The Present State

Flogging an old horse?

Khaled Rab

It is only in the look that jute today is a golden fibre but not in the sense of a golden goose it used to be in it's hey day! That seems to be the trademark attitude of resignation to the sector being maintained by the principal actors in the field who could otherwise have changed its lot by tuning in to the changing times.

Does it mean the versatile fibre has to be written off as a topic for sentimental indulgence in pure nostalgia and lamentation? Certainly not. This positive assertion stems from my belief as a jute professional with a background in global marketing that the fibre still has a lot of potential to be coming good, bouncing back in order to claim a reasonable share of the international market arrayed against synthetic products. But for that to happen we have to have the right kind of a policy mix designed to shore up the fledgling sector by basically diversifying the production line.

I had met the Jute Man of Dundee Mr. Edward Bill Duncan (who was popularly known as the Jute King of Europe during 1960's and 1970s) for the first time in 1967 when I was posted in Nakalia, a jute village in Pabna. He came to procure jute for Tay Textiles,

Reduced to raw jute

Dundee. He loved to say that the last two links between the East and West are Jute and the English Language. The last time I met him was in February 1973 in London. During the course of discussion he told me that with proper attention and care, jute would be able to survive for centuries to come.

Jute is a versatile, environment friendly natural fibre and Bangladesh has a considerable agro-ecological comparative advantage in its production, apart from employing a huge proportion of farm labour. The ongoing globalisation is providing both challenges and opportunities. To participate in the process and prosper, Bangladesh has to exploit its comparative advantages and provide an enabling environment to the export oriented industries.

To achieve a competitive edge in jute, it is essential to effect general improvements starting from increasing the yield through improving the quality of fibre in the field to ensuring fair and incentive price to the growers.

During the last couple of years production, supply and price of raw jute have not been stable. As a result, serious problems arose for the industry to get the required quantity of raw materials of desired quality at a reasonable price to be able to compete in the international market. At the peak of the current season few mills in the public as well as the private sector could manage to build up a stock for one month mainly due to financial crisis accompanied by unstable price and supply situations.

Jute and allied fibres have been recognised to occupy a unique position as eco-friendly, biodegradable renewable natural resources with substantial value addition at each stage of processing. But it is a matter of regret that this sector has been used as a field for politics.

It is fact that failure of all the governments in making the right policy decisions to salvage the industry has led it to its present sick state.

The industry as a whole is on a life support system. Large scale privatisation of jute mills in 1982 accompanied by downsizing and closure of production capacity in recent years as per recommendation of World Bank aggravated the overall crisis of jute industry.

It was said that at least 5 Jamuna Bridges could have been constructed with the amount of loss in the now-defunct Adamjee Jute Mills. The fact is that government had to provide Tk. 300.00 crore for financing the so called golden handshake scheme in the Adamjee Jute Mills. But, this Tk. 300 Crore could have been provided to the jute industry for BMR of over 50-year-old machinery of the mills. It is important to note that there was no provision for BMR of jute mills machinery in the JSAC programme, which was essential to increase productivity, and efficiency to reduce average cost of production for increased competitiveness in the world market.

The policy makers should review the present state of jute industry carefully and chalk out programmes without further loss of time. Following areas need to be analysed for decision:
a) Implementation of privatisation policy without taking into account:

• World import demand, real-time and potential; and
• Our performance vis-a-vis that of the competing countries.

Large scale BMR was not envisaged either.
b) Downsizing of production capacity of public sector mills including closure of Adamjee and few other mills as per JSAC programme without considering:

• World demand for traditional jute products.
• Requirement of BMR of mill machinery to increase productivity and production efficiency.

All the above decisions/actions actually resulted in overall shrinkage of production of jute goods with a decrease in export quantity and export earning of Bangladesh and increased export from competing countries. In the last five years Bangladesh export has fallen to 192 thousand tonnes while India's export rose to over 200 thousand tonnes.

It cannot be contested that lack of strong and pragmatic industrial policy has taken the public sector jute mills on their way to virtual collapse. Conditions in the private sector jute mills are more or less the same. Few Private jute mills are partially operating mainly in the local market and the rest have been shut down.

Since, jute has been a commodity of national pride for the people of Bangladesh and its importance in our life and livelihood remains immense, I suggest the following policy decisions for immediate consideration:

With regard public sector jute mills
a) Timely availability of fund to purchase required raw jute during the season;
b) Immediate arrangement of fund towards BMR of machinery to increase productivity;
c) Linking of subsidy to performance;
d) Proper management and manning i.e. through a corporate structure;
e) Introduction of policy of prize and punishment.
With regard to private sector jute mills:
a) Freeze JSAC loan, which is supposed to be soft and/or link deduction of a minimum amount from concerned mills against their export earnings;
b) Bank loan to be analysed thoroughly in the same light as that of other private sector industry.

It may also be pointed out that huge portion of the total bank loans of the individual mills, which are being provided from time to time through cash credit limit, accounts for interest burden. This may be analysed and reviewed and a reasonable portion may be written off as was done in the case of so many other defaulters.

I feel that strong and pragmatic policy measures in the areas delineated may provide ways to overcome the present crisis of jute industry and rejuvenate it in a growingly environment conscious global market place.
Not much time is left to rev up jute---time is of the essence here.

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The writer is a jute expert of long standing.