Problems and prospects of Exporting Jutes and Jute related products from Bangladesh

Introduction

As is known, jute was the single most important export item of Bangladesh till the end of the

1980s. With the ascendancy of export-oriented readymade garments (RMG), and later on of

shrimp, jute lost its pre-eminent position. It presently occupies the third position in the export

basket of Bangladesh.

Bangladesh is the leading exporter of raw jute globally ,whilst India is the largest producer as

well as consumer of jute products in the world.

EXPORT PERFORMANCE

Bangladesh continued to remain the leading exporter globally with the country accounting for over 90 per cent of the world’s raw jute and allied fiber export. It is important to mention here that, raw jute and jute goods export increased significantly and almost doubled in FY2009-10 compared to FY2008-09 (by about 98.5 per cent), to reach USD 736.4 million.

The jute sector of Bangladesh has experienced important changes since the 1990s. Export volume o f raw jute was below 0.3 million tons during late 1980s and continued to fall till 1994. Export trend saw some turnaround since then, but again experienced a trough during 2001 (severe than the previous deep of 1994). 2004 onwards export of raw jute and jute goods have continued to post an increasing trend

Region-wise Distribution of Jute Items Export from Bangladesh (BJMC and BJMA) in Fiscal Year 20013-14

BJMC-2014

Exhibition program of Jute products in Bangladesh.

Exhibition of Jute products:

Three-days international jute fair held in Dhaka on January 27 to January 29, 2014 at Bangabandhu International Conference Centre (BICC). The fair was organized with a view to promoting diversified jute products made by Bangladesh and India. International Jute Study Group (IJSG) has organized the first-ever such fair in association with National Jute Board (NJB), India & Jute Diversification and Promotion Centre (JDPC), Bangladesh to promote jute products

Benefits from the exhibitions

The idea of using jute products are a preferred choice of global consumers due to its environment-friendly nature.

Consumers get the awareness that world's major two jute-producing countries, India and Bangladesh, should work together to change the people's perception about the products made up of natural fiber.

We have to re-brand the jute related product for our foreign target customers to get the proper revenue generation.

Prospect of Jute and Jute products of Bangladesh

Climate and Environmental Issues:

Environmental sustainability and climate change is a big issue in today's world.

The need for eco-friendly, bio degradable packaging material is restoring.

Consumers are now more interested to go for eco-friendly natural

goods rather than synthetic materials which is now creating a positive trend

for jute and jute products

Possibility of western countries to ban polythene:

Due to rising environmental concerns, renewed interest is been shown by

European Union and South and North American countries on jute and jute

products. There is a very good possibility for European Union and South and

North American States to ban plastic bags and accept jute as a substitute for

polythene in essential packaging and shopping bags. According to IJSG the future

demand of jute bags is likely to be 32 million bags a year, while

the present supply is only 12 million bags.

Discovering diverse usage of jute products worldwide:

The global market for jute has moved beyond simple packaging materials.

The range of products includes shopping bags, rugs, wall coverings, apparels, etc. With the

right touch of colors combined with the artisan's skills, jute fabric could be transformed

into almost elegant but ecofriendly product. Besides, Our existing jute mills can be

diversified to produce geo-textiles, the demand for which is bound to grow in future.

 Price competitiveness

Bangladesh is one of the few countries that grows and produces jute and jute products.

Bangladesh became second largest producer of jute after India, and one of the top

supplier of the bio-degradable natural fibre. Thus, Bangladesh's entrance into diversified

foreign markets will not be a great challenge. Labor costs in Bangladesh is very

cheap compare to other countries one of the most competitive in the world and the

economies of scale play a pivotal role in keeping cost of Jute diversified products at

a minimum.

Possible Challenges for Bangladesh

Tariff Barriers

while Kenya and Iran impose the very high tariffs of 73.4 per cent and 50 per cent

respectively. For raw jute Bangladesh faces highest tariff rate in Singapore,

Colombia and Vietnam with 10 per cent, and Brazil with 8 per cent. Twine and ropes

have highest duty in the range of 15 per cent in Venezuela, 10 per cent in Philippines

and Barbados. For fabric, highest duties are levied by Algeria (30 per cent), Tanzania

and Kenya (25 per cent), Brazil and Iran (20 per cent).

Bangladesh has to face high tariff for exporting sacks and bags of jute in Iran (65 per

cent), Kenya (59 per cent) and Vietnam (40 per cent). Brazil imposed very high anti-

dumping duty (ADD) on sacks and bags of jute. These have limited Bangladesh's

export opportunities in those countries. 

Non-tariff Barriers

According to a CPD (Centre for Policy Dialogue) report published in

2011 called Global Market Opportunity in Export of Jute, Bangladesh

faces a number of Non Tariff Barriers (NTB) hampering its export.

Some of them are: 

a. NTBs similar to sanitary and phytosanitary (SPS) measures 

b. NTBs related to consular information 

c. NTBs related to technical barriers to trade (TBT) measures 

d. Quantitative restrictions including ban 

e. Labeling requirement 

f. Rules of Origin g. Visa requirement

Substitute of jute products

Even though there is an increased demand for jute and jute products, still

there are substitutes for jute products such as natural fibres from kenaf,

hemp, sida and sunhemp, coir and abaca etc.

These natural fibres as well as some synthetic fibres may emerge as new

substitute for jute products in near future hampering its growth.

Lack of financial resources

Lack of financial resources of small and medium enterprises is resulting in

imitation rather than innovation of different types of products which is also

hampering automation and productivity and hindering the proper growth.

Opportunities for Jute Related product Market

Strategy formulation to capture new markets

Both long term and short term strategies should be formulated by government and private sector as a team to capture and sustain in domestic and international market.

Facilitating research and development in this sector

In this era of technology and development, it is essential to focus on research and

development to survive in the dynamic market. Investment needs to be made in

R&D to create new and diversified applications of jute fibres. Jute research

organization should come forward with better variety of seeds, new technology to

enhance production of better quality of high yielding jute. Otherwise Bangladesh

will soon lose its competitiveness in the market as competitor countries are

focusing on R&D to increase their jute quality and yield

Introducing new technologies in this sector

Introducing new technology in jute sector has become a necessity to survive in the

competitive market. Bangladesh jute industry is lagging behind because of obsolete old

technology used in manufacturing products in this sector. To meet the future demand

and hold on to its competitive position, introduction to new technology is very essential.

Encouraging innovation and diversification of the products

Bangladesh is still lagging behind in producing diversified jute products. The industry is

still focusing on traditional jute products. But the international market demand has

become more dynamic. Demand of diversified and innovative products like paper from

jute or soil erosion control product made out of jute etc. are increasing. Bangladesh

should also focus on innovating variety of jute product. Thus encouragement and help

for both government and private sector is needed.

Supporting small and medium enterprises in this sector

Small and medium enterprises in this industry are suffering from lack

of capital, financing, and automation, proper market information

which is affecting the whole industry. These SMEs need proper

attention and help from government to recover from current situation.

 

Recommendation and Suggestion

Domestic Market expansion program should be expanded in a larger portion.

Offering of quality Jute products by adding variation.

Proper utilization of domestic fertile resources.

Up gradation of machines that are used for production in the Jute mills.

Appropriate transport facility for remote production areas.

More research and development institutes for jute related product and

Focusing on branding the use of jute and jute related products for daily needs.

Thank You…