Assignment

On
‘Past and Present’ Situation Jute Industries in Bangladesh

Prepared For

Seikh Tawfique Moyazzemul Haque

M.Phil – Norway, M S S – DU, BSS – DU
Assistain Professor
Faculty of Department of Social science
City University

Prepared By

Md. Pavel Hossain

ID: 09221029
Program: BBA
Batch: 21st

Course Title
Bangladesh Studies
Course Code
SSC 108

Submission Date: 02, Oct 2010

City University, Banani, Dhaka-1213

 Jute

Jute, a natural fibre, has been in use for

various purpose over the centuries
throughout the world. It is the bark of a
slender tropical plant belonging to
Tiliaceae family with two species
Corchorus capsularis and Corchorus
olitorius. Breakthrough in textile
technology during the industrial revolution
helped jute emerges as an amazing fabric
from its traditional image of a raw material
for cordage and rope. Since then the
innumerable additions, modifications and
innovations in manufacturing process
turned jute into as indispensable material
for an unconventional uses. The process of
developing diversified use of jute still goes
on unabated despite the challenge and
threat from its synthetic substitutes

Jute dicotyledenous fibre-yielding plant of the genus Corchorus, order Tiliaceae. Jute
was once known as the golden fibre of Bangladesh, since it was the most important cash
crop for the country. Jute fibre is produced mainly from two commercially important
species, namely White Jute (Corchours capsularis), and Tossa Jute (Corchorus olitorius).
The centre of origin of white jute is said to be Indo-Burma including South China, and
that of tossa Africa. The word jute is probably coined from the word jhuta or jota, an
Orrisan word. However, the use of jutta potta cloth was mentioned both in the Bible and
Monushanghita-Mahabharat. This indicates the ancient uses of jute materials by the
people of these areas. There is evidence of the trade of jute cloth in the 16th century. AIN-
I-AKBARI (1590) mentions sackcloth originating from Bengal. Jute grows under wide
variation of climatic conditions and stress of tropic and subtropics.

It is grown in Bangladesh, India, Myanmar, Nepal, China, Taiwan, Thailand, Vietnam,

Cambodia, Brazil and some other countries. Bangladesh used to enjoy almost a monopoly
of this fibre commercially; its share in the export market was 80% in 1947-48 but in 1975-
76 it fell to only 25%. This fall in the world market was due to the fact that many
countries had started growing jute and allied fibres.
 Jute industry in Bangladesh

Past Situation of Jute Industries in Bangladesh:

Bangladesh Jute Research Institute (BJRI) the oldest mono CROP research institute of
the country, located at Sher-e-Bangla Nagar, Dhaka. JUTE research first started in Dhaka
with the creation of a fibre expert's position under the Department of Agriculture, and the
assumption of responsibility by Sir RS Finlow in 1904. The BJRI in its present form and
functions, developed from the first Jute Agricultural Research Laboratory (JARL)
established by the Indian Central Jute Committee (ICJC) at Dhaka Farm in 1936.

The ICJC established the Jute Agricultural Research Laboratory (JARL) at Agricultural
Research Station, Dhaka, and Jute Technological Research Laboratory (JTRL) at
Tallyganj, Calcutta in 1936. The major research objectives of JARL, Dhaka, at that time
were to bring improvement of the jute plant both in regard to quality and yield; to
improve methods of jute growing; to reduce losses caused by diseases and insect pests,
and to introduce improved methods of retting.

The Indian Jute Mills Association (IJMA) also started a Research Department of its own
in 1937. This was later transformed into Indian Central Jute Mills Association Research
Institute (ICJMARI). During 1936-47 the effective infrastructure required for broad-
spectrum jute research activities was established. But due to the partition of India in
1947, jute research activities in Dhaka suffered a setback for many obvious reasons. It
became imperative then to reorganise and start afresh.

Jute being the main source of foreign exchange earning of Pakistan, the role of jute in the
national economy became more pronounced. The government of Pakistan constituted the
Pakistan Central Jute Committee (PCJC) in the light of erstwhile ICJC. The PCJC
reorganised the Jute Research Laboratory as the Jute Research Institute (JRI) at its
present location in 1951.

In its original plan (1951), the JRI meant to have three main branches, namely:
Agricultural Research on Jute; Technological Research on Jute; and Marketing and
Economic Research on Jute. The JRI started functioning from 1951 only with the
Agricultural Research on Jute branch. The second branch, Technological Research on
Jute, was founded in 1963, but the branch for Marketing and Economic Research on jute
has not yet been set up. Jute research during 1947-71 brought some important
developments and released some high yielding varieties. After the birth of Bangladesh in
1971, the jute sector was taken up so that it could be given a realistic outlook.

The Jute Act, 1947 was promulgated and the institute was named as Bangladesh Jute
Research Institute (BJRI). The Act set forth the following major objectives for BJRI: (a)
to regulate, control and promote agricultural, technological and economic research on
jute and allied fibres; (b) to organise production, testing and supply of improved pedigree
jute seeds and their multiplication, procurement and distribution to recognized
organisations, selected growers, and such other agencies as may be approved by the
board; (c) to set up research centres, sub-stations, pilot projects and farms in different
regions of the country for carrying out research on different problems of jute and allied
fibre crops, jute products and allied materials; and (d) to establish project areas for
demonstration of new varieties of jute development by the institute and to train farmers
for cultivation of those varieties of jute.

Subsequently, in the light of the recommendations of the FAO/ADB appraisal report, and
approval of the Executive Committee of the National Economic Council (ECNEC), a
new branch for multiplication and distribution of HYV jute seeds was created in 1976.
BJRI therefore, began functioning with the following branches from 1976: Directorate of
Agricultural Research on Jute; Directorate of Technological Research on Jute; and
Directorate of Jute Seeds.

In 1988, the Directorate of Jute Seed was transferred from BJRI to Bangladesh
Agricultural Development Corporation (BADC). The BJRI has thus been left with two
functional research wings. It may be mentioned here that the jute research activities
originally started under the Ministry of Agriculture (MOA) in 1904. During 1947-71 it
continued to function under MOA as a division of the Central Government. In 1974, Jute
Research Institute was first placed under the newly created Ministry of Jute, and then
under the Science & Technology Ministry in 1980. Again, in 1982 BJRI was brought
back to MOA. These shifts did not alter specific research objectives but definitely
affected the progress of the institute when viewed from a broader perspective.

Fields of Research At present BJRI is conducting researches with two wings, one,
Agricultural Research on Jute, and the other, Technological Research on Jute. As has
been mentioned earlier, these two branches started functioning from 1951 and 1963
respectively, under two directors.

The Director General is the chief executive of the institute and is assisted by the two
directors. The approved staff provision of BJRI at present is 516, of whom 166 are
scientists and 350 are supporting personnel. The headquarters is located at Manik Miah
Avenue, Dhaka and is comprised of the laboratories under different disciplines. The Gene
Bank of BJRI serves as the germplasm depository for jute allied fibres; three greenhouses
facilitate off-season research with simulation and partition of environments. The institute
has one experimental mill for production of yarns and fabrics. Pilot facilities also exist
for production of jute blankets, upholstery, draperies, finer union, and blended fabrics.
Present Situation of Jute Industries in Bangladesh:

The total demand for jute goods in the international market is 0.75 million (7.50 lakh)
tonnes. Bangladesh exports 0.46 million (4.60 lakh) tonnes of jute goods while India
enjoys a share of 0.285 million (2.85 lakh) tonnes in the international market. Dhaka
controls 62 per cent share of the total jute goods market of the world and earn Taka
20.125 billion (2012.5 crore) by exporting jute goods. Bangladesh is the lone
exporter of raw jute. Last year the country exported 2.4 million (24 lakh) bales of
raw jute valued at Taka 9.77 million (977 crore). In total Bangladesh fetched Taka
29.395 billion (2939.5 crore) by exporting raw jute and jute goods.

Locally jute goods are extensively used in India in packaging cement, sugar, rice,
wheat and for other agro products. India produces 1.597 million (15.97 lakh) tonnes
of jute (goods of which 1.372 million (13.72 lakh) tonnes of jute goods are internally
used. Bangladesh produces 0.55 million (5.50 lakh) tonnes of jute goods of which
only 83,513 tones of jute goods are locally consumed. Our government needs to
formulate a pragmatic policy to increase local demand as well in international
markets. Bangladesh can carve a good niche in the international market provided it
can overcome the sickness of jute mills.

High bank interest rates on working capital loan (12-14% compound), corruption,
mismanagement and inefficiency lack of accountability, excess manpower, lack of
maintenance, power crisis, and undue interference of trade union have contributed to
the present situation of the jute industries particularly in the state-owned Jute Mills
under Bangladesh jute mills Corporation (BJMC). Negligence and lack of proper
patronisation by the government also aggravated the situation of jute industry further.

It is being observed that recently different organisations organising seminars,

symposium etc. and publishing various articles in newspaper regarding present ailing
situation on jute industries. All are concerned how to overcome this situation and
salvage the jute industry. Various sections have expressed various opinions and
suggestions.

In past and now also our politics are greatly attached with jute. Our liberation war
was also based on such issues but we are such unfortunate that after long years the
fortune of jute industries have not yet changed. It is obvious that in past all the
government have neglected the industry, despite of everything our government in
different "time had come forward and formulated various fiscal measures to re-
juvenate the ailing jute sector. Still the government is providing subsidy @ 7.5% on
freight on board (FOB) value on export of jute goods but all measures gone in vain.
It still remains a big question why jute sector can not stand on it's own feet properly.

There are two types of jute mills in Bangladesh. a) Twenty seven

conventional/traditional jute mills are running under Bangladesh Jute Mills
Corporation (BJMC) producing Hessian, CBC and sack and 42 conventional jute
mills are under the Bangladesh Jute Mills Association (BJMA) in the private
management. Out of these mills only seven to ten mills running well, five to seven
are limping and the rest being closed. The reason is because of original entrepreneurs
are burdened with heavy bad debts and banks are unable to finance them due to
overdrawn position.

After closing down the largest jute mill in Asia, Adamjee Jute Mills at Narayanganj,
the government handed over some of its good condition machineries to mills under
Bangladesh Jute Mills Corporation (BJMC) and sold rest of almost useless
machineries to the private entrepreneurs by which they set up having a capacity of
20-50 looms. Now, there are such 30 mills, producing traditional jute goods, they are
also under Bangladesh Jute Mills Association (BJMA).

There are 50 private jute spinning mills producing jute yarn/twine under Bangladesh
Jute Spinners Association (BJSA). The mills under jute spinning sector produce 0.29
million (2.90 lakh) tonnes of jute yarn/twine and export 0.261 million (2.61 lakh) m.
tonnes of quality yarn/twine consuming 1.9 million (19 lakh) bales of high quality
raw jute and earn foreign exchange worth Taka 12 million (1200 crore) per annum.

Before the independence, the country had six jute yarn mills. However, this sector
had flourished during the '80s as the industry experienced a setback in the developed
countries during the same period. The entrepreneurs of the country bought these
second-hand jute mills machineries with a very low investment and started setting up
these jute spinning mills.

Two types of opinion exist in Bangladesh over the management of existing mills
under BJMC. One group is in favour of privatisation of the existing state owned jute
mills, where another group advocates reorganisation/restructuring of BJMC mills.
The mills under Bangladesh Jute Mills Corporation are exporting 0.128 million (1.28
lakh) m. tonnes of jute goods i.e Hessian, Sacking and CBC.

Mismanagement, corruption, inefficiency and lack of skilled manpower have gripped

the BJMC mills. The mills should be run professionally to remain competitive in the
open market but that are not practised in case of BJMC, which is causing hundreds
of millions of taka losses to the national exchequer.

Time has come to put pragmatic/realistic thought on the jute sector to revive this
promising sector. The government should devise plans to bring back the glory of the
golden fibre. The demand for environmental friendly jute products are on the rise in
the global market and Bangladesh should tap this opportunity by implementing some
short-,mid- and long-term plans to rejuvenate the ailing jute sector of Bangladesh.

At present it is useless to be nostalgic about old prime era of our jute industry. Now
we must formulate a pragmatic short, mid and long-term plan keeping in mind about
future needs of jute goods' demand. Instead of remembering past mistakes, we must
take lessons out of that and look forward with practical solutions which will bring
back viability to our ailing Jute sector. This should be our only prime object.

Some recommendations are prescribed below to be considered by the government in

the greater interest of the jute sector:

To revive the glory of the jute industry, a high-powered committee should be

constituted comprising the Finance Secretary under the direction of the Chief
Adviser.

It is important to evaluate cumulative losses and liabilities of the existing jute mills.

The government should implement some short-, mid- and long-term proposals in a
bid to revive the jute sector.

The exiting jute mills of the Bangladesh Jute Mills Corporation should be converted
into public limited companies keeping some shares in the hands of the government
like that of the Bangladesh Biman. The government may create a "Regulatory
Board" to run its existing corporations professionally and efficiently. The Regulatory
Body will monitor every unit of the corporation and ensure their accountability.

The government should arrange a 'special fund' to upgrade its existing jute mills to
purchase necessary spares for machineries. Under this package the government will
provide 50 per cent of the total credit as grants and banks will give rest 50 percent on
a long-term credit to jute mills.

Irregular power supply is adversely affecting production of existing jute mills by

cutting their competitiveness. The government may ask donor agencies like the
World Bank (WB) and the Asian Development Bank (ADB) to arrange a 'special
fund' to provide long term loans at 3.00 per cent interest to the existing jute mills to
help them to procure "stand-by generators". The use of stand by generators by the
jute mills will help to save electricity at our national grid.

Government is giving 7.5 per cent cash incentives on jute goods exports. To expand
the market and increase competitiveness, the rate of cash incentives should be raised
to 15 per cent from present rate.

The government should enact a law making mandatory or compulsory to use of jute
bags for internal consumption in packaging. To meet requirement of local markets,
an initiative is necessary to pack sugar, rice and pulse in 5-10 K.G. jute bags. The use
of jute goods in the local market is limited. To increase the use, the government
should also make law to use compulsory at least 20 per cent of total sugar and
cement packaging with jute bags.

The jute industries being an agro based and 100% export-oriented industry, the
commercial banks are not implementing the Bangladesh Bank's order to provide
export credit at lower internet rate (7%), commercial banks should provide "Export
Cash Credit" to jute mills which they give to the leather sector.

"Export Cash Credit" should extend to jute mills for 180 days and they should allow
to draw 90% of export value as per L/C/ contract of foreign buyers/contract of their
local agent. Normal interest will be charged by the banks if the mills fail to adjust it
within 180 days.

Crisis of quality jute seed is a regular phenomenon in the country every year. The
total requirement of jute seeds are 4,000/5,000 tonnes against government supply of
only 400-500 tonnes. To meet local demand, sub-standard Indian seeds enter the
Bangladesh market through imports and smuggling. To improve the situation and
ensure quality seeds, the government should set up a 'seed bank' to distribute seeds
among planters at subsidised rate. Government should also arrange to provide
fertiliser at subsidised rate. Bangladesh Jute Research Institute (BJRI) should also
take appropriate measures to familiarise their new invention "retting process" among
the farmers.

Lack of skilled manpower has put the industries in grave situation. To overcome the
situation at least a 'jute college' may be arranged to set up at one of the closed BJMC
jute mills. To address this situation promptly, government should introduce "Diploma
Course" on jute in the six textile institutes as early as these are under the ministry of
textile and jute.

The jute industries of Bangladesh are in need of good quality jute mills spares and
machineries. For this, the government should give the responsibility of producing
quality spare parts/jute mills machineries to Bangladesh Machine Tools Factory and
Galfra Habib.

The significance of Mongla Port has increased as several hundred industrial units
have been set in the southern part of the country recently. The government should
initiate necessary steps to expand and develop the Mongla Port.

To improve the market intelligence with a view to ensuring greater transparency in

the international jute goods market a programme may be undertaken by the govt. in
collaboration with ITC of the United Nations.

The government should also take measures to promote and expand international'
trade of jute products by maintaining existing markets and by developing of new
endusers.