Prospects for the world jute industry
Prospects for the world jute industry to the mid-1990s are analyzed to identify trends likely to follow the confusion in the jute market originating from the 1984/85 fiber supply crisis. These prospects are derived from analysis of information obtained from surveys of jute demand in several countries and from simulation results from a recently built econometric model of the world jute economy. Jute fiber is used primarily as a textile raw material for making packaging products, carpets, industrial fabrics and twine. Its main demand base is derived from the need to package agricultural inputs and produce in countries where storage and distribution to wholesale and retail markets is in packaged form. Structural changes occurring in the world demand for jute are identified. Prospects for the expansion of jute consumption for packaging uses in developing countries are fairly bright since the scope for early changes to bulk-handling and synthetic substitution are limited. The rapid loss of markets for jute sacks and bags to bulk handling in the industrial countries and grain-exporting developing countries during the 1970s has about run its course. So have the losses of fabric markets where synthetic products held distinct advantages in technical performance or cost. The resulting structural shifts in the regional distribution of consumption and changes in the product composition of final demand suggest that the growth in world demand for jute to the mid-1990s should be somewhat higher than was attained during the 1970s and early 1980s. The sharp output decline in India and Bangladesh in 1984 appears to have started another price/supply cycle. On past performance it is likely that the high prices of 1984/85 will lead to large output increases in the 1985/86 and 1986/87 harvests causing prices to fall and leading to a period of low prices and low output in the late 1980s.
Price stabilization for raw jute in Bangladesh
Fluctuating prices for raw jute have been viewed as contributing to economic problems in the jute subsector. Price fluctuations were thought to reduce the jute farmers' welfare and there has been concern about the costs of parastatals' stocking operations in attempts to stabilize jute prices and incomes. The authors examine these fluctuations and analyze policies that might reduce them. They find that price fluctuations for raw jute reduce farmers' welfare only slightly because farmers' activities are typically diversified and jute's share in total income is small. Although stocking operations by the parastatals contribute to stability in prices and real income, they have been extremely costly and have crowded out private stocking. The authors contend that if the parastatals had refrained from ad hoc stocking and if the private sector had stocked efficiently, jute prices and incomes would have been just as stable - and at no cost. They argue that the Bangladeshi jute market should be free of government intervention and that a a market-based credit system that allows efficient stockholding behavior by the private sector should be established. They also found that improving the flow of market information to farmers and greater price responsiveness by jute mills to raw jute purchases would significantly improve the stability of raw jute prices and incomes. Having more information available would also make private stocking operations more efficient.
The Effect of the Growing Constraint of Subsistence Farming on Farmer Response to Price. A Case Study of Jute in Pakistan
During the last decade or so, substantial empirical work has been done on farmer response to price in the underdeveloped countries 1. ~ost of the research effort, however, is lacking theoretical rigour and is heavily oriented towards the estimation of area (output) supply functions and the verification of the existence of economic incentives. The purpose of this study is to extend the research horizon by emphasizing and elaborating the role of certain constraints in determining the degree of farmer response to price which is one of the aspects of economic performance.