Jute mills are closing as they are failing to buy the natural fibre as the price has hit the record level and showed no signs of cooling down, said the Bangladesh Jute Mills Association (BJMA).
Forty jute mills have suspended operation in the last one to two months. Mills are running operation below their capacity, BJMA Chairman Mohammad Mahbubur Rahman Patwari told The Daily Star.
The price of raw jute went up to Tk 5,800 to Tk 6,300 per maund last week, the highest on record, up from Tk 5,000-Tk 5,500 the previous week, the BJMA said in a press release.
Prices of raw jute began rising after harvesting began in the July-August period last year amid speculations that production fell as a result of floods and unfavourable weather.
Raw jute prices crossed Tk 3,000 per maund in September amid stockpiling by middlemen and the slow release by farmers seeking to make a profit.
"No one had experienced such a price in the past," said Patwari.
The BJMA said the supply in the market had been low and the middlemen and stockists were taking advantage of the low yield and stockpiling the fibre to make higher profits.
"Despite having a lot of export orders, it is not possible to export due to a lack of raw jute," said Patwari.
Production stood at 55 lakh bales in the last season against the annual demand of 60 lakh bales from industries to make jute yarn, twine, sacks and bags, millers said.
The total requirement for raw jute, including household use and export is 73 lakh bales, meaning a shortage of 18 lakh bales.
The trade body demanded the government carry out drive through mobile courts to prevent illegal stockpiling, which is creating the crisis.