Export earnings from jute and jute goods declined drastically in July-November period of the current fiscal year (FY) due to the sanction on Iran and price cuts of the products, industry insiders said.
Exporters also linked political turmoil in the Middle East and economic gloom in Europe to the sluggish demand of the natural fibre.
According to data available with the Export Promotion Bureau (EPB), export earning from the second largest foreign currency earner after apparel fell by 25 per cent over its export target for the period and by 19.8 per cent compared to the same period of the previous FY.
"We are passing through hard times in almost all export destinations. Export earnings both in terms of value and volume have declined," a director of Bangladesh Jute Mills Corporation (BJMC) that oversees the state-run jute mills told the FE, preferring anonymity.
"Besides, demands for jute-made fashionable items are on the increase which we cannot fulfil for lack of modern machinery," he said.
"Moreover, the demand for carpet and carpet backing cloth has fallen as these are not essential items like food," the BJMC official added.
However, echoing with his claim, private sector exporters blamed difficulties in payment realisation mechanism with Iran and depreciation of the Indian rupee against the US dollar for affecting the export of jute and jute goods to Iran and India, the two major destinations of Bangladesh's exports.
"Ongoing economic sanction on Iran and Syria also hurt jute exports to those countries, as buyers are unable to pay for shortage of international currencies and difficulties in payment," President of Bangladesh Jute Association (BJA) Mahafujul Huq told the FE.
"Sanction on Iran and currency depreciation between US dollar and Indian currency came as blows to the sector as well, leading to a fall in demand and price cuts," he added.
"If Bangladesh takes initiatives to settle all bilateral payment issues in riyal-taka mechanism, then export to Iran and Syria can be increased significantly soon," he said.
Mr Huq also informed that following the difficulties in clearance of letters of credit (L/Cs) in US dollar, India had come to an agreement with the Iranian authority to settle all India-Iran payment issues in riyal-rupee mechanism which is now in practice.
Besides, buyers are offering $ 103-105 for per hundred jute sacks, from the previous $ 120, he said adding that the prices of other jute goods, such as yarn, also fell.
According to EPB data, growth of raw jute exports slowed down to 49 per cent in July-November period of this FY from around 20 per cent of the corresponding period of the last FY.
Growth of export earnings from jute sacks and bags declined by 42 per cent from around 30 per cent growth in the same period of last FY, EPB data showed.
"Uncertainty over demand for jute prevails in the global market. Buyers, who had earlier placed orders for six months, have reduced their purchase volumes to meet short-term demands," said Mahmudul Huq, deputy managing director of Janata Jute Mills Ltd, a leading jute yarn and jute goods exporter.
However, to protect the sector and farmers from losses, both the BJMC official and Janata Jute Mill official recommended faster implementation of the compulsory packaging law using jute bags.
"Implementation of the law has become important now to boost domestic consumption and thus shield the whole sector," said Haque.
"If we can ensure packaging of food grains by jute bags alone, the domestic demand would increase," the BJMC official said.
Export earnings from jute, jute goods drop drastically
Badrul Ahsan | Published: December 29, 2013 00:00:00 | Updated: November 30, 2024 06:01:00
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