Cloud of uncertainty over last 15 govt jute mills (Bangladesh)

No allocation of fund yet for raw jute while traders refuse to supply on credit

Saturday August 23 2008 00:19:23 AM BDT

Bangladesh Jute Mills Corporation (BJMC) run 15 factories, which are still in operation, might be forced to shut down soon as the government has yet to allocate any fund for purchasing raw jute, while traders are unwilling to sell the fibre to BJMC on credit anymore.(The Daily Star)If closed, livelihoods of over 60,000 mill workers and the future of their families will be at risk while jute farmers will incur losses due to selling what was once the 'golden fibre' of the country at prices lower than production cost.There were a total of 77 state-run jute mills, 10 of which were shut down, four were leased out, and 48 were privatized.Shutting down of the remaining 15 operational mills will be tantamount to hammering in the last nail on the coffin of the government run jute sector, according to traders and experts.Ironically the shock is brewing at a time when the United Nations declared 2009 as the International Year of Fibre, because of worldwide increasing demand for jute due to its environment friendliness."I made a final appeal to the finance ministry today for allocating Tk 200 crore for purchasing raw jute. But it made many unnecessary queries, responses to which will require a long time, meanwhile it will be difficult to keep the mills running," BJMC Chairman Ataharul Islam told The Daily Star on Thursday.He said he was also negotiating with banks for loans and was 'hopeful'. Asked what would be the impact if BJMC does not get the money required for purchasing raw jute, Islam said, "We will face a loss, while interests on the corporation's loans will go up leading to an ultimate destination." He said BJMC had a stock of raw jute enough to run the mills for five or six more days, but did not have the cash for purchasing any new stock. The corporation already owes around Tk 140 crore to raw jute traders.Production in the mills also slowed down, the BJMC chairman admitted, but added that the slow down is not due to the lack of raw jute supply. "The workers don't want to work until their back pays are cleared." The workers' wages for 7 to 25 weeks remain unpaid, Ataharul said. He, however, could not say for sure what was the current volume of production. Another BJMC official said the current production is only 150 tonnes a day while the mills' capacity is 600 tonnes.Mohammad Yunus Mia, president of Bangladesh Small Jute Traders and Farmers Association, said they are unwilling to sell raw jute to BJMC because it already owes the traders a large sum of money. "We always provided jute to BJMC on credit to the maximum level. But now we don't want to continue under such an arrangement. We can't trust it anymore because it has lost the good will by not paying the dues," Yunus said.Annual production of raw jute in the country is currently around 60 lakh bales, while the present demand of BJMC is for around 11 lakh bales. Private jute and spinning mills demand 18 lakh bales while 26 lakh bales are exported.The country currently earns over Tk 3,000 crore in foreign exchange from exporting jute, which once used to be the main foreign currency earner of Bangladesh.Expressing concerns over the government's indifference about purchasing raw jute for BJMC, jute expert Shahidullah Chowdhury said shutting down of the government run jute mills will not only affect the 60,000 workers and their families, but will also seriously affect jute farmers because they will lose an important portion of the domestic market. If there is excess raw jute in the country, its price will automatically go down, he said adding that jute is a fibre in which 95 percent value addition is possible, but the government's indifference towards the sector and the lack of managerial expertise of bureaucrats have been destroying the industry.Now during the harvesting period, the average price of a maund of jute is Tk 900 to Tk 1,000, which will go up to Tk 1,200 to Tk 1,400 in a few days, said Shahidullah Chowdhury, who is also the joint convener of Jute, Textile, Cotton Workers and Employees Action Committee."It has already been too late, even if BJMC gets the money from the government now, it will have to purchase raw jute at higher prices, facing losses," he said adding, successive governments' wrong policies regarding the sector have been destroying the industry. BJMC's current debt stands at around Tk 4,000 crore, he pointed out.