Jute exports drop for low global demand
Jute is spread to dry before sale. Photo: Rashed Shumon
Jute and jute goods export earnings have slowed in the first quarter of the current fiscal year due to price cuts by buyers in the face of slack demand.
Exporters linked political turmoil in the Middle East, economic gloom in Europe and fears of global recession to sluggish demand for the natural fibre, the second biggest foreign currency earner after apparel.
"We are facing troubled times in almost all export destinations. Export earnings both in terms of value and volume have declined resulting in a rise in stocks," said Shamsul Haque, marketing director for Bangladesh Jute Mills Corporation (BJMC) that oversees the state jute mills.
According to Export Promotion Bureau (EPB) data, growth of export earnings from jute and jute goods fell 17 percent in July-September of fiscal 2011-12 from 34 percent growth last year.
The BJMC official blamed depreciation of the Indian rupee against the US dollar for affecting the export of jute goods to India, a major destination for jute exports.
Ongoing economic sanction on Iran and Syria also hurt jute exports in those countries, as buyers are unable to pay for a shortage of international currencies, said the BJMC official.
The recent earthquake in Turkey and floods in Thailand came as blows to the sector as well, leading to a fall in demand and price cuts, he said.
Buyers are offering $103-105 for per hundred jute sacks, from $120 previously, he added. Prices of other jute goods, such as yarn, also fell.
"Demand for carpet and carpet backing cloth has fallen since it is not an essential item, like food," said the BJMC official.
According to EPB data, growth of raw jute exports slowed to 18 percent in July-September this fiscal year from 53 percent last year.
Growth of export earnings from jute yarn and twine declined to 20 percent from 54 percent, while jute bags and sacks by almost half, EPB data showed.
"Uncertainty over demand for jute prevails in the global market. Buyers, who had earlier placed orders for six months, have reduced their purchase volumes to meet short term demand," said Mahmudul Huq, deputy managing director of Janata Jute Mills Ltd, a leading jute yarn and jute goods exporter.
To cushion the sector and farmers from losses, both the BJMC official and Janata Jute Mill official recommended faster implementation of compulsory packaging law using jute bags.
"Implementation of the law has become important now to boost domestic consumption and thus shield the whole sector," said Haque.
He said India consumes most of its domestic production locally as it ensures compliance of its packaging act.
If we could ensure implementation of the law, we would not have to sit with the stocks of unsold jute goods, said the BJMC official.
"If we can ensure packaging of food grains by jute bags alone, domestic demand would increase."
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