Steep rise in raw jute price hit jute goods exports market

Jute goods exports have logged almost flat growth from 2010-11 (0.19 million tonne) to 2013-14 (0.21 million tonne). However, jute goods exports declined sharply in 2014-15 to 0.15 million tonne, a fall of 27 %.

Manish Poddar, chairman, Indian Jute Mills Association (IJMA) said that the rising prices of jute goods has both a short-term and long-term impact on the export market. While exports may not be impacted in a big way in value terms, the decline would be felt in volume terms. They have already lost major export markets like Egypt and Syria. Moreover, there is no incentive from the Government of India on exports unlike Bangladesh which continues to incentivize jute exports.

A squeeze in export orders has wiped out profitability of the mills with major export orders.

A report by the Jute Commissioner Subrata Gupta said that jute mills with substantial export orders have been adversely impacted as several had contracted orders with foreign buyers without expecting such huge jump in raw jute prices.

While on one hand, this could wipe out profit for these mills, on the other, the increase in prices of these goods could also shrink the demand from foreign buyers. Further, the sharp increase in price of some products such as jute felt and Hessian can also adversely impact the opening up of new markets, such as those for geo-textiles and jute composites. These developments do not augur well for the health of the jute sector in the long term.

The escalated prices of jute goods as well the B Twill sacking prices are now ruling at Rs 74,000 a tonne whereas Hessian has moved beyond Rs 100,000 per tonne.