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Jute: cultural heritage of Bangladesh
Abstract
Jute plays a vital role in sustaining the cultural heritage of Bangladesh. This sector holds great potential in terms of outreach, contribution to the national economy and earnings from growing international market demand, particularly for jute diversified products. As a developing country, Bangladesh faces tough competition in the export of finished and manufactured goods; however, many developed countries give preferential treatment to the import of craft items from Bangladesh, A European market survey of gift and decorative items (2003-04) by CBI (Centre for the Promotion of Imports from Developing Countries) clearly shows that the market size for such items so increasing in European countries. European traders prefer to import craft items from developing countries as they get better quality at cheaper rate. The domestic market for decorative goods made of jute is also expanding.
Products requiring the use of jute in new, alternative and non-traditional ways that add value to the final product are generally termed jute diversified products. Jute gardening products, industrial raw materials. non-woven products, home textiles, fashion textiles, decorative accessories, packaging materials, handicrafts, gift items, promotional material, handmade paper, particleboard, etc. are some of the familiar JDPs of Bangladesh. So far, 131 JDPs have been identified. Many private sector SMEs are entering this market and are reaping higher profits by exporting jute diversified products. About 1.3 million people are employed in the JDP sub-sector. The entire jute sector employs more than 2 million people including farmers.
The strength of the JDP sub-sector is: home-grown raw materials, inherited skills of craftsmen, total value addition within the country, low labor cost etc. Characteristics like environmental friendliness and biodegradability are also considered to be strengths of the sub-sector. The inferior quality of some JDPs compared to synthetic and plastic products, unattractive designs, the poor image of Bangladeshi products in many international markets, and insufficient R&D facilities are some of the most commonly cited weaknesses of this sub-sector.
The research methodology included a thorough analysis of both primary and secondary information. To demonstrate various function within the sub-sector, a value-chain, map with description of different actors at each stage of the value-chain has been developed. The major constraints of the sub-sector were identified through detailed information with key informants.
Some of the major constraints identified are: Absence of R&D facilities, lack of creativity and innovation in product development, insufficient training for local artisans, rising costs of participation in international trade fairs or similar events, absence pf specific government policies to promote the JDP sub-sector.
Favorable government policy, the presence of effective business membership organization (BMOs) to mobilize resources for the institution of effective policies, introduction of appropriate export promotion tools, vertical integration to increase overall performance and skill enhancement for local artisans and designers are required to overcome the sectoral constraints.
Bangladesh JDP producers should be trained to improve the quality of their products and also be encouraged t expand their present range of products. Furthermore, given that even the current product range is not being optimally exploited, strategic global marketing efforts should be undertaken to promote the present quality levels in markets that would accept these products. Efforts must also be made to capitalize on those factors that would enhance the image of Bangladeshi jute and jute diversified products in both domestic and international markets.
Objective of the Study
We have tried to give a thorough idea about the jute diversified products and its potentiality in Bangladesh as a second largest jute producing country. Besides the following are the main objectives:
• To familiar with the jute diversified products.
• To identify the jute diversified products as a major revenue generating sector in Bangladesh.
• To show the jute diversified products sector can generate employment opportunity.
• To identify the strength, opportunity, weakness and threats of jute diversifying products production and marketing.
• To give the idea about the benefits of jute made products use in place of synthetic products in case of Bangladesh’s national economy and environment.
• To generate the idea that jute diversified products can protect the world environment form the present worst situation.
Scope of the Report
This report is prepared on the jute diversified products. Generally we are familiar with the traditional jute products like Sacking, Hessian, CBC etc. But jute diversified products have huge potentiality in case of Bangladesh because Bangladesh is the second largest jute producing country and first largest jute and jute products exporting country. This report covers benefits of natural products use in place synthetic one, marketing opportunity of jute diversified products, present increasing demand of jute diversified products due to environmental conscious among the people, constraints in the JDPs sub-sector and solution etc.
Methodology of the Study
Data collected from the two sources. These two sources are as following:
1. Primary sources and
2. Secondary sources
The primary sources of information includes
1. Personal survey in Faridpur, Madaripur, and Shariotpur and interviewing farmers, traders, farias, pesticides and SMEs of JDPs.
2. Expert opinion
The secondary sources of information includes:
1. Publications of JDPC, GTZ etc.
2. Different related books.
Limitation of the Study
We faced some problems during the study, which are given below:
I. Lack of time: the officials were busy and were not able to give much time
II. Insufficient data: In Bangladesh to get jute related information is very difficult because authority’s unwillingness, website is not up-to-date etc.
III. Lack of Supervision: Few officials sometimes felt disturbed, as they were busy with their tasks. Sometimes they did not want to supervise due to pressure of work load.
Chapter 1
OVERVIEW OF JUTE AND JUTE DIVERSIFIED PRODUCTS
1.1 Overview of the Jute Sector in Bangladesh:
Jute is cultivated extensively in Bangladesh and India, and in some parts of Latin America. Bangladesh, India, Myanmar, Vietnam and Thailand account for over 95% of the jute produced in the world. In 2003-04, the world production of jute, kenaf and allied fibres was 3.292 million tons, about 3.33% higher than that of the previous year.
In Bangladesh, jute was once called the golden fibre, as it was the highest foreign exchange earner, contributing more than 80% of the country’s total foreign exchange. In fact, back in the 1950s and early 1960s , almost 80% of the world’s jute was produced in Bangladesh(Source: Encyclopaedia Britannica, 1986 edition). However, the share of the jute sector in foreign exchange earnings started to decline due to the entrance of various synthetic substitutes and artificial fibres into the market and bulk handling techniques introduced during the 1980s. Eventually the importance of jute in international markets declined and jute started losing its predominant position. In 1980-1981, raw jute and jute goods together constituted 68% of the total exports of Bangladesh. Between 1908/1981 and 1999/2000, exports of both raw jute and jute products declined in absolute terms and their total share came down to only 6% of total exports in 19999/00. Nevertheless, the importance of jute in the national economy of Bangladesh can hardly be overemphasized, as it is still the third most important source of foreign exchange.
According to the Krishibid Information website, in Bangladesh about 800,000 metric tons of jute was produced in 2003. According to the Bangladesh Jute Spinners Association (BJSA), the average production of jute for the period 2002-2004 was 4, 800,000 bales. India has now become the world’s largest producer of jute as well as the largest consumer of jute products. Bangladesh is the only other major producer of jute , and its jute is of a higher quality than that of other countries. However, China, Myanmar, Nepal and Thailand, who produced very small quantities of jute in the past, are increasing their production.
Jute is one of the major cash crops of the country and about 1.2 million farmers are directly associated with its cultivation. Almost one-seventh of the total population of the country is involved in jute production, transportation, processing and marketing, either directly or indirectly. The jute sector provides about 10% of total employment in the economy (Source: Ministry of Textiles and Jute website). It contributes 4% of GDP and has a 4.07% share in national export earnings. Most of the farmers take up jute production for crop rotation because it helps to enrich soil fertility. It also provides a vital cash flow for people who live at the very margins of subsistence.
Unfortunately, for some time now, the entire jute industry in Bangladesh has been suffering losses, and many of the government-owned mils are being shut down. One of the fundamental problems of the jute mills is that most of the time they produce only traditional jute goods, usually classical or stereotypical products such as hessian, sacking, carpet-backing cloth, etc. These products have to be sold at competitive prices in international markets, as synthetic products, as well as jute goods produced by other countries, still pose a threat to Bangladeshi jute products. Hence, the mills’ profit margins and ultimately their profitability gradually decline, as they are unable to supply reasonably priced products. Moreover, often government incentives/subsidies are the only source of income that the mills have, weakening the mills further as they can neither increase their production capacity nor improve the existing situation by investing more. The farmers face similar problems as the cost of inputs are increasing while the selling price of raw jute is falling. As a result , some farmers are planting other crops in order to increase their profitability. In such a situation, the sector’s stability and sustainability become questionable.
Nonetheless, a few success stories illustrate that the golden fibre of Bangladesh could make a come-back. For example, Pubali Jute Mills Ltd. recently reduced its losses by developing and introducing linoleum fabric, which is being used as an industrial material. Such products and all similar items requiring the use of jute in new, alternative and non-traditional ways that add value to the final product are generally termed jute diversified products (JDP). The traditional items together with the diversified products are generally called jute goods.
The image of jute has always been restricted to that of traditional packaging materials like hessian, sacking, rope, twine, carpet-backing cloth, etc. In order to overcome the declining market for these conventional products, new technologies have been evolved for bulk use of jute as a raw material in the production of high-value-added and price-competitive intermediate or final products. A host of innovative new products have been developed, such as non-woven products, gardening products, semi-industrial materials, household items, high quality packaging material, particle board, paper pulp, promotional materials (files, folders, bags, etc.) handicrafts, fashion, accessories, etc.
In fact, a breakthrough to revive the industry is only possible by concentration on the production and expansion of JDP exports, since the profit margins of JDPs are much higher than those of traditional products. With increasing worldwide demand for such environment-friendly products, the governments of many countries and the jute industry of Bangladesh have undertaken programs to develop jute diversified products over the last few years. To this end, international agencies and government in both exporting and importing countries have supported research and development effort to develop new jute products. Many of the private sector entrepreneurs have also entered this market and are already reaping huge profits by exporting large quantities of diversified products. They have proven that it is possible to gradually turn the present circumstances around by producing and commercialising high value added jute diversified products.
Thus, it is expected that production and promotion of jute diversified products will further open up new possibilities for revival of the jute sector and will create additional employment opportunities, help improve the economic conditions of farmers and workers and hence assist in poverty reduction in the jute producing countries.
1.2 Jute Diversified Products(JDP):
Some of the familiar diversified jute products of Bangladesh are various kinds of gardening products, industrial materials, jute non-woven products, home textiles, fashion textiles, decorative accessories, value-added packaging materials, handicrafts, gift items, promotional materials, handmade paper, particleboard etc. All of these have potentials for wider use and application. To date, 131 JDPs have been identified. A list of JDPs is given below:
Table 1: List of Jute Diversified Products
Fibre based products:
Group-A
Pulp, paper, paper products, jute composites, wood/plastic substitutes, non-woven products wipes, medicare textiles, absorbents, pillow /quilts, insulation materials, bonding materials , etc.
Group-B
Cellulose, cellulose derivatives, CMC, MCC, tech s, sheets, panels, floor tiles, damp proofing sheet, etc.
Yarn based products:
Group-C
Finer yarn, bleached yarn, dyed yarn, dehaired yarn, polished yarn, coated yarn, woollenized yarn, blended yarn, fancy yarn, fused yarn, core yarn, cable yarn, other treated yarn, multiflied yarn, fire retardant yarn/proof yarn, corded yarn, etc.
Group-D
Hammock, shikka, shoe, shoe upper, shoe sole, sandals, door mat, belts, tape, lace, braids, braided rugs, door cheeks, door, and window screen, etc.
Group-E
Sweater, cardigan, jackets, muffler, caps, carrying kits, knitted wears, knitted bags, etc.
Fabric based products
Group-F
Light fabric, striped fabric, checked fabric, dyed fabric, bleached fabrics, treated fabric, laminated fabric, printed fabric, union fabric, woollenized fabric, calendar, etc.
Group-G
Suitcase, brief case, giff boxes, pots, purses, hold-all, seminar bags, folders and files, beach products, jewellary box, etc.
Group-H
Denim, drill, suiting, shirting, sheeting, scraf, dress materials, chaddar, tapestries, curtains, hometextiles, furnishing fabric, bed cover, sofa cover, cushion, etc.
Group-I
Carpet, blanket, mats, satranji, wall mats, table mats, prayer mats, running mats, technical textile, geo-textiles, battic, linoleum backing cloth, floor covers, etc.
Group-J
Grossery bags, shopping bags, carry bags, laundry bags, garbage bags, school bags, travel bags and kits, haver sacks, shoulder bags, vanity bags, purses, toys, decorative product, berets, nursery pots/sheet/square, etc.
Except for very limited exposure in some recent trade fairs/ exhibitions, jute diversified products have not been extensively published locally. Very few organizations are actively involved in JDP development and export oriented activities. Some of the enterprises currently in this sector are: Janata Jute Mills, Sonali Ash Jute Mills, Pubali Jute Mills, Creation Limited, Probartana, CORR- The Jute Works, MCC, Ishita, Bengal Braided Rugs Ltd. and Karupannya. These organizations, together with the International Jute Study Group (IJSG), the Bangladesh Jute Mills Corporation (BJMC), the Jute Diversified Promotion Centre (JDPC), and the Bangladesh Jute Mills Association (BJMA), are playing major roles in developing and promoting jute diversified products in both local and international markets.
1.3 SWOT Analysis of the Jute Diversified Product (JDP) Sub-sector:
SWOT Analysis is a strategic method used for identifying the strengths and weaknesses and to examine the opportunity and threats in the wider context of an organization. The SWOT presented in the following table is the result of primary research, which was later validated by sector participants in a workshop.
Strengths:
1. is produced locally and is a completely indigenous product.
2. Low/ advantageous labour cost compared to that of other countries.
3. A profitable income generating activity for underprivileged women.
4. Primary raw materials are easily available locally and are considered probably the best in the world.
5. Increased participation by private sector SMEs.
6. Bangladesh is recognized as one of the major jute producing countries.
7. One of the most versatile natural fibres used as raw material for packaging, textiles, the non-textiles and agricultural sectors.
8. Some jute products are naturally fire resistant.
Weaknesses:
1. Insufficient awareness of jute diversified products in the domestic market.
2. Little or no modern / advanced technology / machines.
3. Insufficient research and development (R&D) facilities.
4. Poor implementation of policies and strategies by government agencies.
5. Higher production cost compared to competing countries.
6. This sector is not able to respond quickly to global market trends.
7. High yielding varieties of jute seeds are not available as per market demand.
Opportunities:
1. Jute products are being favored in the international market as environment-friendly products.
2. Growing international demand for jute products.
3. More entrepreneurs are entering the market and introducing new jute diversified products.
4. Huge local demand for jute sticks as a primary substitute for diesel/wood.
5. Opportunities to create a wide variety of product lines.
6. Increasing prices for jute is inducing many entrepreneurs to take up the jute business.
7. The increase in oil prices in industrial markets may reduce the use of synthetics and plastics.
Threats:
1. Other countries have successfully established a favorable image of their jute diversified products in the international market.
2. Indian, Chinese and Vietnamese jute diversified goods are more popular because of their product range and depth, colours, design, and quality,
3. Extensive government support in the jute sector by neighboring countries made their JDPs more competitive in international markets.
1.4 Value-chain Map and Description of the Actors:
Figure 1: Value-chain Map of JDP:
100%
100%
100%
80% 10% 3% 90% 10%
7%
100%
1% 2%
19%
70% 1%
99%
1%
1%
97%
1%
2%
1.4.1 Description of the Actors in the Value-chain:
Input Suppliers (jute farmers): After harvesting the plants, the farmers tie them into bundles and leave the bundles in the fields for four to five days for the leaves to shed. The bundles are then carried to retting places (places with clean, stagnant water) and are immersed into the water. After retting, the bundles of retted plants are taken out and the fibers are extracted from individual plants or a number of plants at a time by hand. Each bundle of fibers extracted is washed well until all non-fibers materials are removed. 20 to 30 small bundles of fibres are bundles up and kept overnight to rinse out the water. The fibres are exposed to sunlight for two to three days until the fibres are dry. Dry jute fibre is again tied into bundles of about 4 kg each and is thus made ready for sale. The farmers sell the jute either to the intermediaries or to the jute mills and JDP producers, in line with a cluster approach. However, the last two are negligible, as the farmers nearly always sell the raw jute to intermediaries
Intermediaries: The intermediaries are a group of middlemen generally called farias. They buy jute from the farmers and local bazaars and sell it to the local traders or purchase centers of the jute mills. They often supply jute to the HDP producers who follow a cluster approach to made handmade jute diversified products.
Jute Mills: The jute mills buy the jute from the traders or from their own purchase centres, which are located in different areas. These mills are of two types, those engaged in producing traditional items such as hessian, sacking, carpet backing cloth, rope, twine, etc. and those involved, to some, in producing jute diversified products. In both cases , their production processes are similar up to the point of producing yarn or twine from the raw jute. Once the bales are received in the godowns the jute is sorted according to quality and type of jute that is required and softened accordingly. Piling or conditioning is the nest step, after which the raw jute is carded. The jute is then spun and wound to make the yarn. If the mills produces hessian and sacking materials, these yarns are then made into fabric, cut and sewn according to the required sizes and shapes. Such products as well as rope, yarn or twine, and in certain cases fabric, are supplied to the JDP producers following a cluster approach. Those following a semi-industrial approach receive similar inputs from the mills and use these to manufacture finished products of added value. A very negligible percentage of these products are sold to the wholesalers. Jute mills also sell their products to exporters / traders, who in turn sell these in international markets. It is difficult to separate out the number of person employed in the jute mills dedicated to manufacturing jute diversified products, as often the mills allocate only a small portion of their factory to JDP production. Nonetheless, an estimate of the number employed in 100 jute mills is provided.
Furnishers / Converters: These entities are involved in intermediary activities such as colouring fabrics or yarns, lamination, accessories development, printing and other activities. The products are sold to the JDP producers, following a semi-industrial approach. Since traditional products are still manufactured in large quantities, many mills do not have a separate wet processing plant on their premises. For the same reason, the need for such plants is also not that high and hence there are only few such enterprise. For firms manufacturing JDPs, the cost of setting up a wet processing plant is too high and as a result. Most of these operations are outsourced to the existing furnishers.
Jute Diversified Products Producers Following a Semi-industrial Approach: These actors are formal entities who combine the use of machines and manual activities during the production process. Their inputs range from yarns to fabrics used for making products like cushion covers, curtains, bas, clothes, papers, particleboard, and so on. These products are usually sold directly in international market, while only a small percentage is sold to the retailers for the domestic market. Sometimes these producers do not sell directly to the international markets, but do so through exporters/traders.
Jute Diversified Products Producers Following a Cluster Approach: These entities are basically NGOs or organization that works with artisans based at different locations on a contractual basis. The items that they produce are somewhat traditional and handmade such as sikkas, mats, hammocks, etc. This is mainly due to the skills of the artisans, as they are often adept at only certain tasks and are unable to make other items. Only recently have some organization begun diversifying their product range by rigorously training their artisans in various areas. Some organization also encourages their artisans to come up with newer designs, patterns or products, and promote these to their regular customers. These are then improved upon on the basis of the feedback received from the buyers. They sell their products to retailers in small quantities and large quantities to exporters/ traders.
Wholesalers: The role of the wholesalers in the JDP sub-sector is very limited, as the mills, the producers and the exporters/traders usually play that role. Since a large portion of jute goods are exported, the wholesalers only cater to the domestic market in very small quantities and usually supply only the retailers.
Retailers: There are not many retail houses in the city dedicated to various jut diversified products. The showrooms that exist are usually not large, except for a few renowned stores. These stores however carry a wide range of items and not just jute goods. Retailers buy a large quantity of the products from the JDP producers. A small portion of their goods is bought from the wholesalers as well. Though initially the size of the domestic market was small, it is gradually growing, due to changes in the tastes and choices of local people.
Exporters / Traders: This group acts as commission agents, taking various products from the mils or the JDP producers and selling them in international markets. The products they sell range from traditional jute goods to jute diversified products. In the case of sikka exports and exporter adds a value of 48%, because the marketing cost is low and the transportation cost of bringing the sikkas from small towns to the city is relatively high. However, if jute bags are considered, the value addition is only 17%. as the marketing costs are lower. One reason for the difference in the marketing cost is that JDP producers following a cluster approach often do not need extensive marketing campaigns. Retailers their approach is usually to sell smaller quantities of traditional items that have a ready market around the world.
Table 2: Total Number of People Employed and the Value Addition at Each Stage of the JDP Value-chain
Value-chain Actors Total Number of People Employed Value Addition at Each Stage
Farmers 1,200,000 78%
Intermediaries 500 Farias 3%
Traders 3%
Jute mills 137,151 73%
Furnishers/converters 300 37%
JDP producers (semi-industrial approach) 20,000 39%
JDP producers(cluster approach) 14,000 50%
Wholesalers 50 Jute bags 5%
Sikkas 10%
Retailers 500 Jute bags 16%
Sikkas 10%
Exporters 1,000 Jute bags 17%
Sikkas 48%
Total number of people employed 1,373,501
(Source: BBS, JDPC, EPB, BJMC,DAE, and BJA)
Value addition have been calculated on the basis of jute diversified products (jute bags and sikkas). Jute production in Bangladesh is highly labour intensive farming. Due to rising labour costs and lower selling prices, the value addition figure at the farmers’ level is relatively high. Detailed calculation of the value additions is shown in the annexure of the report.
The following table shows the distribution of value added of a JDP (jute bags) among various stages of the value-chain (from growers to exporters/retailers). The calculation has been made considering the fina sales price of the JDP as 100%. Percentage within columns 2 and 3 of Table 3 vary due to different selling prices in local and international markets.
Table 3: Distribution of Value Addition across Different Stages of the Value-chain
Stage
Local Market
International Market
01 02 03
From growers to farias 7.10% 7.34%
Farias to traders 0.18% 0.21%
Traders to jute mills 19.82 20.49%
Jute mills to converters 16.08% 16.72%
Converters to JDP producers 36.82% 38.17%
JDP producers to wholesalers 4.12% N/A
Wholesalers to retailers 15.88% N/A
JDP producers to exporters N/A 17.07%
Total 100% 100%
Note: N/A = Not Applicable (Source: Value Chain Assessment for the Jute Sector in Bangladesh, GTZ)
Chapter 2
MARKET OVERVIEW OF JUTE AND JDPs
2.1 International and Domestic Market Analysis:
The jute sector all over the world has suffered a number of setbacks. To begin with, jute competes for land with food crops such as paddy. For example, in Bangladesh land allocation between rice and jute depends on the price levels. Since the price of jute was reasonably high in 2005, it was projected that the production of jute would increase in 2006. Other factors that dictate the production volume of jute are price variability and substitution. Secondly, polypropylene polymer and related synthetic products are cheaper than jute products. Thirdly, jute being and annual crop, is subject to instability due to weather and long distance transport. Lastly , jute “fails” when compared with synthetic in terms of technical characteristics such as the heavy weight and the unsuitability of jute sacks for automatic filling systems. The superior breathability of jute sacks vis-a-vis the water-resistant qualities of synthetic sacks and even the biodegradability of jute were not considered as and advantage. In addition to the above, other important factors such as the lack of reliable and regular supplies of fibre of consistent quality have resulted in further replacement of jute by synthetic s.
Figure 2 : Production of Jute Products in Bangladesh
Figure 2 shows the production trend of jute goods produced in Bangladesh in 2002-2003and 2003-2004. It is evident that the production of hessian and sacking has increased, whereas the production of other jute items has decreased. Hessian cloth is used for a wide range of applications and is exported all over the world in the form of both cloth and bags. Jute bags are used to store and pack a variety of goods ands commodities such as pulses, gain, potatoes, onions, sugar, fertilizer, seed, cement, etc. It can also be used to make high value added products such as fashionable bags.
If we look at global demand for jute, we see that there was a downward trend from the year 2001 to 2003 because of economic recession in some countries, attributed to the US declaration of war on Iraq in late 2002 and SARS in early 2003. Statistics obtained from the international jute study group demonstrates that the local export market for jute yarn was 120,000 tons in 1980 and grew to more than 300,000 tons by the year 2004. This shows that the worldwide demand for jute has started to gain momentum. The projected demand trend of jute in the years 2005-2008 is shown in Figure 3.
Figure 3: Existing and Projected Demand Trend of Jute
To take advantage of future growth in demand for jute, more jute diversified products need to be produced alongside traditional jute products.
2.2 Export and Local Sales of JDPs:
Owing to the increasing use of environment-friendly products in developed countries, the market for jute products is gradually expanding. Many products that used to be made of synthetic and plastic are now being made of jute. Countries such as India are increasingly diversifying products made of jute and exporting these to developed countries. Their ability to produce and market a wide range of JDPs shows the scope for expanding demand for such products. Bangladesh too has the potential to capture certain market segment , provided that the JDP producers improve of the quality and design, increase the product range, establish effective market linkage and uphold the image of Bangladeshi products in foreign markets.
In Bangladesh and other developing countries, a significant quantity of jute is being used to produce traditional items such as hessian and sacking cloth for packaging purposes. Carpet backing cloth is used to make different types of shopping and promotional bags. In some villages, jute sticks are stil used as fuel and for making fences around the houses. Diversified products such as gardening products, jute non-wovens, floor covering, paper pulp, decorative items, etc. comprise a small proportion of total consumption to date.
The domestic consumption patters is gradually changing , as more and more people are recognizing the aesthetic and ecological values of jute products. According to the statistics of JDPC and the Ministry of Textiles and Jute, the local sales of jute diversified products in 2003-2004 was USD 1.30 million, which increased to USD 2.45 million in 2004-2005. Both the export and local sales figures of JDP (in USD) are presented in Figure 4.
Figure 4: Exports and Local Sales Value of JDPs (Source: gtz)
Projected local and export sales (2005-06 to 2007-08) of JDPs shown an increasing trend, which underlines the prospects of this sub-sector. The increasing use of environment- friendly products in many countries is expanding the demand for JDPs. Many products that used to be made of synthetic and plastic are now being made of jute. It would be relatively easy for Bangladesh to achieve the projected export figure provided the existing and potential SMEs of this sub-sector are appropriately nurtured. However, the SMEs themselves have to invest in design and product development, market development, promotion, quality control systems etc.
2.3 Projection of the Global Pattern for Jute and Jute Diversified Products:
The consumption of jute and jute diversified products is expected to rise in Europe and in the USA, as people become more and more conscious about the use of environment-friendly products. This sector in Bangladesh has already shown resilience : even with the closure of many jute mills, the country continues to produce and export different kinds of jute products. Based on the figures obtained from the Export Promotion Bureau (EPB), USD 27.47 million of raw jute and jute products were exported in 2003-2004; the amount increased to USD 37.53 million in 2004-2005. The JDPC estimates that the export of JDP and other jute goods will increase to USD 140 million by 2010, excluding jute pulp.
2.4 Jute Diversified Products Growth Potential:
During the last decade, diversified uses of jute accounted for small quantities of fibre. However, their share in the value of total exports is rising. In 1997-1998 the total value of jute diversified goods exported from India was 10% of total exports and in 2001-2002. it increased to 24%. This highlights the growth potential and the opportunity for market expansion in both domestic and international markets, given effective research and development strategies and intensified marketing efforts. Bangladesh too, has shown this potential as USD 9.11 million and USD 11.21 million of jute diversified products were exported in 2003-2004 and in 2004-2005, respectively. In 2004-2005 , Bangladesh earned around USD 223.01 million from the export of jute products (source: EPB).
In fact, JDPs play decisive role not only in earning foreign exchange, but also in reducing expensive imports into Bangladesh. For example , the government has recently decided to provide local private investors with the technology for jute pulp, one of the products made from green jute. If jute pulp production takes off smoothly, it will put an end to the import of pulp worth millions of taka and Bangladesh will become a major exporter of jute pulp.
Furthermore, with growing concern over synthetic goods usage, developing countries, especially Bangladesh, must try to meet the demand for various items made of jute by supplying more jute goods (traditional and non-traditional items). Government assistance is crucial for the revival of the jute sector in general and the jute diversified sector in particular. With proper monitoring of jute production, technological development and adequate R&D, a wide variety of products will be available for consumers around the world.
Fortunately some national and international organizations are already actively participating in the revival of the jute sector , working to overcome all possible barriers and establish a strong market for the jute diversified products of Bangladesh. In April 2001, the European Commission, through its COMPEX scheme, contributed USD 0.3 million for the commercialization of newly developed technologies for high value added jute diversified products. A revolving fund of USD 200 million has been set up to provide loans to investors for production of jute diversified products. Another USD 30 million has been provided for grant support to these industries to finance the cost of technology transfer, training, market surveys and R&D. Fourteen industrial projects have already been selected with total investment exceeding USD 1000 million for jute diversified products (source: website of the European Commission’s Delegation to Bangladesh).
Chapter 3
MAJOR INSTITUTION INVOLVE IN PROMOTING JUTE AND JDPS
The objectives and function of some of the major institutions involved in the jute sector and the jute diversified sub-sector are:
3.1 International Jute Study Group:
The International Jute Study Group (IJSG) is an intergovernmental body set up under the aegis of UNCTAD to function as the International Commodity Body (ICB) for Jute, Kenaf, and other Allied Fibres. It is the legal successor to the erstwhile International Jute Organization (IJO), and was established on April 27, 2002, with the completion of the process of Definitive Acceptance/ Acceptance by Government of Bangladesh, India Switzerland and the European Community, representing its 15 member countries and representing over 60% of jute trade (import and export).
The objectives of the group are to:
? Provide an effective framework for international cooperation , consultation and policy development among members with regard to all relevant aspects of the world jute economy.
? Promote the expansion of international trade in jute and jute products by maintaining existing markets and by developing new markets, including the introduction of new jute products and the development of new end-uses.
? Provide a forum for the active participation of the private sector in the development of the jute sector.
? Address the issues of poverty alleviation, employment and development of human resources, particularly of women, in the jute sector.
? Facilities the improvement of structural conditions in the jute sector through improvement of productivity and quality and promotion of the application of new processes and technologies.
? Create and increase awareness of the beneficial effects of the use of jute as an environment – friendly, renewable and biodegradable natural .
? Improve market intelligence with a view to ensuring greater transparency in the international jute market in collaboration with other organizations, including the Food and Agricultural Organization (FAO).
In pursuance of its objectives, the group has the following functions:
? To develop an appropriate strategy for the improvement of the world jute economy with particular emphasis of generic promotion of jute and jute products.
? To conduct consultation and exchange of information on the international jute economy.
? To initiate, sponsor, supervise, monitor and act as a catalyst with respect to projects and related activities aimed at improving the structural conditions of the world jute economy and the general economic well-being of those employed therein. In exceptional cases, the Council shall approve the involvement of the group in the implementation of projects, if this involvement does not bring about any additional costs for the administrative budget of the group.
? To provide and improve statistics and market intelligence on jute and jute –based products in consultation with the Food and Agricultural Organization of the United Nations and others appropriate bodies.
? To undertake studies on various aspects of the world jute economy and related issues.
? To consider problems or difficulties that may arise in the international jute economy.
3.2 Department of Jute under the Ministry of Textiles and Jute:
The Department of jute is a department of the Ministry of Textiles and Jute. This department was established in the year 1992 through the merger of the Directorate of Jute and the Directorate of Inspection for Jute and Jute Goods. Its major activities are as follows:
? Application and implementation of Jute Ordinance 1962.
? Application and implementation of Jute (Licensing and Enforcement ) Rules 1964
? Control measures in accordance with the Jute Grower’s Act 1974
? Identification of business engaged in illegal trading of jute and jute goods without license and punishes them as per the existing rules.
? Legal action against jute traders who do not export raw jute or jute goods as per the trade deal with the foreign buyers.
? Collection of revenue by issuing and renewal of license to trade jute and jute goods.
? Inspection and evaluation of the quality of jute goods produced by the jute mills
? Supervision of standard testing methods of jute mills.
? Assistance to the jute mils for maintenance of quality standards.
? Annual stock verification of jute and jute goods.
3.3 Bangladesh Jute Mills Corporation (BJMC):
The Bangladesh Jute Mills Corporation (BJMC) was established as a statutory body under Presidential Order 27 of March 26, 1972. Through this order, the overall operation , management, maintenance and future development agenda of all the jute mills of Bangladesh under private ownership and the erstwhile East Pakistan Industrial Development Corporation (EPIDC) were placed under BJMC.
The main objectives of BJMC were to run the jute mills efficiently under a single organization and to expand the industry in order to augment foreign exchange earning s from jute goods. At the time of nationalization, there wee 77 jute mills in the country; however, their performance continuously deteriorated. This led to the privatization of the jute industry, under which 35 mills were transferred to their original owners in 1982-1983, leaving the rest to continue under BJMC. There are now 28 enterprises under BJMC, of which 25 re jute mills and the rest are non-jute mills.
In 2004-2005, BJMC produced 123,000 metric tons of jute, with export earnings of around USD 56.6 million. Its products are mainly food grade jute bags, sacking cloth and bags, twill and double warp bags, hessian cloth and bags, wall covering cloth, tarpaulin and canvas cloth, jute soil erosion control fabric, jute felt, rot proof fabric and bags, and scrim cloth. One component under BJMC produces JDPs –specifically, high quality fabric like finer jute fabrics (FJF) and other finished jute goods (such as shopping and promotional bags). They also undertake colouring processing /wet processing and printing of fabrics.
3.4 Jute Diversification Promotion Centre (JDPC):
The government of Bangladesh through the Ministry of Textile and Jute set up the Jute Diversification Promotion Centre (JDPC) on October 31, 2002.The JDPC was created with the vision of reviving the past glory of jute as the golden fibre through expansion of the uses of jute by vertical and horizontal diversification, thereby improving the socio-economic conditions of al people directly and indirectly involved in the jute sector.
The Jute Diversification Promotion Centre (JDPC) is comprised of the following three sections:
• Technology transfer and project feasibility section
• Market research and promotion section
• Programme and project monitoring section.
The list of potential technologies /project areas so far identified for establising diversified jute industries with the help of JDPC and private entrepreneurs includes:
• Chemical treatment of jute for delignification
• Mini spinning of jute blended yarns
• Fine yarn spinning of jute blended with other fibres
• Integrated wet processing plant
• Jute reinforced plastic granules
• Flexible jute bags for tea packaging
• Non-woven jute products
• Friction spinning technology
• Wood substitute from jute sliver
• Jute blankets
• Jute products from pultrusion technology.
In addition to these , the search for technology to diversify jute products is going on both nationally and internationally through constant contact with R&D organizations like the Bangladesh Jute Research Institute , the Bangladesh Council for Science and Industrial Research, the Indian Jute Industries Research Association, the International Jute Study Group, etc. Moreover, JDPC has assisted enterprises in obtaining loans from different banks.
3.5 Bangladesh Jute Research Institute (BJRI):
The Bangladesh Jute Research Institute (BJRI) was established in 1951 in order to conduct research to improve jute crops and products. Presently, t he institute is active in agricultural research, technological research, economic and marketing research on jute and allied fibres. BJRI has developed many new jute varieties and jute –based products. The organization has focused on the improvement of jute and the diversification of jute products.
BJRI has developed a variety of jute-based products to broaden the market for jute products:
• Jute blankets
• Novotex fabrics
• Wool – substitute soft jute yarn
• Micro crystalline cellulose
• Fireproof jute fabrics
• Jute geo-textiles.
The future plans of BJRI include the development of high yielding varieties of jute seed; refinement of crop , soil, water and fertilizer management technologies; strengthening of participatory jut farming systems research; fine-tuning of jute cropping patterns for different agro –ecological zones; new retting technologies; improvement of pest management techniques , to make jute more environment-friendly and cost –effective; strengthening the linkage between jute agricultural research, extension and farmers as well as the linkage between jut industrial research, pilot scale entrepreneurs and industry ; establishment of more international links with research organizations of jute producing countries and with industrialized countries; development of diversified jute products and fabrication of appropriate materials for diversified products; generation of industrial technologies like paper pulp for the jute and paper pulp industries and geo-jute for road construction.
3.6 Bangladesh Jute Mills Association (BJMA):
The Bangladesh Jute Mills Association is an organization of owners of private jute mills operating in the country. The organization was created to help the owners address the common problems and opportunities that they face in running the private sector jute mills. Currently there are 35 jute mills under BJMA and they together contribute 20-25% of the total production of traditional jute goods. The BJMA produces about 60-70000 metric tons of jute goods annually, of which 50-60% is exported, earning about USD 18.8-20 million in foreign exchange each year. The products are mainly hessian, sacking and carpet – backing cloth.
3.7 Bangladesh Jute Spinners Association (BJSA) :
The Bangladesh Jute Spinners Association was established in 1979 and represents the jute –spinning sector of Bangladesh. The Association has a total membership of 50 jute spinning mills, of which six are closed. The total production capacity of this sector is more than 290000 metric tons per annum. The association is represented on various advisory councils / committees under different ministries and departments of the Government.
The association provides relevant and useful information and other services to its members , who are the beading entrepreneurs and manufactures of jute yarn/twine . It has a number of publications , one of which is the Spinners News, a monthly publication containing information on national and international issued related to jute and the jute industry, statistics on exports, etc.
The member mills product a wide variety of jute yarn and twine. Their products are used for carpet weaving, wall covering, and jute webbing, as well as in fabric for shopping bags, caps, and handicrafts, jute cloth for various uses like canvas, decorative fabrics , laminated cloth, safety fuses for explosive and many other products.
This industrial sector employs about 40,000 people, exports nearly 100% of its products, and is one of the largest foreign exchange earners in the private sector. There are about 100,000 installed spindles at present and annual production capacity is over 290,000 metric tons. During 2000-2001 members mills produced 174,000 metric tons of jute yarn and twine, exported 161,000 metric tons and earned USD 67.1 million.
3.8 Bangladesh Jute Association (BJA):
This association started its activities in 1950 and was registered in 1959 as the Pakistan Jute Association, after the liberation war, it was renamed the Bangladesh Jute Association. The main objectives of the association are: to promote and protect the jute trade in Bangladesh; watch over and protect general commercial interests in every sphere of the jute trade; communicate with trade associations and other mercantile and public bodies throughout the world; promote measures for the protection of the jute trade and persons engaged therein and so on. The association has as many as 350 members. Since the abolition of the Bangladesh Jute Corporation (BJC), association members have handled the total export of raw jute. The members are directly involved in every sphere of the raw jute trade and contribute important amounts of foreign exchange earnings to the country by exporting raw jute to overseas countries. The association renders social services by supporting the government in various national problem , needs, etc.
3.9 Other Jute Association:
There are two other associations, namely: the Bangladesh Jute Goods Association (BJGA) and the Bangladesh Jute Exporters Association (BJEA). The former consists of exporters who export only jute goods. Bangladesh Jute Goods Association (BJGA) members are : BJMC, some private mills, non-mill owners, traders and even some representatives of foreign buyers, On the other hand , Bangladesh Jute Exporters Association (BJEA) is an association of exporters who export only raw jute.
Chapter 4
MAJOR CONSTRAINTS IN THE JDP SUB-SECTOR
During the primary data collection state by GTZ progress team, about 41 JDP sub-sector constraints were identified. Value –chain actors verified these constraints in a workshop that they attended. During the workshop, the value-chain actors shared their views and experiences about the identified constraints and commented on the relevance of these constraints during the post MEA era.
Based on the workshop outputs and information gathered during the field survey, the consultant team members, through extensive discussion, brought the list of constraints down to 17. The following diagram shows how the sub-sector constraints were short-listed.
The 17 identified constraints were assessed on the basis of the variables given by PROGRESS for selection of the key constraints that can be addressed by the program. In the following exercise, each of the identification constraints has been rated according to the degree of their impact on the given variables. Creation of additional employment and increased export are given the highest priority (30% each) when PROGRESS selects a value-chain that has post MFA relevance and can contribute to poverty reduction. The rating was based on the outcome of the Focus Group Discussion with key information, available secondary information and the impression and experience gathered by the study team members during the field survey.
Sl
Constraints in the JDP sub-sector
Creation
of Additional
Employment
Increased
Export
Increased Production
Volume
Improved Environmental
Situation
Improved Labor &Social
Situation
Total
Interven-
tion
Possibilites
30% 30% 20% 10% 10%
1 Unavailability of high yield varieties of jute seed leads farmers to use poor quality seed resulting in lower productivity. 15 20 20 8 9 72 Yes
2 Absenci of cost effective modern jute cultivation systems cultivates farmers to take up other agricultural activities resulting in decreased jute production. 15 20 20 8 9 72 No
3 Lack of access to short term credit by the traders and producers leads to inability to procure unputs on time resulting in lower capacity utilization and loss of additional income opportunities. 10 20 15 5 9 59 Partly
4 Lack of advanced technology and unavailability of spare parts in some jute mills leads to use of obsolete machines resulting in reduced production efficiency. 15 25 20 10 10 80 Partly
5 Lack of skilled labour in the JDP sub-sector leads to production of inferior quality products resulting in loss of competitiveness in the export market. 20 20 15 10 10 75 Yes
6 Lack of skilled designers and specialized craftsmen in the JDP sub-sector leads to production of typical products with low demand resulting in loss of additional opportunities in both domestic and international markets. 25 30 20 6 9 90 Yes
7 Local designers of jute diversified products lack international exposure, so they are unable to develop designs as per global trends resulting in inability to increase export orders. 25 30 18 5 9 87 Yes
8 Absence of continuous product development by JDP producers leads to production of stereotyped products resulting in inability to penetrate new markets. 20 25 15 5 9 74 Yes
9 Inadequate R&D facilities at both public and private levels in the JDP sub-sector leads to absence of continuous product innovation resulting in loss of growth opportunities. 15 30 15 7 8 75 Partly
10 Absence of adequate wit processing facilities in the JDP sub-sector leads to production of products which often do not conform to buyer requirements resulting in inability to meet international buyer demands. 20 30 18 5 8 81 Partly
11 Inadequate backward linkages in the JDP sub-sector leads to import of accessories by local JDP producers resulting in higher cost of production. 25 25 18 5 8 81 Partly
12 Lack of market development knowledge by the exporter’s leads to ineffective promotion of products in both international and domestic markets resulting in loss of potential market opportunities. 10 30 15 0 5 60 Yes
13 Insufficient cost-effective market development tools for exporters leads to use of expensive means (such as participation in international trade fairs) resulting in inability to promote their products adequately 25 30 18 5 9 87 Yes
14 Lack of effective initiative by the retailers to develop the local market leads to loss of market potential resulting in loss of income opportunities for JDP products. 20 5 20 5 5 55 Partly
15 Lack of awareness in the domestic market about JDPs lead to customers often preferring to buy available substitutes resulting in loss of potential income and inability to strengthen the domestic market. 10 0 10 5 5 30 Partly
16 Absence of government policies to develop the JDP sub-sector leads to loss of sub-sector growth opportunities resulting in slower development of SMEs in this sector. 20 25 18 6 9 78 Yes
17 Absence of effective BMOs leads to inability to mobilize resources for creation of effective policies resulting in inability to overcome sector constraints. 15 30 18 6 6 75 No
Based on the out put of the above exercise , the following selection matrix was developed. The constraints were plotted on the basis of the rating against the variables set by GTZ-progress. To simplify the process of plotting the constraints in the matrix, the serial number of each of the constraints was used. The selection matrix has nine quadrants to classify the identified constraints.
Figure: 5 Constraints selection matrix
12
1 5 6 7
8 13 16
15
3 14 4 6
10 11
2 17
0 13 35 50 65 84 100
Following is a lost of constraints that are a major hindrance to SME development in Bangladesh:
• Unavailability of high yield varieties of jute seed leads farmers to use poor quality seed resulting in lower productivity
• Lack of skilled labour in the JDP sub-sector leads to production of inferior quality products results g in loss of competitiveness in the export market
• Lack of skilled designers and specialized craftsmen in the JDP sub-sector leads to production of typical products with low demand resulting in loss of additional opportunities in both domestic and international markets
• Local designs of jute diversified products lack international exposure, so they are unable to develop designs as per global trends resulting in inability to increase export orders.
• Absence of continuous product development by JDP producers leads to production of stereotyped products resulting in inability to penetrate new markets.
• Insufficient cost-effective market development tools for exporters leads to use of expensive means resulting in inability to promote their products adequately.
• Absence of government policies to develop the JDP sub-sector leads to loss of sub-sector growth opportunities resulting in slower development of SMEs in this sector.
Some General Constraint for Diversification:
• Production, popularization and marketing of diversified new jute products are complex and multi dimensional and multi faceted phenomenon where interactions of different steak-holders from different disciplines are involved.
• For this smooth and continuous cooperation, coordination are needed. Unfortunately, this is lacking due to absences of appropriate policy and guidance.
• Our neighbor has better policy regulation than ours. For example all exporters of diversified jute products are getting 25% export benefits whether they are bi, small or micro. In our country only mill owners can get it.
• Entrepreneurs and financial institutes arte reluctant to invest in this sector as image of it are very negative and sensitive.
• Lack of modernization and renovation of age-old technology and also introduction of new technology
• Limited or non existence of linkage of Industry –Research Institutes and University. So totally unaware and lack of information about the modern development of the sector.
Chapter 5
DIVERSIFICATION OF JUTE AND ITS PROSPECT FROM THE GLOBAL PERSPECTIVE
Presently progress and prospect of jute and jute products is a very important subject and which is being widely discussed by National and International bodies in extensive ways. World opinion is more concerned with environment and its eco-balance. The natural s including jute are focused in depth for their different potential uses and their beneficial impact on economical and ecological aspect of environment and society as a whole. Very recently a Road Map for jute also proposed by International where whole spectrum of jute was deeply uphold among with consumer need production and marketing of diversified jute products. In this presentation mostly Bangladesh situation is reflected in contrast with world situation.
Jute is a versatile natural with unique characteristics for long outstanding applications. Jute and allied fivers are best , commercially extract from various species, of Corchorus capsularis, Corcorus olitorious , Hibiscus Canabunus, and Habiscus Sabdareffa by retting through complex micro-bial action. Jute is a photo reactive plant. It needs long daylight with occasional rainfall. Soil , water, and climate of Bangladesh are very conducive for the production of best quality of jute and jute products. Farmers of Bangladesh are also very expert in cultivating jute.
5.1 Jute Industrial Use:
People of this part of the world have been using jute from time immemorial as household and farm yard appliances along with edible and medicinal substitutes. Its use as raw material for modern packaging materials started from the middle of eighteen century. The products are limited to Twin, Hessian, Gunny bag, CBC, Woolpack, Furnishing fabrics etc. Its industrialization started in Europe at Dandy and late transferred to Kolikata and Dhaka, Chittagong and Khulna.
5.2 Jute Trade and Commerce:
Industrialization of jute and marketing basically started in Europe. This is only the commodity in the world, the price of which is controlled a