Presentation on
Profitability and Marketing of
Jute in Bangladesh
by
Uttam Deb
Head, Research Division
and
Subir Kanti Bairagi
Research Associate
Centre for Policy Dialogue (CPD)
At the International Conference on
Prospects of Jute & Kenaf as Natural Fibres
Bangladesh-China Friendship Conference Centre
Dhaka: 08-09 February 2008
1
Presentation Outline
I. Introduction: Jute production situation
II. Objectives of the Study
III. Input Use Level and Profitability in Jute Production
IV. Marketing System of Raw Jute
V. Problems in Jute Production and Marketing
VI. Policy Implications
2
I. INTRODUCTION: Jute Production Situation
Trends in area, production and yield of jute: 1981/82-2007/08
Production (lakh bales)
Area (lakh ha)
Yield (bales/ha)
100
14
90
80
10
70
60
8
50
6
40
.
30
Yield (bales/ha)
Area (lakh ha), Production (lakh bales)
12
4
20
2
10
2007-08
2006-07
2005-06
2004-05
2003-04
2002-03
2001-02
2000-01
1999-00
1998-99
1997 -98
1996-97
1995-96
1994-95
1993-94
1992-93
1991-92
1990-91
1989-90
1988-89
1987-88
1986-87
1985-86
1984-85
1983-84
1982-83
0
1981-82
0
In 2007/08, jute production (46.22 lakh bales) was 0.5% lower than that of
1981/82 (46.46 lakh bales). Jute area has decreased from 5.72 lac hectare to
4.40 lakh hectare (23.1% decrease). Jute yield increased from 8.1 lakh bales
per hectare to 10.5 lakh bales per hectare (29.6% increase).
3
I. INTRODUCTION: Jute Production Situation
Jute Production: TE2007/08
Four categories of districts:
•
•
•
•
Not grown: 7 districts
Low (up to 20 thousand bales): 18
districts (Bagerhat, Barisal, Bhola,
Comilla, Feni, Gazipur, Hobigonj,
Jalakathi, Joypurhat, Khulna,
Lakshmipur, Narayangonj,
Nawabgonj, Noakhali, Patuakhali,
Pirojpur, Sunamgonj and Sylhet)
Medium (20 to 100 thousand bales):
21 districts (Bogra, Brahmanbaria,
Chandpur, Dhaka, Dinajpur,
Gaibanda, Kishoregonj, Lalmonirhat,
Manikgonj, Munsigonj, Mymensingh,
Narsingdi, Natore, Netrokona,
Noagaon, Panchagar, Rajshahi,
Sathkhira, Sherpur, Sirajgonj and
Thakurgaon)
High (more than 100 thousand
bales): 18 districts (Chuadanga,
Faridpur, Gopalgonj, Jamalpur,
Jessore, Jhenaidah, Kurigram, Kustia,
Madaripur, Magura, Meherpur, Narail,
Nilphamari, Pabna, Rajbari, Rangpur,
Shariatpur and Tangail)
4
I. INTRODUCTION: Jute Production Situation
Jute Area: TE 2007/08
Five categories of districts (jute area
basis):
•
•
Not grown: 7 districts
Low (<5 thousand ha): 30 districts
(Bagerhat, Barisal, Bhola, Bogra,
Brahmanbaria, Chandpur, Comilla, Dhaka,
Feni, Gazipur, Hobigonj, Jalakati,
Joypurhat, Khulna, Lakshmipur, Manikgonj,
Narayangonj, Narsingdi, Natore,
Nawabgonj, Netrokona, Noagaon,
Noakhali, Patuakhali, Pirojpur, Rajshahi,
Sherpur, Sunamgonj, Sylhet and
Thakurgaon)
•
•
•
Medium (5-15 thousand ha): 17
districts (Chuadanga, Dinajpur,
Gaibanda, Gopalgonj, Jamalpur,
Jhenaidah, Kishoregonj, Lalmonirhat,
Meherpur, Munsigonj, Mymensingh, Narail,
Nilphamari, Panchagar, Rangpur,
Sathkhira and Sirajgonj)
High (15-20 thousand ha): 7
districts (Jessore, Kurigram, Kustia,
Magura, Pabna, Shariatpur and Tangail)
Very High (>20 thousand ha): 3
districts (Faridpur, Madariput and Rajbari)
5
I. INTRODUCTION: Jute Production Situation
Jute Yield: TE2007/08
Four categories of districts:
•
•
•
•
Not grown: 7 districts
Low (1 to 5 bales/ha)): 5 districts
(Bagerhat, Barisal, Bhola, Comilla, Feni,
Gazipur, (Bhola, Feni, Jalakathi, Noakhali
and Patuakhali)
Medium (5.01-10.0 bales/ha): 24 districts
(Barisal, Brahmanbaria, Chandpur, Dhaka,
Dinajpur, Hobigonj, Lakshmipur,
Lalmonirhat, Manikgonj, Munsigonj,
Mymensingh, Narayangonj, Narsingdi,
Nawabgonj, Netrokona, Noagaon,
Panchagar, Pirojpur, Sherpur, Sirajgonj,
Sunamgonj, Sylhet, Tangail and
Thakurgaon)
High (10.01 to 15.0 bales/ha): 28
districts (Bagerhat, Bogra, Chuadanga,
Comilla, Faridpur, Gaibanda, Gazipur,
Gopalgonj, Jamalpur, Jessore, Jhenaidah,
Joypurhat, Khulna, Kishoregonj, Kurigram,
Kustia, Madaripur, Magura, Meherpur,
Narail, Natore, Nilphamari, Pabna, Rajbari,
Rajshahi, Rangpur, Sathkhira, Shariatpur)
6
II. OBJECTIVES OF THE STUDY
Broad Objective
•
To know the profitability situation and jute marketing system in Bangladesh.
Specific Objectives
•
To know input use level, and cost and returns in jute cultivation
•
To document raw jute marketing system
•
To identify problems faced by jute farmers in production and marketing of
jute
•
To suggest policy some measures to encourage jute production in
Bangladesh
7
III. INPUT USE LEVEL AND PROFITABILITY IN JUTE CULTIVATION
Location of the Sample Villages
•
•
•
•
•
This study is based on field survey
conducted during Nov’07-Jan’08 and
relates to the jute situation in 2007
360 jute farmers from 12 villages of
12 jute producing districts were
interviewed through structured
questionnaire. They represent:
Intensive Jute cultivation villages:
Five villages of Faridpur, Jessore,
Magura, Meherpur and Rajbari
districts where 91.80% of total
cultivated area were under jute
Semi-intensive jute villages: Three
villages of Munshiganj, Rajshahi and
Shariatpur districts where 52.38% of
total cultivated area were under jute
‘Not intensive’ jute villages: Four
villages of Satkhira, Manikganj,
Dhaka and Tangail districts where
29.10% of total cultivated area were
under jute
8
III. INPUT USE LEVEL AND PROFITABILITY IN JUTE CULTIVATION
Cropping Patterns of the Sample Villages
Cropping pattern
% of total area
Cropping pattern
% of total area
Mustard-Jute-Fallow
5.2
Boro-Fallow-Fallow
21.6
Wheat-Jute-Aman
4.7
Boro-Fallow-Aman
13.4
Potato-Jute-Aman
4.6
Potato-Fallow-Aman
1.6
Lentil-Jute-Aman
4.2
Maize-Fallow-Aman
1.1
Fallow-Jute-Fallow
4.0
Papaya-----
1.4
Potato-Jute-Fallow
3.8
Sugarcane----
1.3
Khesari-Jute-Fallow
3.3
Others (Chili, Garlic, Brinjal,
Onion-Jute-Aman
2.8
Cauliflower, Karolla, Pui shak,
Dhaincha, Kalijira)
Fallow-Jute-Aman
2.5
Boro-Jute-Aman
2.5
Onion-Jute-Fallow
2.4
Maize-Jute-Fallow
2.3
Lentil-Jute-Fallow
2.0
Wheat-Jute-Fallow
1.8
Mustard-Jute-Aman
1.7
Boro-Jute-Fallow
1.2
Dhaniya-Jute-Fallow
1.1
8.8
50.1%
9
III. INPUT USE LEVEL AND PROFITABILITY IN JUTE CULTIVATION
Share of Jute and other fiber crops
• Among the sample farmers, Jute covered about 90% of the area
under fiber crops and Mesta covered about 10% area
• Share of Deshi jute was about 10% of total area under fiber crops
while Tossa jute was cultivated in 80% of total area under fiber
crops
Deshi
10%
Mesta
10%
Tossa
80%
10
III. INPUT USE LEVEL AND PROFITABILITY IN JUTE CULTIVATION
Share of Different Tossa Varieties
•
Framers did not know the name
of variety grown in case of 18%
of area under Tossa jute
•
In case of about 25% of tossa
area farmers only knew that the
variety was Indian but they did
not know the name
•
64% of the area under Tossa
jute was under Indian varieties
•
Among the known varieties,
highest share was for
Maharashtra (18.3%) followed
by Bangkim (10.0%), Nabin
(7.5%), Chaka (6.4%), Chaitali
(5.0%), Kishayan (2.0%),
Gangakaberi (1.4%), Gander
(1.3%), Bangabir (1.1%), Laksmi
(0.9%), Bengal (0.8%), Kustin
(0.7%), Mahamaya (0.7%),
Krishak (0.7%) and O-9897
(Tossa) (0.1%)
Not Know n
17.8%
Nabin
7.5%
Laksmi
0.9%
Kustin
0.7%
Chaka
6.4%
Gander
1.3%
Chaitali
5.0%
Kishayan
2.0%
Bangabir
1.1%
Bangkim
10.0%
Indian
25.2%
O-9897 (Tossa)
0.1%
Gangakaberi
Bengal
1.4%
0.8%
Krishak
0.7%
Maharastra
18.3%
Mahamaya
0.7%
11
III. INPUT USE LEVEL AND PROFITABILITY IN JUTE CULTIVATION
Sources of Jute seed
Source
Deshi
Tossa
Market
91.7
98.1
Neighbors
2.3
1.5
BADC
2.4
0. 4
Others
3.6
0.0
100.0
100.0
Total
Local market is the main source of jute seed. About 92 percent of the
seed of Deshi jute and 98 percent seed of Tossa jute are bought by the
farmers from the market. Other sources of jute seed include
neighbouring farmers and BADC
12
III. INPUT USE LEVEL AND PROFITABILITY IN JUTE CULTIVATION
Per Hectare Input Use Level of Jute Production in 2007
Input
Unit
Deshi
Tossa
Labour
Man-day
178
185
Power Tiller
Tk
4,353
2,884
Seed
Kg
9
8
Fertilizer
Kg
Urea
Kg
100
82
TSP
Kg
48
64
MP
Kg
37
42
Manure
Tk
19
391
Pesticide
Tk
154
274
Irrigation
Tk
527
2,394
Labour cost was the main cost component of the jute cultivation, which
constituted more than 50 per cent of total cost. Among the other cost
components, land rent (more than 20 per cent), power tiller cost,
fertilizer cost (about 6 per cent) are significant in both the deshi and
tossa jute.
13
III. INPUT USE LEVEL AND PROFITABILITY IN JUTE CULTIVATION
Per Hectare Cost of jute production in 2007
Deshi
Input
Labour
Tossa
Cost (Tk/ha) % of total cost Cost (Tk/ha) % of total cost
22,850
52.41
21,654
50.70
Power Tiller
4,353
9.99
2,884
6.75
Seed
1,033
2.37
1,178
2.76
Fertilizer
2,417
5.54
2,627
6.15
Urea
687
1.58
597
1.40
TSP
1,059
2.43
1,268
2.97
671
1.54
762
1.78
19
0.04
391
0.92
Pesticide
154
0.35
274
0.64
Irrigation
527
1.21
2,394
5.61
1568
3.60
1,587
3.72
Land rent
10,672
24.48
9,391
21.99
Total Cost
43,595
100.0
42,708
100.0
MP
Manure
Interest on Working capital
14
III. INPUT USE LEVEL AND PROFITABILITY IN JUTE CULTIVATION
Profitability in jute production 2007
Input
Deshi
Tossa
Yield: Jute fibre (kg)
1,960
2,340
Jute stick (Tk)
6,105
5,810
Price of jute (Tk/kg)
15.85
16.08
Gross Return (TK)
37,171
43,431
Total Cost (Tk)
43,595
42,708
Net Return (Tk)
-6,429
723
Return to land (Tk)
4,249
10,114
Per unit cost (Tk/kg)
22.20
18.26
0.85
1.02
Benefit Cost Ratio (BCR)
Per hectare Yield of Jute: Deshi: 1,960 kg and and Tossa:2,340 kg
Per hectare Gross Return from Deshi: Tk 37,171 and Tossa: Tk 43,431
Per hectare Net Return from Deshi: Tk 6,424 (net loss) and Tossa jute Tk.
723 (Net Profit)
15
III. INPUT USE LEVEL AND PROFITABILITY IN JUTE CULTIVATION
Jute Yield: According to Village Type
3000
2840
2800
2600
2600
Yield (Kg/ha)
2400
2240
2240
2200
2520
2400
2320
2160
2000
1880
1800
1680
1560
1600
1440
1400
1200
Intensive
Semi-intensive
Dhaka (T)
Manikganj
(T)
Manikganj
(D)
Satkhira
Tangail (T)
Rajshahi
(T)
Munshiganj
(T)
Meherpur
(T)
Magura (T)
Faridpur (T)
Jessore (T)
Rajbari (T)
1000
Not-intensive
•Highest jute yield (2.84 t/ha) was in Meherpur and lowest jute yield
(1.44t/ha) was in Manikganj
16
III. INPUT USE LEVEL AND PROFITABILITY IN JUTE CULTIVATION
Net Return (Tk/ha) : According to Village Type
9000
7000
5000
3000
-5000
Intensive
Semi-intensive
Dhaka (T)
Manikganj (T)
Manikganj (D)
Satkhira
Tangail (T)
Rajshahi (T)
Munshiganj
(T)
Meherpur (T)
Magura (T)
Faridpur (T)
-3000
Jessore (T)
-1000
Rajbari (T)
1000
Not-intensive
-7000
-9000
-11000
• Positive Net Return was observed in intensive jute villages except in Jessore
• Negative net return (net loss) was observed in semi-intensive and not17
intensive jute villages except in Tangail and Manikganj
III. INPUT USE LEVEL AND PROFITABILITY IN JUTE CULTIVATION
Relative Profitability of jute production in 2007
Crops
Net Return
(Tk/ha)
Crops
Net Return (Tk/ha)
Jute (Deshi)
-6,424
Onion
30,175
Jute (Tossa)
723
Kheshari
7,744
3,764
Lentil
13,659
HYV Boro
20,545
Chilli
104,104
HYV Aman
7,099
Garlic
96,440
34,000
Potato
150,905
Wheat
Maize
Mustard
5,498
• Analysis of relative profitability of different crops indicated that
highest net return was obtained from cultivation of Potato, followed by
Chili, Gralic, Maize, Onion, HYV Boro, and Lentil.
• Farmers had net loss from Jute (Deshi)
• Low net profit was obtained from Jute (Tossa)
18
IV. MARKETING SYSTEM OF RAW JUTE
Marketing channel of raw jute
Jute Producer/
Grower
Faria
Govt. Purchase
Centers
Bepari
One type of actors
named Aratdar who
give only logistic
support to the Beparis
and take a fixed
amount of Tk as
commission on per
maund purchase basis
Mohajan
Public Jute Mills
Private Jute
Mills
Exporter
19
IV. MARKETING SYSTEM OF RAW JUTE
Buying sources and selling destination of raw jute
Selling destinations (%)
Buying sources
Bepari
Mohajan
Bepari and
Mohajan
Farmer house
35.2
14.8
3.7
53.7
Village Market
5.6
5.6
1.9
13.0
Market and farmer house
14.8
11.1
7.4
33.3
Sub-Total
55.6
31.5
13.0
-
-
5.0
15.0
2.5
2.5
2.5
Jute mill
Mohajan and
Jute mill
Exporter
Total
Faria
-
100.0
Bepari
Market (Farmer)
Market (Faria)
32.5
27.5
10.0
42.5
Market (Farmer and Faria)
2.5
12.5
5.0
2.5
2.5
5.0
30.0
Sub-Total
7.5
60.0
7.5
15.0
5.0
5.0
100.0
6.7
20.0
Mohajan
Faria and Bepari
13.3
Bepari
13.3
Market
Sub-Total
Source: Field survey, 2007.
13.3
-
13.3
-
13.3
46.7
6.7
73.3
6.7
66.7
6.7
100.0
20
IV. MARKETING SYSTEM OF RAW JUTE
Marketing Margin
Buying price (Tk/maund)
Jute Quality
Selling price (Tk/maund)
Faria
Bepari
Mahajan
Faria
Bepari
Mahajan
Excellent
819
867
874
851
921
974
Good
721
718
736
756
763
815
Medium
608
628
642
645
661
708
Poor
525
543
534
566
588
597
Gross margin (Tk/maund)
Net margin (Tk/maund)
Excellent
32
54
100
21
31
56
Good
35
44
79
23
21
35
Medium
37
33
67
26
10
23
Poor
41
45
63
30
22
19
Marketing cost
11
23
44
Marketing margin can be defined as:
Gross Margin = (purchasing price) – (selling price)
Net Margin = (gross margin) – (marketing cost).
 Among all actors Mohajans received highest net margin (Tk 56 /maund for
excellent quality jute and Tk 35 /maund for good quality of jute)
Farias received highest Net Margin (Tk 30 per maund) by selling poor quality jute..21
IV. MARKETING SYSTEM OF RAW JUTE
Comparison of Jute Prices: 2007 and 2006
Price differences of raw jute in the study villages
Grade
Excellent
Good
2006
854
712
2007 Increase/ decrease (%)
844
-1.3
702
-1.4
Medium
Poor
599
462
600
471
0.2
2.0
All
675
672
-0.5
• Farmers received lower prices in 2007 than that of 2006
• Jute prices vary according to quality. Price of excellent quality jute
was about two times of the price of poor quality jute
• Farmers sold 80% of their jute immediately (1-2 weeks) after harvest,
and another 17% within 2 months and rest of the jute (3%) were sold
within 4 months
22
V. PROBLEMS IN JUTE PRODUCTION AND MARKETING
Production Related Problems faced by farmers: 2007
Rank of the Problems
Problems
Intensive
Semiintensive
Notintensive
All
Lack of fertilizer availability
1
1
1
1
Lack of quality seed
4
2
2
2
Cost of irrigation is higher
2
5
5
3
Lack of retting place and water
3
4
7
4
High labour wages as well as
high production cost
5
3
6
5
Shortage of labour during the
time of harvesting and retting
7
6
3
6
Lack of flood control plan by
the Govt.
6
7
4
7
Lack of adequate knowledge
about retting and grading
8
8
8
8
23
V. PROBLEMS IN JUTE PRODUCTION AND MARKETING
Marketing Related Problems faced by farmers in 2007
Problems
Rank of the Problems
Intensive
Semiintensive
Notintensive
All
Low market price of raw jute
1
1
1
1
Bepari's control the market
price
5
3
2
2
High transportation cost
3
4
3
3
Farmers did not get fair
weight by the businessmen
4
5
5
4
Price fluctuates day to day
and market to market
7
2
4
5
Faria or Bepari takes 1/2 kg
in each maund
2
6
6
6
Farmer have to bear the
Market toll
6
7
7
7
24
V. PROBLEMS IN JUTE PRODUCTION AND MARKETING
Solutions suggested by the farmers
Suggested Solutions
Announce minimum support price for
raw jute
Ensure availability of fertilizer and
pesticides
Reduce input cost and be ensure
availability
Control unfair business by effective
monitoring mechanism
Ensure supply of good quality seed
Digging new pond and cannels reexcavation for retting
Promote a training programme for
retting, grading and processing
Govt. Khas canal release from the land
grabbers
Develop road and market infrastructure
Formulate a policy for developing flood
control dams
Provide crop loan with low interest rate
Rank of the Solution
Intensive
Semiintensive
Notintensive
All
2
1
1
1
1
4
6
2
3
7
2
3
4
2
5
4
7
3
3
5
5
5
7
6
9
6
4
7
6
11
11
8
11
8
8
9
8
10
9
10
10
9
10
11
25
VI. POLICY IMPLICATIONS
• Minimum support price for raw jute may be declared
to reduce price risk and thereby uncertainty in
profitability
• Adequate supply of quality jute seed will increased
jute yield and thereby production
• Retting of jute is a major constraint because of lack
of water availability for this purpose. Public canals
need to be reclaimed from land grabbers.
• Availability of adequate amount of fertilizer was a
problem. Fertilizer supply need to be ensured.
26
Thank You
for
Your Attention
27