Political turmoil in Bangladesh hampered jute export and production by Tk5.1 bn

Bangladesh exports and local trade of jute hit hard by 20-30 per cent in the last 26 days due to political turmoil. The jute sector suffered loss of an estimated Tk 5.1 billion, insiders said. The Bangladesh Jute Mills Corporation (BJMC), Jute Mills Association (BJMA), Jute Spinners Association (BJSA) officials said that nearly 249 jute mills in the country have been forced to cut production by 42,000 tonnes owing to the blockade enforced by the BNP-led alliance since January 5.

According to businesses, August-March is the peak season for jute harvest, trading, mills’ production and exports. Supply shortage of raw jute, Jute Batching Oil and diesel due to halt in transportation has hampered production and exports.

BJSA estimates that 96 mills under the association have cut production by 22,608 tonnes worth Tk1.7 billion since the blockade began.

BJSA chairman Md Shahjahan stated that jute yarn factories need approximately 16,000 litres of JBO per day, but supply has almost halved. Exporters have also halted shipment as transportation cost from the factories to Benapole and Chittagong port increased by 100 percent while orders have also fallen significantly.

While, BJMA secretary A Barik Khan said that 145 mills under the association have cut production by 20,000 tonnes worth Tk1.45 billion in the 26 days blockade. Many mills have cut production by more than 30 per cent.

An official at state-run BJMC said that due to this situation stockpile of the government-owned factories increased further.

BJMC’s 24 mills cut production to 400 tonnes a day from 700 tonnes last year for weak demand for jute goods, mainly sacks. The blockade has caused nearly a 10,000 tonnes additional to the stockpile worth Tk 700 million.

Bangladesh Jute Association (BJA) secretary Abdul Kaiyum said that exports plunged to 1.98 million bales (bale=180 kgs) in 2013-14 from 2.05 million bales in FY’13. Normally in October-March period, the association members export nearly 0.1-0.15 million bales per month. The shipment of raw jute faced serious setback in January as export has decreased by more than by 80 per cent.

Exports from the jute sector amounted to US$824 million in FY’14, the Export Promotion Bureau data showed.

Presently, there are 249 jute manufacturing units in the country. Of which, 96 private spinning mills produce jute yarn, while 24 state-owned mills and 145 private jute mills manufacture hessian, sacks and bags.

The jute and jute sector is highly fire-sensitive and they can’t take risk in the highways. If the political turmoil continues, jute factories will not be able to repay bank loans in time and many of them will become defaulters.