ALMOST every government has had a soft corner for jute; perhaps that's why the government has a separate ministry for jute and textile out of all the industries. Today people from all parts of the world know the tag “Made in Bangladesh” because of the RMG sector; but it was jute in the first place that put Bangladesh on the export map of the world and created the path for apparel goods. If jute and textiles were Marvel's Avengers, jute would be “Captain America” and RMG “Iron Man”.
As a part of the jute sector, I feel the love for jute is conditional, as demonstrated by the implementation of various government policies. For instance, the Mandatory Jute Packaging Act was enacted in 2010 and four years later we are yet to see its full implementation. When the government first took this step in 2010, like others in the industry, I welcomed it and waited for the golden future; but it never came.
The primary reason for the failure in implementation is the high prices of the jute bags compared to its plastic substitutes. The latter comes at one-third the price of jute bags. However, jute bags can be used four or five times while the plastic bags can be used once, making it cost-effective in the long run. Most of these feed mills have a large requirement of sacks per day for their packaging needs; hence, it's more cost-effective for them to run a small production line manufacturing PP woven or other plastic sacks.
According to a CPD report, if the act were implemented, there would have been an internal demand of about 850 million pieces of jute bags per year. The current production capacity is over a billion bags.
The environmental benefits should not be ignored either. Jute is environment-friendly and biodegradable. The government had allocated Tk. twenty-five crore to remove the deposits of polythene from the riverbed of Buriganga. There is no clear case for the government to do so if it is not able to ban the use of plastic bags.
It is in the greater good of the nation to protect and nurture the jute sector. The sector provides in excess of 4 million jobs to farmers and over 150 thousand jobs to factory workers. A collapse of this sector will have a disastrous effect on the economy, as 2.5% of the country's population is dependent on this sector for their livelihood.
The industry is already in a volatile and depressed state due to complete dependence on exports. Exports are already down by 20% for the year 2013-14 from the previous year. Turmoil in the Middle East and worries of a double dip recession has further worsened the situation. Arab spring movement in some countries and unrest in Thailand hasn't helped either. To top it off, the rupee depreciation against the dollar has hit the Bangladesh jute export (both raw and processed) industry hard.
The export of jute is dependent on the export of raw jute and spun yarn. The yarn constitutes the majority of the exports and because of socio political and economic situations there has been a decline in jute yarn exports. Although the worldwide demand for jute goods (not to be confused with jute yarn) is increasing at 5-7% every year, these goods are exported by very few mills. As the margins are razor thin, private sector mills are often unwilling to take the necessary R & D to develop jute-diversified products.
The government at the same time is trying to reopen many of the closed mills. It is a very premature step at this point. Without proper implementation of the packaging act, the government is simply creating excess supply in an already depressed market.
The government mills are in very sorry states; the technology of the mills has not been upgraded, which severely hurts the mills productivity. Mills, often after they are reopened, struggle to reach optimum efficiency due to labour union problems, past dues not being cleared, red tape and so on. Private sector mills have always been more efficient than the public sector ones and the job of running such mills should be left to skilled private sector management.
Having said that, the government still has a vital role to play. To ensure a flourishing jute sector, the government should create a fostering culture. Instead of reopening mills, which have had a history of losses, the government should focus on establishing more research and development centres in collaboration or partnership with other stakeholders. These centres would focus on product development and provide new technology to increase efficiency and productivity.
The government needs to take steps to encourage the use and production of diversified products. For example, blended yarns with jute and cotton/silk/viscose for a variety of indoor applications such as blankets, shawls, home textiles and lightweight materials.
R & D efforts have been made by various organisations that allow the use of jute-reinforced composites in the form of flexible semi rigid and rigid boards to substitute wood, timber and plywood. Jute pulp has also got the potential to make paper. The technological advancement and know-how required to do so must be provided by the government to the mills. There is the potential for use of jute fibre in the replacement of glass/synthetic fibre for plastic reinforcement. The openings exist for both compress and injection molding. Even 10% of jute use would create a market demand for several hundred thousand units of fibre.
The government has a big role to play in order to restore the golden fiber. It, however, must take the right steps that support a long-term strategy for the development of the jute sector. Only then we can hope for the “golden future that awaits!”
The writer is co-owner and executive director at NAM jute mills.