Fuel price hike raises production cost of jute yarn by 45pc
FE Report | Wednesday, 23 July 2008
Production cost of jute yarn has gone up by 45 per cent per tonne due to fuel price hike in the domestic market and this will affect the export earnings this fiscal severely, jute spinners said Tuesday.
"Some of our spinning mills could be laid-off for their liquidity crisis due to the higher production cost. The export earnings will fall short severely this fiscal," chairman of the Bangladesh Jute Spinners Association (BJSA) Sabbir Yusuf said at a press conference in the city.
"The prices of lubricant, diesel and jute backing oil (JBO), and transportation cost have increased by 46, 40, 35 and 45 per cent respectively over the last one year. All these have contributed in the rise of our production cost by 45 per cent," he said adding, "it is very difficult for us to run our industries."
"In addition, the US recession, higher jute price in the local markets and US threat to Iran on nuclear issue have been affecting country's jute yearn export badly over the last one years," the chairman said.
According to BJSA, Bangladesh in the last fiscal 2007-08 exported jute yarn and twin worth nearly US$200 million (Tk14.00 billion).
"We've taken a target of jute yarn and twin export worth $217 million (Tk 15.00 billion) in the current fiscal. It will now be difficult to achieve following the prevailing affect on the jute spinning sector," Mr. Yususf said.
"Our yarn price in the international market has already declined by $70 to $80 per tonne due to competitive global market, US slowdown and US threat to Iran. On the other hand, the prices of fuel, raw jute and wages of the workers and transportation cost in the domestic market have gone up. So, it will be difficult for us to survive," he said.
Iran is the second largest buyer of Bangladesh's jute yarn followed by Turkey. The export growth to Iran has already decreased due to US threat to the country on nuclear issue.
Bangladesh, the largest jute producing country in the world, has more than 60 jute spinning mills, which produce nearly 0.35 million tonnes of jute yarn per year. Out of the production about 0.29 million tonnes are exported to different countries including Turkey, Iran, USA and Belgium.
The BJSA chairman said if uninterrupted power and energy supply to our production units are ensured our production cost would not go up much even after fuel price hike in the country.
"We do not get supply of electricity for 8-10 hours almost every day over the last one year," he said adding some of spinning mills have already become sick due to liquidity crisis for higher production cost.
He demanded uninterrupted power and gas supply, subsidised fuel oil, reduced interest rate on bank loans and higher cash incentives for their industry in a bid to survive within this prevailing crisis.
"If the government does not support us, thousands of jute growers in the country will face losses and one of the major export earning sector will extinct," he said.
In terms of export earnings, Bangladesh's jute and jute goods is in the third highest position preceded by ready-made garments and frozen foods.
Bangladesh's earning from the jute goods in the first 11 months of the just concluded fiscal stood at $292.87, a fall by 1.60 per cent over that of the same period of fiscal 2006-07.
However, the export of raw jute increased by 14.41 per cent to $156.90 million in the first 11 months of the last fiscal 2007-08.
"Some of our spinning mills could be laid-off for their liquidity crisis due to the higher production cost. The export earnings will fall short severely this fiscal," chairman of the Bangladesh Jute Spinners Association (BJSA) Sabbir Yusuf said at a press conference in the city.
"The prices of lubricant, diesel and jute backing oil (JBO), and transportation cost have increased by 46, 40, 35 and 45 per cent respectively over the last one year. All these have contributed in the rise of our production cost by 45 per cent," he said adding, "it is very difficult for us to run our industries."
"In addition, the US recession, higher jute price in the local markets and US threat to Iran on nuclear issue have been affecting country's jute yearn export badly over the last one years," the chairman said.
According to BJSA, Bangladesh in the last fiscal 2007-08 exported jute yarn and twin worth nearly US$200 million (Tk14.00 billion).
"We've taken a target of jute yarn and twin export worth $217 million (Tk 15.00 billion) in the current fiscal. It will now be difficult to achieve following the prevailing affect on the jute spinning sector," Mr. Yususf said.
"Our yarn price in the international market has already declined by $70 to $80 per tonne due to competitive global market, US slowdown and US threat to Iran. On the other hand, the prices of fuel, raw jute and wages of the workers and transportation cost in the domestic market have gone up. So, it will be difficult for us to survive," he said.
Iran is the second largest buyer of Bangladesh's jute yarn followed by Turkey. The export growth to Iran has already decreased due to US threat to the country on nuclear issue.
Bangladesh, the largest jute producing country in the world, has more than 60 jute spinning mills, which produce nearly 0.35 million tonnes of jute yarn per year. Out of the production about 0.29 million tonnes are exported to different countries including Turkey, Iran, USA and Belgium.
The BJSA chairman said if uninterrupted power and energy supply to our production units are ensured our production cost would not go up much even after fuel price hike in the country.
"We do not get supply of electricity for 8-10 hours almost every day over the last one year," he said adding some of spinning mills have already become sick due to liquidity crisis for higher production cost.
He demanded uninterrupted power and gas supply, subsidised fuel oil, reduced interest rate on bank loans and higher cash incentives for their industry in a bid to survive within this prevailing crisis.
"If the government does not support us, thousands of jute growers in the country will face losses and one of the major export earning sector will extinct," he said.
In terms of export earnings, Bangladesh's jute and jute goods is in the third highest position preceded by ready-made garments and frozen foods.
Bangladesh's earning from the jute goods in the first 11 months of the just concluded fiscal stood at $292.87, a fall by 1.60 per cent over that of the same period of fiscal 2006-07.
However, the export of raw jute increased by 14.41 per cent to $156.90 million in the first 11 months of the last fiscal 2007-08.