Demand for jute is inelastic, that

is, a reduction in price will not bring a proportionate increase in its consumption. As a result total income of growers from jute as well as prices of jute falls if sup-ply is increased. Bangladesh is the largest exporter of raw jute, and India is the largest producer and consumer of jute products in the world. Therefore, the local price of raw jute in Bangladesh is deemed the international price. Also the local price of jute prod-ucts in India is considered to be the international price.

Monthly raw jute price move-ment in Bangladesh

Figure-1 shows that during last one year (April ’12 to March ’13), the monthly retted raw jute prices in Bangladesh were almost un-changed in first seven months of the year, if we ignore the effect of exchange rate. On the other hand in last five months it was in little declining trend due to the fund crisis by the local buyer for jute procurement. Only exception was BT-A grade which increased steadily during last three months. However the long-term price stability of raw jute in Bangladesh does not reflect the actual sce-nario of its market price.

Yearly average raw jute export price in Bangladesh

The export price of raw jute (retted, tow and waste) in Bangla-desh was in increasing trend dur-ing 2007-2010, but the prices declined sharply during 2011-2012 (Table-1 and Figure-2). This was because in the last year the local traders and industries of Bangladesh faced a fund crisis for jute procurement which might in turn pulled down the jute prices

in local market as well as in ex-port market. However, consider-ing the average price growth dur-ing 2005-2008 and 2009-2012, it

can be projected that the raw jute price will be around USD 537 per Tonne in an average by 2016.

Monthly raw jute price move-ment in India Considering the data collected from the Jute Baler's Associa-tion of India, the monthly ret-ted raw jute prices in last one year (April ’12 to March ’13) in India was in regular and normal fluctuation trend (Figure-3). Prices of retted raw jute were steady increasing trend during July-October in 2012 and Janu-ary-March in 2013. On the other hand the prices of raw jute were in declining trend during April-June and Novem-ber-December in 2012. In April-June due to old stock clearing and in November-December new jute appears in the market

Raw Jute Price Movement in India and Bangladesh

April 2013

Volume 1, Issue 5

Feature

Page

Raw Jute Price Movement in India and Bangladesh

01-02

IJSG news 03

Upcoming IJSG events 04

Upcoming international events

04

Jute news 04

New associate members of IJSG

04

Issue Highlights

Wipe your carbon footprints with JUTE Page 1

A monthly publication by IJSG

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Figure 1 Monthly movement of raw jute price in Bangladesh

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Figure 2 Average Raw Jute Price movement in Bangladesh

Table 1 average raw jute price in

Bangladesh (USD/Tonne)

Year Average Raw Jute Price

Growth

2005 293.78

21.22% 2006 337.60

2007 272.88

2008 356.12

2009 444.93

6.21% 2010 721.06

2011 592.90

2012 472.56

2016* 537.39 13.72%

*Projected

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leads to regular price decline of raw jute.

Average market price & mini-mum support price of raw jute in India

Every year, the Government of India determines the Minimum Support Prices of various grades of raw jute based on the recom-mendations of the Commission for Agricultural Cost and Prices (CACP) since the season 1966-67 (July-June). During the re-ported period (season 2006-07 to 2012-13) the MSP of raw jute increased steadily.

The market price of TD-5 grade raw jute (a tossa variety grown in Assam) was in increasing trend during season 2006-07 to 2009-10 but it was in decreasing trend during season 2010-11 and 2011-12. The market price of raw jute in India was in declining trend during last two seasons due to high carryover stock and lower demand of jute goods. Table-2 & Figure-4 also show that through-out the period the market prices of TD-5 grade raw jute were higher than the MSPs. In the season 2012-13 the Government of India has increased the Mini-mum Support Price (MSP) of TD-5 grade raw jute from USD 405 per Tonne to USD 532 per Tonne. This is an increase of USD 127 a Tonne or 31.34 per-cent over previous year’s MSP fixed for jute. On the other hand, it can be projected that the average market price of TD-5 grade jute will be USD 490/Tonne in the season 2012-13 and for the first time in the last dec-ade market price of TD-5 grade jute will be lower than the MSP by USD 42/Tonne. Therefore farmers will get direct benefit of MSP after a long period.

The Indian government has also fixed the corresponding MSP for other varieties and grades of raw jute across locations keeping in view, apart from normal market price differentials, the aggregate scores assigned to different grades of raw jute.

Comparison of jute prices at grower level between Bangla-desh & India

Most of the jute farmers belong to the small and marginal farmer categories. These farmers have inadequate holding capacity, which propels them to offload their produce by the earliest op-portunity. Figure-5 showed that Indian growers enjoyed better jute prices than growers of Bang-ladesh in the reported period which is very much important for the sustainability of the growers as well as the jute sector. In 2010 growers of both the country enjoyed better prices comparing with the previous years’ prices. But in 2011 Bangla-deshi growers faced a sharp de-cline by around USD 200/Tonne in jute price. On the other hand Indian growers also faced a de-crease in jute price in 2011 which was half of the magnitude com-pared with the price decline in Bangladesh due to MSP support.

Jute Corporation of India (JCI) acts as the central government’s nodal agency undertaking price support operations, the Govern-ment of India reimburses the losses of JCI incurred in its MSP operations for jute. Moreover, in recent years, Government of India has been providing bank guarantee of Rs. 33 crores for MSP, which enables JCI to ob-tain bank credit to the extent of about Rs. 100 crores. JCI pro-

cures raw jute directly in 171 procurement centers or through its agents including primary co-operative societies. Those initia-tives played a vital role for get-ting better prices of raw jute in India at grower level.

On the contrary, in Bangladesh there is no MSP for jute as it is in India. But there is MSP for paddy/rice. When farmers get competitive returns from substi-tute crops like rice, they switched over to paddy cultivation from jute. As a result Bangladeshi farmers are affecting more be-tween the two major producers which also leads fluctuation in acreage of jute in Bangladesh from year to year.

Concluding Remarks Jute prices tend to be subject to extreme volatility and seasonal

fluctuations. Jute has to face competition with other fibres, especially polypropylene. Whereas the price of jute fibre is about half of propylene, jute sack price generally tends to be more than twice as expensive as poly-propylene sack. This price differ-ence affects the competitiveness of jute products. Instability of price of jute and jute products creates serious problems for both producers and consumers. Fluctuation in the price of jute will affect the income received by jute growers and also will affect the overall economy, espe-cially in those countries where the jute industry is of major im-portance. Author: Md. Saifur Rahman Executive Secretary, Interna-tional Jute Study Group (IJSG)

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Figure 3 Raw jute price movement in India in last one year

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MSP Increase MSP Market Price

Figure 4 Average market prices, MPS of TD-5 grade jute in India

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Figure 5 Comparison of jute prices at grower level between Bangladesh and India

Table 2 Average Market prices and MSPs of TD-5 Grade

Jute in India

Season Market Price $/tonne

MSP MSP increase (%)

2006-07 295 242 9.89%

2007-08 480 255 5.50%

2008-09 610 302 18.48%

2009-10 733 333 10.00%

2010-11 645 381 14.55%

2011-12 460 405 6.35%

2012-13 490* 532 31.34%

* Projected

Training on “Design and Product Development of Jute Diversified Products (JDP)”

Jute Matters Apr i l 2013

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The International Jute Study Group (IJSG) successfully

completed the second phase of the training on “Design and Product Development of Jute Diversified Products (JDP)” in Dhaka from March 4- 11, 2013

The objectives of the training was to provide specialized practical and visual training techniques and innovative de-sign and product development harmonizing the demands of international consumers so as to promote exports of jute

diversified items. The training has been conducted by three trainers from NCDPD, India, Mr. R.K. Srivastava, Ms Amla Srivastava and Mr. Rudy Jr. Romero Rivera. Mr. Shamim Ahmed, SME Trainer from Bangladesh was also attended the whole session. The seven days train-ing were comprised of 17 theoretical sessions, 18 Videos on design, tex-ture, colors, etc, 12 full patterns (bag), 190 bag images, 248 cushion images, 100 design by NCDPD and 10 practi-cal sessions. Dr Chandan Kumar Saha, Projects & Operations officer, Saifur Rahman, Executive Officer and Suriya Ferdous, Senior Project Assistant of IJSG were present in the inaugural ceremony. Dr Saha re-marked the importance of this train-ing in his welcome note and inaugu-rated the session on March 04, 2013.

the cooperation between CFC, the private sector and ICBs. After a fruitful discussion the meeting was ended at 4.30 pm .The delegates visited and appreciated the prod-uct Display Centre of IJSG.

The twentieth meeting of CFC-ICB was held on 25 March, 2013 at IJSG Se-

cretariat in Dhaka. The daylong meeting began with the welcome remarks of Mr. Bhupendra Singh, Secretary General of the host ICB International Jute Study Group (IJSG) followed by the statement of Mr. Parvindar Singh, Manag-ing Director, CFC. Mr. Don Smale, Secretary General, International Copper, Lead, Zinc and Nickel Study group, Mr Guy Sneyers, Chief Operations Officer, CFC, Mr. Terry P. Townsend, Executive Director, International Cotton Advi-sory Committee (ICAC), Mr. Boubaker Ben Belhassen, Trade and markets Di-vision (EST), FAO and Dr. Jacoba Hoogendoorn, Director General, the Inter-national Network for Bamboo and Rattan (INBAR) were also present in the meeting. This was a remarkable meeting as this was the first meeting after approval of the new project funding guidelines of the CFC for the period 2013 to 2015 and was also the first ever held in a Least Developed Countries (LDC). Of the agenda discussed the most crucial one was about the future role of CFC and

Presentation on the Implementation Status (Bangladesh part) of the Jute Geo Textile Project Held at IJSG Con-ference Hall

A presentation of the CFC funded project (Bangladesh part) titled “Development and Applica-

tion of Potentially Important Jute Geo-Textile” (CFC/IJSG/21) was held on March 26, 2103 at IJSG secretariat, Dhaka, Bangladesh. The Session was chaired by K.M. Rahman, Executive Di-rector, JDPC. Professor Dr. Abdul Jabbar Khan, Bangladesh University of Engineering and Technology (BUET) made a presentation on implementation status of the project (Bangladesh part). Mr. Guy Sneyers, Chief Operations Officer of CFC was present as representative of CFC. Dr. Khan highlighted the overall activities conducting by different facilitating agencies from field applications, laboratory simulation, testing, monitoring and standardization of jute geo-textiles. He noted that in the next 20 years around 80,000 km of rural road will need to be constructed in Bangladesh and for this 150,000 ton JGT will be required. Mr. Sneyeres was impressed with the current status of implementation of the project.

IJSG Events

Mr. Bhupendra Singh, Secretary General, IJSG presided over the Valedictory Ceremony on March 11, 2013 and Mr. Singh and Mr. Srivastava distributed the Train-ing Certificates to the successful par-ticipants. About 30 entrepre-neurs, representing export, design and manufacturing firms/ units, as well as from the government organi-zations from Dhaka and Chittagong participated in the training. In his speech Mr Singh praised the trainer about their performance and also described the activities of IJSG to promote jute in the world market. He also thanked the NCDPD for extending their supports for the training. Mr. Srivastava thanked IJSG for this kind of initiation and he also thanked the trainees and assured continuous co-operation of the NCDPD to meet any query.

20th Meeting Between the Common Fund for Commodities (CFC) and International Commodity Bodies (ICB) Held at IJSG in Dhaka, Bangladesh

International Jute Study Group (IJSG)

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Editorial Board Chief Patron : Mr Bhupendra Singh, Secretary General, IJSG Executive Editor : Dr. Chandan Kumar Saha, Projects & Operations Officer, IJSG Associate Editors: Ms Safinoor Sagorika, Library and Resource Centre Assistant, IJSG Mr ATM Jahangir Alam, Project Assistant, IJSG 145 Monipuripara Tejgaon Dhaka-1215 Bangladesh Tel : (880 2) 9125581-5 Fax : (880 2) 9125248-9 Email : info@jute.org , Web : www.jute.org. Follow us on Facebook: www.facebook.com/jute.org Published for International Jute Study Group (IJSG)

Page 4

Jute Matters Apr i l 2013

New Associate Members

(March, 2013)

197. G.M. Mizanur Rahman CEO & Manager Bangladesh Alimentary SNC Via-Lepanto-34 04100-Cagli Ari Sardegna-Italy Tel: 3881885840 Email: asma85mithu@yahoo.com 198. Mr. Permit Chanda Material Development Leader IKEA Service India Pvt. Ltd. 8th floor Infinity Tower A DLF Cyber Park DLF Phase 2, Gurgaon 122002, India Tel: + 91 124 4325000 Fax: + 91 124 4112710 Email: permit.chandan@ikea.com Web: www.ikea.com 199. Mr. Malik Mohammad Jahangir Executive Director Indus Jute Mills Ltd. White Pearl House, 29 Bridge Colony Lahore Cantt. Pakistan Tel: 00 92 42 3660 4722/33/44 Fax: 00 92 42 3660 4755/66 E-mail: info@whitepearlgroup.com Web: www.whitepearlgroup.com 200. Mr. Saeed Akther Javed Cheif Executive Spick n‘ Span International MR-1/114 (1st Floor) Para Lane, Corner Kutchi Gail No.3, Jodia Bazar Karachi-74000. Pakistan Tel: + 92-21 32425731-2 Fax: + 92 21 32425733 Email: saj_spicknspan@yahoo.com

In recent years, natural fibre composite has found its way into musical instruments. The Finnish guitar manufac-turer Flaxwood is already making a name for itself globally. The resonant material also corresponds with the de-mands of sustainable development. Flaxwood manufactured the first guitar in 2002 and range of guitars was launched in the markets in 2005. From the very beginning the company has set its sights on the global markets, which they have found in Europe, the US and Japan. Over the years the company has developed other products in addition to electric guitars. In 2009, a novel Flaxwood guitar hybrid model was revealed in which a wooden body is combined with a composite neck. The company also manufactures composite parts for other instruments such as violins, basses and drums. Traditional wood used for instruments, such as ebony and rosewood, are threatened species and a dwindling natural resource. Thus the company is also contributing on sustainable development. The Flaxwood has proved that the composites work wonderfully in musical instruments. Nobody has ever questioned the quality, sound or feel of the instruments. [Source: http://www.goodnewsfinland.com/en/archive/themes/innovative-materials/2bf67595/]

Biratnagar Jute Mill Resuming Production from April, 2013

Upcoming IJSG Events

Workshop on Sustainability and Social Compliances for the Jute Diver-sified Product (JDP) Manufacturers in Bangladesh, IJSG Secretariat, Dhaka, April 10, 2013

Interactive meeting of IJSG with JDP manufacturers, Kolkata, India, April 29, 2013

Training on design and product development of jute diversified prod-ucts, Kolkata, India, May 20 to 26, 2013

14th meeting of Committee on Projects (COP), IJSG Secretariat, Dhaka, Bangladesh, May 15, 2013

16th meeting of Council of IJSG, IJSG Secretariat, Dhaka, Bangladesh, May 16, 2013

Upcoming International Events

The 10th International Conference of the European Industrial Hemp Association (EIHA), Rheinforum, Wesseling near Cologne, Germany, May 22 – 23, 2013 [http://www.eiha-conference.org/]

1st International Conference on natural fibres Uni-versity of Minho, School of Engineering Guimarães, Portugal, June 9-11, 2013[http://www.icnf2013.com/welcome]

Natural Fiber Fair, Arcata Community Center, Ar-cata, USA, September 07 – 08, 2013 [http://www.biztradeshows.com/natural-fiber-fair/]

The government of Bangladesh is trying to rejuvenate the jute industry by injecting Tk 4 billion in the

current financial year (FY) as loan to jute exporters. Each of four state-owned banks will allocate Tk 1 billion under the auspices of the Banking Division of the Ministry of Finance, according to a decision that came from a meeting held with all the stakeholders at the secretariat recently. Meanwhile, private sector jute exporters demanded immediate release of subsidy amounting to Tk 5.88 billion for jute exports which remained pending with the finance ministry. According to the central Bank of Bangladesh, jute exporters have sought loans at 7 percent rate of interest but banks are not inclined in it. “They argue the banks allow credit at 7 percent rate of inter-est for 90-day period but inward remittance for jute export takes usually 120 days,” the source said. The source said state-owned banks will need a circular from the Ministry of Finance to allow loan for jute exporters at 7 percent rate of interest. [Source: The Daily Sun, March 13, 2013]

Biratnagar Jute Mill, which stopped production three years ago, is resuming operation in April, creat-

ing more than 1,000 jobs. Officials of Winsome International, the Indian firm which has taken the factory in lease, said the factory will resume operation by the first week of April. At present the man-agement is repairing machineries of the 75-year old factory, according to Nani Kaji Shrestha, an em-ployee. He further added that Winsome International will start recruiting workers from the last week of March.The government of India had handed over the factory to Winsome International on 25-year lease through competitive bidding. Winsome International is also installing new machineries in the factory. Meanwhile, the management has said that it will give old workers in the recruitment process. [Source: Republica: March 13, 2013]

Govt of Bangladesh to Inject Tk 4bn to Jute Sector in FY13

Musical Instruments from Natural Fibre Composites