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.
Jute supply response in Bangladesh
This paper uses quantitative methods to identify major factors affecting jute supply in Bangladesh. As well as estimating the impact of the jute-to-rice price ratio on acreage harvested, estimates of the impact on jute supply of weather variations, labor costs, fertilizer availability, value of jute sticks and irrigation availability were also made. The analysis of acreage and yield response was carried out at the district level as well as at the national level to identify district supply characteristics. A distinction was also made between tossa and white jute as the prices paid for these different varieties and the land on which they are grown differ. The potential for jute production in Bangladesh has remained nearly constant for the past 15 years, as increasing yield has offset to a large degree the declining acreage caused by the expansion of irrigation and rice growing. The recent low levels of production were largely the result of low real jute prices during the 1979-82 period and adverse weather conditions. Under higher prices and more normal weather conditions jute supply is likely to expand through increases in acreage and yield.
Economic Determinants of Jute Production in India and Pakistan
Most of the world's jute is produced within the predominantly rice-growing areas of India and Pakistan. Rice is grown as the staple food crop, while jute is the principal cash crop of the farmers of the jute belt. In Pakistan, acreage under jute normally accounts for 6 per cent of the total sown area in the jutegrowing districts, while rice acreage extends to more than 80 per cent of the total. In the jute-growing districts of the Indian Union, although the proportion of the total sown land under rice is lower than in East Pakistan, rice acreage is normally 15 to 20 times as extensive as the total jute acreage. The scope for variation in jute cultivation is, therefore, potentially large in both lndia and Pakistan.