Govt bans raw jute export to meet local demand
Wednesday, 9 December 2009
FE Report
The government has banned export of all grades of raw jute following a supply scarcity of the fibre, faced by the domestic jute mills.
"The government has decided to keep export of all kinds of raw jute suspended with an immediate effect in order to ensure its supply in the internal market," said a circular issued on December 7 (Monday) by the textile and jute ministry.
The government has put the embargo on export of raw jute in line with the articles 4 and 13 of the Jute Ordinance 1962, the circular said, adding the ban will be in force until any further order is given in this connection.
It further said raw jute, both in the forms of 'kancha and 'pacca' bales, that has already been taken to ports but yet to be shipped, will come under the export ban.
The decision on the export ban has come against the backdrop of an immense scarcity of raw jute in the domestic market, the sector insiders said.
Hailing the ban on export of raw jute, the country's jute mill operators said the decision will help ease the prevailing supply scarcity of their main raw material. According to them, the jute mills are severely hit by raw jute scarcity to run their production.
The price of raw jute has already marked an abnormal rise in recent times mainly due to inadequate supply of the natural fibre. Jute mill operators said the raw jute price has jumped to Tk 1,700 - Tk 1,750 per maund from Tk 1,200 to 1,250 just a couple of months back.
The jute mills are unable to afford such exorbitant prices, as their cost of production has gone up significantly, they said.
The country's total availability of raw jute could be 4.5 million bales this year against an estimated raw jute output of 5.5 million bales in the outing season, private jute mill operators said.
Presently, local jute mills - both private and state-run ones - consume 3.0 million to 3.2 million bales of raw jute per annum, while the country's raw jute export is estimated at 1.8 million bales a year.
Apart from such demand-supply mismatch, a section of hoarders have also created an artificial crisis of the fibre in the market, they observed.
It was also alleged that some traders had been exporting quality raw jute in the name of rejected grades.
Taking the overall situation into consideration, the country's private jute mills had sought the government intervention in addressing the problem of raw jute scarcity.
However, expressing their resentment over the export ban, the raw jute exporters said such a sudden embargo would affect their business.
"We will face a huge loss because of the government's sudden restriction on raw jute export," President of the Bangladesh Jute Association (BJA) Sheikh Farook Hossain told the FE.
"Already we have export deals with foreign buyers … a total of 0.9 million to 1.0 million bales of raw jute are now in the export pipeline," he said.
The BJA leader said prices of both raw jute and jute goods have gone up significantly in the global market, mainly due to increased global demand for the environment-friendly natural fibre.
He, however, ruled out the allegation of any supply shortage of raw jute in the domestic market.
Some 0.6 million bales of raw jute were exported during the July-October period of the current fiscal, while the amount was 1.75 million bales in the entire 2008-09 fiscal, he mentioned.
Replying to another query, the BJA president said: "We have no problem if we are able to sell raw jute to local mills… But the main problem is that we do not get our payments accordingly."
He also said the raw jute exporters Tuesday staged demonstration in Khulna to protest the government's export ban.
The Association will hold an emergency meeting today (Wednesday) to discuss the next plan of action against such embargo, he added.
The government has banned export of all grades of raw jute following a supply scarcity of the fibre, faced by the domestic jute mills.
"The government has decided to keep export of all kinds of raw jute suspended with an immediate effect in order to ensure its supply in the internal market," said a circular issued on December 7 (Monday) by the textile and jute ministry.
The government has put the embargo on export of raw jute in line with the articles 4 and 13 of the Jute Ordinance 1962, the circular said, adding the ban will be in force until any further order is given in this connection.
It further said raw jute, both in the forms of 'kancha and 'pacca' bales, that has already been taken to ports but yet to be shipped, will come under the export ban.
The decision on the export ban has come against the backdrop of an immense scarcity of raw jute in the domestic market, the sector insiders said.
Hailing the ban on export of raw jute, the country's jute mill operators said the decision will help ease the prevailing supply scarcity of their main raw material. According to them, the jute mills are severely hit by raw jute scarcity to run their production.
The price of raw jute has already marked an abnormal rise in recent times mainly due to inadequate supply of the natural fibre. Jute mill operators said the raw jute price has jumped to Tk 1,700 - Tk 1,750 per maund from Tk 1,200 to 1,250 just a couple of months back.
The jute mills are unable to afford such exorbitant prices, as their cost of production has gone up significantly, they said.
The country's total availability of raw jute could be 4.5 million bales this year against an estimated raw jute output of 5.5 million bales in the outing season, private jute mill operators said.
Presently, local jute mills - both private and state-run ones - consume 3.0 million to 3.2 million bales of raw jute per annum, while the country's raw jute export is estimated at 1.8 million bales a year.
Apart from such demand-supply mismatch, a section of hoarders have also created an artificial crisis of the fibre in the market, they observed.
It was also alleged that some traders had been exporting quality raw jute in the name of rejected grades.
Taking the overall situation into consideration, the country's private jute mills had sought the government intervention in addressing the problem of raw jute scarcity.
However, expressing their resentment over the export ban, the raw jute exporters said such a sudden embargo would affect their business.
"We will face a huge loss because of the government's sudden restriction on raw jute export," President of the Bangladesh Jute Association (BJA) Sheikh Farook Hossain told the FE.
"Already we have export deals with foreign buyers … a total of 0.9 million to 1.0 million bales of raw jute are now in the export pipeline," he said.
The BJA leader said prices of both raw jute and jute goods have gone up significantly in the global market, mainly due to increased global demand for the environment-friendly natural fibre.
He, however, ruled out the allegation of any supply shortage of raw jute in the domestic market.
Some 0.6 million bales of raw jute were exported during the July-October period of the current fiscal, while the amount was 1.75 million bales in the entire 2008-09 fiscal, he mentioned.
Replying to another query, the BJA president said: "We have no problem if we are able to sell raw jute to local mills… But the main problem is that we do not get our payments accordingly."
He also said the raw jute exporters Tuesday staged demonstration in Khulna to protest the government's export ban.
The Association will hold an emergency meeting today (Wednesday) to discuss the next plan of action against such embargo, he added.