintal of jute sold at Tk 3,800 yesterday, whereas it could have been up to Tk 5,000 had the company not been cash-strapped.