62pc rise in JBO price comes as a blow to jute sector

The government's decision to increase the price of jute batching oil (JBO) comes as a big blow to the jute sector already hit hard by drastic fall in export orders.
Terming the 62 per cent hike as unrealistic, the jute businesses said the sector will count additional Tk1.47 billion (147 crore) annually following the price hike of JBO.
Jute exporters both from the private and public sectors, however, urged the government to reconsider the decision for the betterment of the sector that contributes nearly $1.0 billion to the export basket annually.
According to the Bangladesh Petroleum Corporation (BPC), from February 4 this year, the corporation increased price of JBO to Tk110 per litre from Tk 67.70 earlier to stop the adulteration of soybean oil mixing this industrial oil.
According to key kitchen markets in the city, soybean oil was sold at Tk102 per litre (bottled) and Tk102-104 per kg (loose) on Sunday.  
JBO is a petroleum by-product, which comes from the Eastern Refinery Limited (ERL), the country's lone fuel oil refinery. The jute mills use the oil to soften the raw jute to process.
Bangladesh Jute Spinners Association (BJSA) chairman Md Shahjahan said the sector is passing through a crucial time as orders for jute goods from fixed destinations fell significantly in recent times.
 "Drop in export coupled with the political turbulence has made it very hard to do business. We are fighting just to survive,"
The decision of raising the price by nearly 62 per cent is nothing but a torture on the spinning sector that needs 18,000 tonnes of JBO alone, he said.
He said country's jute mills use 30,000 tonnes of JBO annually and the cost of production will increase by nearly Tk 1.47 billion.
"The sector is not in a position now to bear the additional cost," he added.
He said BJSA has sent a letter to the ministry of Textiles and Jute (MoTJ) and Ministry of Power, Energy and Mineral (MoPEM) to reconsider the decision and keep the JBO's earlier price.
State- run Bangladesh Jute Mills Corporation (BJMC) chairman Maj Gen (Retd) Humayun Khaled told the FE a meeting was held in this regard Sunday with the state minister for MoTJ where BJMC representatives and private exporters were also present.
He said BJMC has sent a letter to MoTJ to take the matter seriously as the production cost of jute products will increase significantly due to the hike in JBO price.
"The ministry will also place the issue to the MoPEM," he said.
He said: "We are hopeful that the BPC will reconsider ourdemand as there are many other options to stop soybean adulteration".
Bangladesh Jute Mills Association (BJMA) chairman Muhammad Shams-uz Zoha said 30 big jute mills have been closed due to fall in orders from importing countries.
He said export by jute sector that crossed $1.0 billion in fiscal year (FY) 2011-12 had declined to $824 million in FY '14.
The government should look into matter and re-fix the price, he said.
However, Bangladesh Edible Oil Wholesale Merchants Association president Alhaj Md Golam Maula said many of the unscrupulous traders are involved in soybean adulteration.
 "But as far as we know, they use palm oil or super palm oil to do so, we have no idea that JBO could be mixed with soybean," he said.
When asked, Prof Dr Md Mofazell Hossain at the Department of Chemistry under Dhaka University said it is possible to mix JBO, the hydro-carbon with soybean but it could easily be identified by the consumers.
He said the mixed soybean (with JBO) will have a bad smell.
A jute miller requesting anonymity said a committee at BPC was formed to investigate presence of JBO in soybean oil but they haven't yet started the job.
When asked on the issuer, BPC Director (Marketing) Md Mir Ali Reza told the FE that a committee has been formed that visited the jute mills and informed the corporation of the matter.
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