Sudan war deals fresh blow to jute goods exporters
The war in Sudan has dealt a fresh blow to Bangladesh's jute goods exports which has been suffering from a downturn for the last two years.
Millers said the northeast African country was a good market for locally-made jute sacks and bags.
But the war that began in mid-April this year dented shipments, payments against items that have already been shipped and flow of fresh orders, they said.
"We used to utilise 40 per cent of our annual capacity for exporting jute bag products to Sudan," said Md Mamunur Rahman, director of Rahman Jute Spinners Pvt Ltd.
"Exports have fallen. Even when there are some queries, we can not even dare to send over products as there is an uncertainty regarding payments," he said.
The company sent around 1,000 tonnes of large jute sacks to Sudan in fiscal year 2021-22. The shipments dropped to 200 tonnes in the current fiscal year which ends this month.
The problems pertaining to exports began after a coup in October 2021 and it intensified over the last six to eight months, he said.
Bangladesh exported more than $40 million worth sacks and bags used in packing goods to Sudan in the July-May period of fiscal year 2020-21. The amount of shipment slumped to just one-fourth the following fiscal year.
Export earnings from sacks and bags rose in the current fiscal year but stood 37.5 per cent lower than the proceeds of fiscal year 2020-21, showed data of the Export Promotion Bureau (EPB).
Sudan had been one of the largest markets for Bangladesh's jute products as they use those to package their cereals and cotton, said Mushtaq Hussain, managing director of Golden Fibre Trade Centre Ltd (GFTCL).
"The conflict has affected the market," he said, adding that payments worth Tk 3 crore for products that have already been exported were in limbo.
"The buyer has vanished for self-preservation amidst the war," said Hussain, adding that payments of some other exporters from their buyers in Sudan were stuck too.
The latest setback comes at a time when export earnings of jute and jute goods makers have fallen nearly 20 per cent year-on-year to $845 million in the July-May period of the current fiscal year.
It resulted from a decline in demand for the main export item -- jute yarn – from carpet makers abroad for high inflation in the US and Europe and the Russia-Ukraine war.
"We see reduced demand from carpet markers," said Helal Ahmed, chief operating officer of Janata Jute Mills and Sadat Jute Industries Ltd, one of the largest jute yarn and jute goods maker and exporter.
He said their mills have not cut production but a number of small mills were struggling to sustain losses resulting from higher production costs which could not be offset by prices offered by buyers.
"Even after losses, we are selling our products only to retain our buyers," said Rahman of Rahman Jute Spinners.
With raw jute prices reaching record highs, many buyers switched to alternatives or synthetic fibres in fiscal year 2020-21. "Buyers have options now. They are placing orders after comparing prices of jute yarn and alternative fibres," he said.
Exporters are now facing the effects of the exorbitant prices of raw jute, said Sheikh Nasir Uddin, chairman of Akij Jute Mills Ltd.
"Many buyers have shifted to alternative yarns amid high prices and are not returning," he said.
"Had the government taken adequate measures against stocking at that time, the sector would not have faced such a situation," he added.
"Now time has come for the government to take decisions ahead of the harvesting of jute. It must stop exports and fix prices at Tk 2,000-Tk 2,500 a maund (around 37 kilogrammes) depending on quality," he said.
Comments