Bangladesh may lose market in diversified jute products
Bangladesh is missing out on the opportunity to earn foreign currency from the export of diversified jute products, industry players said.
India, on the other hand, is taking advantage of this opportunity by investing in new mills and research and development in line with global demand, they added.
“A ban on the use of plastic bags in different countries -- from the US to Europe, Africa, Asia and Australia -- has opened new opportunities to export diversified jute products,” said Rashedul Karim Munna, general secretary of Bangladesh Jute Diversified Products Manufacturers and Exporters Association.
The global demand for shopping bags is estimated to be 500 billion pieces, worth around $500 billion a year, according to International Jute Study Group.
The US, Europe and China would be the biggest markets for shopping bags, once the ban on the use of plastic bags would fully come into force in a few years.
Local manufacturers and exporters fear they would lose the market to India, as entrepreneurs in the neighbouring country have built factories that are able to produce quality yarn, fabric and diversified products.
India exported more than 70 million jute shopping bags in 2012-13, against around 1 million by Bangladesh. Entrepreneurs in India received grants from the government to set up advanced mills to produce diversified jute products, they said.
Bangladesh's manufacturers and exporters said all the governments in the country had paid little attention to develop this sector.
“The cost of producing quality yarn is 40 percent higher in Bangladesh than India because of technological disadvantages,” Munna said. India has set up composite jute mills with modern machinery and technologies to make fabric, dyeing or lamination under one roof, he said. Bangladesh has nearly 250 jute mills, but none with dyeing and lamination facilities, which are essential to producing diversified products.
Historically, Bangladesh and a part of India are the main producers of jute accounting for more than 96 percent of the total jute production globally. In 2011, global jute production was 2.86 million tonnes, of which Bangladesh's share was 1.2 million tonnes.
Once Bangladesh was known as the country of 'golden fibre' because of the quality of jute it produced. Jute and jute goods accounted for 90 percent of the country's total exports in 1972-73. Now, the contribution of this sector to Bangladesh's export earnings has dropped to less than 5 percent, even though it has more than 95 percent local value addition.
Bangladesh exported raw jute and jute goods worth $1.03 billion in fiscal 2012-13 -- jute sacks and bags accounted for $237 million and jute yarn and twine over $500 million -- according to data from Export Promotion Bureau. In July-October this year, data shows a negative trend in the export of jute sacks and bags -- $42.61 million against the target of nearly $93 million for the period.
“India is enjoying the cream of jute diversification. It has quality mills, professionals and designers to produce diversified products,” said Mahmudul Haque, deputy managing director of Janata Jute Mills, one of the two biggest private mills. The largest one is Akij Jute Mills.
“Investing in dyeing and lamination is yet to be feasible in Bangladesh as the market is not so big. An absence of designers is a major concern here too,” Haque said.
The good news is that Bangladesh Jute Mills Corporation (BJMC) is set to convert a couple of its mills to produce raw materials to make diversified products instead of traditional ones.
“We are converting Karnaphuli Jute Mills and hope to go for commercial production next month. The world is demanding diversified products and we have to get out of making traditional things,” said Maj Gen Humayun Khaled, chairman of BJMC.