Jute regaining its importance ******
Saturday, 23 April 2011
Anu Mahmud
W ith the Cabinet's approval of the Jute and Textile Ministry's proposal for reopening five jute mills, the process of reinvigorating the country's jute sector has certainly received a big boost. Closed by the past four-party alliance government in defiance of the trend of global preference for natural fibre and linked to economic prospects and the livelihoods of thousands of employees, the mills when in operation, are hopefully going to prove how unwise the decision was. Not only was early decision contrary to the rules of economy of scale, it also acted retrogressively. Now we have to redouble our efforts to get a hefty share of the jute economy which is on course to a great revival. Our neighbour India was prompt in seeing the opportunity and started working on it right from day one. The decision to reopen five state-run jute mills has enormous potential particularly if it is considered in the context of the next move towards making the Adamjee Jute Mills, once the world's largest of such units, operational. However the challenge will be daunting because reports published in different newspapers earlier have it that entire machines and structure were sold or looted from their locations. If any unit comparable with that behemoth of a jute mill has to be set up there, more likely the enterprise has to be built up all over again. But the option should be kept open because jute and jute goods are going very strong on the international market. Of the five mills, two have gone into operation in March last and the rest are expected to start functioning by the end of this year. It is also good to know that the government is contemplating recruitment of trained workers on a permanent basis. Now that the turnaround of the industry is quite clear, there should hardly be any reason for running the mills on losses. But installation of modern machines, retraining of workers and diversification of products, among other initiatives, may be a key factor to a successful re-launching of the jute mills. We certainly do not want to go back to the bad old days when the industry languished under heavy debt and in enormous losses. The poor, top-heavy management and lack of transparency have been responsible, more often than not, for turning most of our state-run industries into losing concerns. Now we must be competitive enough to run the good global tiding in our favour. The scientist of the Agriculture Research Wing (ARW) of the Bangladesh Jute Research Institute (BJRI) have, so far, developed 38 improved jute varieties, of which 14 are already in cultivation across the country. Besides, the BJRI has developed a number of improved jute production technologies for developing jute-based cropping patterns, minimising production costs, reducing dependence on pesticides in controlling insects and disease pests, improving the quality of jute fibre, and for increased production. Improved technologies of the BJRI are transferred to the farmers through the institute's out-reach research section. But the Department of Agricultural Extension (DAE) is the major technology transfer agent of agricultural research findings on jute. Research organisations like BJRI, Bangladesh Agricultural Research Institute (BARI) and Bangladesh Rice Research Institute (BRRI), generate technologies for farmers' use, which are transferred by the DAE to the growers. Technology generated from research institutions is finally recommended by the National Seed Board. The research organisations provide breeder seeds to the Bangladesh Agricultural Development Corporation (BADC) for production of foundation seeds, to be distributed among the farmers for increasing production. The jute export accounts for about six per cent of the country's foreign exchange earning. Jute, kenaf and other allied fibre crops, commonly referred to as JAF crops, constitute the second most important natural fibres in the world. Around 450 thousand hectares of land of the country is under jute cultivation which produces 900 thousand to one million tonnes of jute fibre annually. Meanwhile, the International Jute Study Group (IJSG) with its headquarters in Dhaka provides an effective framework for international cooperation, consultation and policy development among members regarding jute economy. The objective of the IJSG is to promote expansion of international trade in jute and jute products by maintaining existing markets and developing new markets. The Group was also established to provide a forum for active participation of private sector in the development of the jute sector and also to address the issues of poverty alleviation, unemployment as well as development of human resources. The IJSG has also been facilitating improvement of structural conditions in the jute sector by improving productivity and quality, and promotion of the application of new processes and technologies. Its objectives also include creating and increasing awareness about the beneficial effects of the use of jute as an environmentally-friendly, renewable and biodegradable natural fibre. Besides, another purpose of the Group was improvement of market intelligence to ensure greater transparency in the international jute market in collaboration with other organisations, including the Food and Agricultural Organisation (FAO) of the United Nations. The IJSG has been playing a vital role in highlighting the importance of jute and kenaf and jute-kenaf products to the economies of a number of countries and advocating the cause of jute and kenaf. The researches on jute first started in this country in 1936, through the Jute Agricultural Research Laboratory (JARL) in Dhaka by the erstwhile Indian Central Jute Committee (ICJC). The ICJC was renamed as BJRI in 1974 after the liberation of Bangladesh. For region-specific agricultural research on jute as per the demand and necessity of the farmers, the BJRI has the Central Agricultural Experimental Station on jute at Manikganj. For long-term preservation of indigenous and exotic germplasm of jute, kenaf and mestal, the only gene bank in the world was established at the BJRI headquarters in 1982. Good news is that, the BJRI, which has been suffering from manpower shortage and funds constraint for years, has finally got the government nod to recruit 61 employees, including 17 scientists. It took the institute four years to get approval for fresh recruitments. Several scientists have left BJRI due to lack of opportunities and lower incentives and have settled abroad. The BJRI currently has about 400 employees against 541 posts. Its annual budget of Tk 190 million is not also sufficient to run research and development works properly. Besides, most of the equipment has become obsolete and almost unusable. The spinning mill of the BJRI requires modernisation and renovation. Diversification of jute products has become mostly non-functional in the absence of modernisation. The BJRI is the oldest mono-crop research institute in the country. The present government is giving due attention to strengthen the organisation. The government has temporarily withdrawn a restriction on exports of low-grade raw jute to tap foreign markets as many farmers and traders sit with stocks due to less demand against huge production. A restriction on export was imposed earlier because the overall production of jute was low. But the opportunity to export has widened after a good harvest in the immediate past season. In 2010, growers bagged more than 8 million bales of jute, up from 6 million bales in 2009, according to Bangladesh Bureau of Statistics. But a bumper but low quality production caused a fall in the prices. The prices of low quality jute fell to Tk 1,300 per maund this year from Tk 1,700 in November-December last year. However, the extent of fall in prices of quality jute is not much. Farmers in south-western regions - Jessore and Kushtia - produce the low-grade BTR jute. Exporters indicate, they used to export raw BTR jute to China, Pakistan and India before the imposition of the ban in February last year. The latest withdrawal of the ban may not bring about benefit to the farmers and help rebound the prices. Traders indicate that the withdrawal of the ban might encourage foreign buyers to place orders for low-grade jute, used for marketing bags and sacks. Importers will need to spend less to buy raw jute. With the worldwide demotion of synthetic, now known to be a proven environmental and health hazard, both traditional jute goods and other diversified items have happily been showing a growing trend everywhere. The government is encouraged to see the potentials of the golden fibre and hence decided to import high quality seed to strengthen the sector. A decade or so after the Adamjee Jute Mills were shut down, the lives and livelihoods of the farmers of this versatile hemp plant suffered considerable disruption. But small scale private entrepreneurs in sixteen northern districts of Bangladesh went on record for resisting despondency and salvaging ten to twenty of the still-usable looms from the defunct mills and setting up business against all odds. Today, more than twenty of them are said to be humming and giving jute farmers a fillip. Bangladesh's classic cash crop is clearly regaining its old importance and looks like drawing a number of big players as well which, it is hoped, would not drive the small entrepreneurs out. This otherwise 'obvious' economic effect must be guarded against in a country like Bangladesh where Schumacher's 'small is beautiful' philosophy is not likely to lose its relevance for a long time to come. Some jute entrepreneurs complain that policy makers' words and the reality on the ground do not always tally. Although this legendary golden fibre has immense potential - paper pulp from green jute and yarn for household linen, upholstery and even clothing, not to forget existing items like carpets, rugs, twine and sacking - the government seems too tardy on exploiting all the potential. Jute goods exporters also claim there is no reason why the sector should ever be sick at all as international demand for jute products is often found to greater than the volume the mills here can deliver, which is less than their capacity. Many entrepreneurs who have proved modestly successful in developing new products that are commercially viable have also been found faulting the government for not being encouraging enough. Jute floor coverings, for example, have won selected markets on account of the fibre's biodegradable as well as fire- retardant qualities. Yet policy makers have been permitting the unimpeded import of synthetic floor coverings, and have also been taking a number of negative decisions that seemed to be designed to throttle the sector rather than revamp it. This must be rectified. Serious efforts at research and development, linked to commercially viable projects, are also called for. Diversified products like hand-braided rugs, modelled on the specifications of guaranteed foreign buyers, have been a great success and could be replicated if buyers can be located prior to production. Clues for items that cater to current taste in the developed world should be getting as much government support as possible. In an apt response to the revived global interest in jute and favourable price trends being witnessed recently, the government has decided to take back the ownership of 20 loss-making jute and textile mills. The decision follows the failure of the Privatisation Commission to sell the enterprises at reasonable prices. Reopening of the closed mills and factories had been an election pledge of the government. And jute which is fondly called golden fibre had once the economic lifeline of the country. Any government that accords high priority to creating and expanding employment opportunity cannot ignore the jute sector. The jute sector provides employment, directly, to 40 million people. But many jute mills have been closed down or sold away thoughtlessly. After the liberation of Bangladesh there were 77 jute mills under state ownership. The jute mills were incurring losses but their real adversity began after the change of August 1975. Most of the jute mills were shut down, some were sold to private owners at throw-away prices. The closing down of Adamjee Jute Mills had been as rash an action as could be imagined. This was the biggest jute mill in the world and the country's flagship industry. It employed, at its height, 26,000 people, and more than 10,000 at the time it was closed. The then four-party alliance carried out this most injudicious task without consulting the broad spectrum of public opinion, perhaps at the bidding of the World Bank and the IMF. The reason given was that the mill was hugely in the red. It was well-known that Adamjee Jute Mill was plagued by chronic mismanagement and corruption and was burdened with a top-heavy administration. But the government of the day put the blame for the losses squarely on a section of workers, the so-called union bosses. The question is, if a government cannot deal with a few union bosses, how it will run a state. The fact is that the closure was part of a blueprint to wipe away all possibilities of the country's industrial self-sufficiency. It is good to learn from the Jute and Textile Minister that by the end of the year five government-owned jute mills will be reopened. His expectation has already been realised with Prime Minister Sheikh Hasina herself opening the Quomi jute mill in its new name National Jute Mill on April 09 last. Another favourable factor for jute trade is that India has recently withdrawn the 14 per cent duty it had imposed on import of Bangladesh jute goods. The possibilities of jute are not only vast but increasing. If the government can bridle corruption, end mismanagement and provide the right policy support, jute can regain its lost golden-fibre glory. Policy support includes the prohibition of packaging with synthetic substitutes. (The writer is an economist and researcher, and can be reached at e-mail; anumahmud@yahoo.com )
W ith the Cabinet's approval of the Jute and Textile Ministry's proposal for reopening five jute mills, the process of reinvigorating the country's jute sector has certainly received a big boost. Closed by the past four-party alliance government in defiance of the trend of global preference for natural fibre and linked to economic prospects and the livelihoods of thousands of employees, the mills when in operation, are hopefully going to prove how unwise the decision was. Not only was early decision contrary to the rules of economy of scale, it also acted retrogressively. Now we have to redouble our efforts to get a hefty share of the jute economy which is on course to a great revival. Our neighbour India was prompt in seeing the opportunity and started working on it right from day one. The decision to reopen five state-run jute mills has enormous potential particularly if it is considered in the context of the next move towards making the Adamjee Jute Mills, once the world's largest of such units, operational. However the challenge will be daunting because reports published in different newspapers earlier have it that entire machines and structure were sold or looted from their locations. If any unit comparable with that behemoth of a jute mill has to be set up there, more likely the enterprise has to be built up all over again. But the option should be kept open because jute and jute goods are going very strong on the international market. Of the five mills, two have gone into operation in March last and the rest are expected to start functioning by the end of this year. It is also good to know that the government is contemplating recruitment of trained workers on a permanent basis. Now that the turnaround of the industry is quite clear, there should hardly be any reason for running the mills on losses. But installation of modern machines, retraining of workers and diversification of products, among other initiatives, may be a key factor to a successful re-launching of the jute mills. We certainly do not want to go back to the bad old days when the industry languished under heavy debt and in enormous losses. The poor, top-heavy management and lack of transparency have been responsible, more often than not, for turning most of our state-run industries into losing concerns. Now we must be competitive enough to run the good global tiding in our favour. The scientist of the Agriculture Research Wing (ARW) of the Bangladesh Jute Research Institute (BJRI) have, so far, developed 38 improved jute varieties, of which 14 are already in cultivation across the country. Besides, the BJRI has developed a number of improved jute production technologies for developing jute-based cropping patterns, minimising production costs, reducing dependence on pesticides in controlling insects and disease pests, improving the quality of jute fibre, and for increased production. Improved technologies of the BJRI are transferred to the farmers through the institute's out-reach research section. But the Department of Agricultural Extension (DAE) is the major technology transfer agent of agricultural research findings on jute. Research organisations like BJRI, Bangladesh Agricultural Research Institute (BARI) and Bangladesh Rice Research Institute (BRRI), generate technologies for farmers' use, which are transferred by the DAE to the growers. Technology generated from research institutions is finally recommended by the National Seed Board. The research organisations provide breeder seeds to the Bangladesh Agricultural Development Corporation (BADC) for production of foundation seeds, to be distributed among the farmers for increasing production. The jute export accounts for about six per cent of the country's foreign exchange earning. Jute, kenaf and other allied fibre crops, commonly referred to as JAF crops, constitute the second most important natural fibres in the world. Around 450 thousand hectares of land of the country is under jute cultivation which produces 900 thousand to one million tonnes of jute fibre annually. Meanwhile, the International Jute Study Group (IJSG) with its headquarters in Dhaka provides an effective framework for international cooperation, consultation and policy development among members regarding jute economy. The objective of the IJSG is to promote expansion of international trade in jute and jute products by maintaining existing markets and developing new markets. The Group was also established to provide a forum for active participation of private sector in the development of the jute sector and also to address the issues of poverty alleviation, unemployment as well as development of human resources. The IJSG has also been facilitating improvement of structural conditions in the jute sector by improving productivity and quality, and promotion of the application of new processes and technologies. Its objectives also include creating and increasing awareness about the beneficial effects of the use of jute as an environmentally-friendly, renewable and biodegradable natural fibre. Besides, another purpose of the Group was improvement of market intelligence to ensure greater transparency in the international jute market in collaboration with other organisations, including the Food and Agricultural Organisation (FAO) of the United Nations. The IJSG has been playing a vital role in highlighting the importance of jute and kenaf and jute-kenaf products to the economies of a number of countries and advocating the cause of jute and kenaf. The researches on jute first started in this country in 1936, through the Jute Agricultural Research Laboratory (JARL) in Dhaka by the erstwhile Indian Central Jute Committee (ICJC). The ICJC was renamed as BJRI in 1974 after the liberation of Bangladesh. For region-specific agricultural research on jute as per the demand and necessity of the farmers, the BJRI has the Central Agricultural Experimental Station on jute at Manikganj. For long-term preservation of indigenous and exotic germplasm of jute, kenaf and mestal, the only gene bank in the world was established at the BJRI headquarters in 1982. Good news is that, the BJRI, which has been suffering from manpower shortage and funds constraint for years, has finally got the government nod to recruit 61 employees, including 17 scientists. It took the institute four years to get approval for fresh recruitments. Several scientists have left BJRI due to lack of opportunities and lower incentives and have settled abroad. The BJRI currently has about 400 employees against 541 posts. Its annual budget of Tk 190 million is not also sufficient to run research and development works properly. Besides, most of the equipment has become obsolete and almost unusable. The spinning mill of the BJRI requires modernisation and renovation. Diversification of jute products has become mostly non-functional in the absence of modernisation. The BJRI is the oldest mono-crop research institute in the country. The present government is giving due attention to strengthen the organisation. The government has temporarily withdrawn a restriction on exports of low-grade raw jute to tap foreign markets as many farmers and traders sit with stocks due to less demand against huge production. A restriction on export was imposed earlier because the overall production of jute was low. But the opportunity to export has widened after a good harvest in the immediate past season. In 2010, growers bagged more than 8 million bales of jute, up from 6 million bales in 2009, according to Bangladesh Bureau of Statistics. But a bumper but low quality production caused a fall in the prices. The prices of low quality jute fell to Tk 1,300 per maund this year from Tk 1,700 in November-December last year. However, the extent of fall in prices of quality jute is not much. Farmers in south-western regions - Jessore and Kushtia - produce the low-grade BTR jute. Exporters indicate, they used to export raw BTR jute to China, Pakistan and India before the imposition of the ban in February last year. The latest withdrawal of the ban may not bring about benefit to the farmers and help rebound the prices. Traders indicate that the withdrawal of the ban might encourage foreign buyers to place orders for low-grade jute, used for marketing bags and sacks. Importers will need to spend less to buy raw jute. With the worldwide demotion of synthetic, now known to be a proven environmental and health hazard, both traditional jute goods and other diversified items have happily been showing a growing trend everywhere. The government is encouraged to see the potentials of the golden fibre and hence decided to import high quality seed to strengthen the sector. A decade or so after the Adamjee Jute Mills were shut down, the lives and livelihoods of the farmers of this versatile hemp plant suffered considerable disruption. But small scale private entrepreneurs in sixteen northern districts of Bangladesh went on record for resisting despondency and salvaging ten to twenty of the still-usable looms from the defunct mills and setting up business against all odds. Today, more than twenty of them are said to be humming and giving jute farmers a fillip. Bangladesh's classic cash crop is clearly regaining its old importance and looks like drawing a number of big players as well which, it is hoped, would not drive the small entrepreneurs out. This otherwise 'obvious' economic effect must be guarded against in a country like Bangladesh where Schumacher's 'small is beautiful' philosophy is not likely to lose its relevance for a long time to come. Some jute entrepreneurs complain that policy makers' words and the reality on the ground do not always tally. Although this legendary golden fibre has immense potential - paper pulp from green jute and yarn for household linen, upholstery and even clothing, not to forget existing items like carpets, rugs, twine and sacking - the government seems too tardy on exploiting all the potential. Jute goods exporters also claim there is no reason why the sector should ever be sick at all as international demand for jute products is often found to greater than the volume the mills here can deliver, which is less than their capacity. Many entrepreneurs who have proved modestly successful in developing new products that are commercially viable have also been found faulting the government for not being encouraging enough. Jute floor coverings, for example, have won selected markets on account of the fibre's biodegradable as well as fire- retardant qualities. Yet policy makers have been permitting the unimpeded import of synthetic floor coverings, and have also been taking a number of negative decisions that seemed to be designed to throttle the sector rather than revamp it. This must be rectified. Serious efforts at research and development, linked to commercially viable projects, are also called for. Diversified products like hand-braided rugs, modelled on the specifications of guaranteed foreign buyers, have been a great success and could be replicated if buyers can be located prior to production. Clues for items that cater to current taste in the developed world should be getting as much government support as possible. In an apt response to the revived global interest in jute and favourable price trends being witnessed recently, the government has decided to take back the ownership of 20 loss-making jute and textile mills. The decision follows the failure of the Privatisation Commission to sell the enterprises at reasonable prices. Reopening of the closed mills and factories had been an election pledge of the government. And jute which is fondly called golden fibre had once the economic lifeline of the country. Any government that accords high priority to creating and expanding employment opportunity cannot ignore the jute sector. The jute sector provides employment, directly, to 40 million people. But many jute mills have been closed down or sold away thoughtlessly. After the liberation of Bangladesh there were 77 jute mills under state ownership. The jute mills were incurring losses but their real adversity began after the change of August 1975. Most of the jute mills were shut down, some were sold to private owners at throw-away prices. The closing down of Adamjee Jute Mills had been as rash an action as could be imagined. This was the biggest jute mill in the world and the country's flagship industry. It employed, at its height, 26,000 people, and more than 10,000 at the time it was closed. The then four-party alliance carried out this most injudicious task without consulting the broad spectrum of public opinion, perhaps at the bidding of the World Bank and the IMF. The reason given was that the mill was hugely in the red. It was well-known that Adamjee Jute Mill was plagued by chronic mismanagement and corruption and was burdened with a top-heavy administration. But the government of the day put the blame for the losses squarely on a section of workers, the so-called union bosses. The question is, if a government cannot deal with a few union bosses, how it will run a state. The fact is that the closure was part of a blueprint to wipe away all possibilities of the country's industrial self-sufficiency. It is good to learn from the Jute and Textile Minister that by the end of the year five government-owned jute mills will be reopened. His expectation has already been realised with Prime Minister Sheikh Hasina herself opening the Quomi jute mill in its new name National Jute Mill on April 09 last. Another favourable factor for jute trade is that India has recently withdrawn the 14 per cent duty it had imposed on import of Bangladesh jute goods. The possibilities of jute are not only vast but increasing. If the government can bridle corruption, end mismanagement and provide the right policy support, jute can regain its lost golden-fibre glory. Policy support includes the prohibition of packaging with synthetic substitutes. (The writer is an economist and researcher, and can be reached at e-mail; anumahmud@yahoo.com )