Funding constraints put damper on jute market
Sunday, 30 September 2012
Arafat Ara
Fund constraints held jute millers and traders back putting a damper on demand for the golden fibre to the utter deprivation of farmers.
Farmers saw a significant fall in prices of the world's most adorned biodegradable natural fibre, as the jute millers and traders could not go for purchase of the cash-crop as targeted because of their fund constraints, sources said.
If the situation was allowed to linger long, it would cause an adverse impact on overall production in the country's jute industry, they feared.
Leaders of Bangladesh Jute Mills Corporation (BJMC), Bangladesh Jute Mills Association (BJMA), Bangladesh Jute Spinners Association (BJSA) and Bangladesh Jute Association (BJA) said they were yet to achieve even half of the jute purchase targets.
BJMA officials said their miller members planned to procure 1.0 million bales of raw jute this season.
But so far they could meet only 10 per cent of the total target due to the fund constraint.
Same was the situation with the BJMC, as it was not able to buy the targeted volume of raw jute because of their fund scarcity.
The state-run mills have so far procured 535,000 bales of raw jute against the target of 1,220,000 bales in the ongoing fiscal year.
BJA chairman Mahfuj-Ul-Haque said they had a plan to buy 2.5 million bales of raw jute in the current year. But they so far could buy only one bale.
Mr Haque said nearly 95 per cent of raw jute exporters could not procure jute this season.
In such a situation the farmers emerged losers as they were not getting prices up to the expectation.
According to the jute traders, the prices of raw jute at the field level stood at Tk 900 to Tk 1700 per maund this year, down from last year's Tk 1500 to Tk 2200 depending on quality.
According to the leaders in the sector, if the traders cannot purchase jute within the next 15 days, the market will be under the full control of hoarders.
Then they would be compelled to buy the commodity at much higher prices from the hoarders while the farmers would incur heavy losses, they said.
They also said if the banks at least give them assurance about availability of loans during the period, they can place orders for purchase of jute from the farmers.
Recently the Textile and Jute Ministry in letters to four state-run banks asked them to provide loans to the jute sector to overcome the funding crisis.
The ministry also suggested disbursement of Tk 1.0 billion by each of the four state-owned banks immediately to the jute mills and raw jute exporters for the sake of running their business smoothly, sources said.
The banks are Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank.
Earlier in a meeting Textiles and Jute Minister Abdul Latif Siddique said, "The prices of raw jute decreased recently following a scarcity of money in the market".
"If the banks and the finance division do not cooperate, the jute industry cannot remain stable," he also said.
The managing directors of four state-owned banks who attended the meeting evinced keen interest in extending loans to the jute sector.
The millers said though the concerned minister asked the some state-owned banks to give loans to the jute sector, there was no notable progress yet in this regard.
The jute purchasers said despite the jute ministry's decision, the banks were not cooperating with them and said also it was the matter of the finance ministry and that they should contact that ministry.
Fund constraints held jute millers and traders back putting a damper on demand for the golden fibre to the utter deprivation of farmers.
Farmers saw a significant fall in prices of the world's most adorned biodegradable natural fibre, as the jute millers and traders could not go for purchase of the cash-crop as targeted because of their fund constraints, sources said.
If the situation was allowed to linger long, it would cause an adverse impact on overall production in the country's jute industry, they feared.
Leaders of Bangladesh Jute Mills Corporation (BJMC), Bangladesh Jute Mills Association (BJMA), Bangladesh Jute Spinners Association (BJSA) and Bangladesh Jute Association (BJA) said they were yet to achieve even half of the jute purchase targets.
BJMA officials said their miller members planned to procure 1.0 million bales of raw jute this season.
But so far they could meet only 10 per cent of the total target due to the fund constraint.
Same was the situation with the BJMC, as it was not able to buy the targeted volume of raw jute because of their fund scarcity.
The state-run mills have so far procured 535,000 bales of raw jute against the target of 1,220,000 bales in the ongoing fiscal year.
BJA chairman Mahfuj-Ul-Haque said they had a plan to buy 2.5 million bales of raw jute in the current year. But they so far could buy only one bale.
Mr Haque said nearly 95 per cent of raw jute exporters could not procure jute this season.
In such a situation the farmers emerged losers as they were not getting prices up to the expectation.
According to the jute traders, the prices of raw jute at the field level stood at Tk 900 to Tk 1700 per maund this year, down from last year's Tk 1500 to Tk 2200 depending on quality.
According to the leaders in the sector, if the traders cannot purchase jute within the next 15 days, the market will be under the full control of hoarders.
Then they would be compelled to buy the commodity at much higher prices from the hoarders while the farmers would incur heavy losses, they said.
They also said if the banks at least give them assurance about availability of loans during the period, they can place orders for purchase of jute from the farmers.
Recently the Textile and Jute Ministry in letters to four state-run banks asked them to provide loans to the jute sector to overcome the funding crisis.
The ministry also suggested disbursement of Tk 1.0 billion by each of the four state-owned banks immediately to the jute mills and raw jute exporters for the sake of running their business smoothly, sources said.
The banks are Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank.
Earlier in a meeting Textiles and Jute Minister Abdul Latif Siddique said, "The prices of raw jute decreased recently following a scarcity of money in the market".
"If the banks and the finance division do not cooperate, the jute industry cannot remain stable," he also said.
The managing directors of four state-owned banks who attended the meeting evinced keen interest in extending loans to the jute sector.
The millers said though the concerned minister asked the some state-owned banks to give loans to the jute sector, there was no notable progress yet in this regard.
The jute purchasers said despite the jute ministry's decision, the banks were not cooperating with them and said also it was the matter of the finance ministry and that they should contact that ministry.