Farmers are getting higher prices for raw jute after cyclone Amphan and prolonged floods damaged part of their cash crop, but millers are not happy with the price spiral, which they say will push up production costs and affect demand from buyers abroad.

In the face of speculation of huge crop losses and low yield this year, the prices of high-quality raw jute soared to as high as Tk 2,600 each maund in the middle of this month.

Eventually, the Bangladesh Jute Spinners Association (BJSA) that represents jute yarn makers, who are the main export earner and consumer of jute, asked its members to buy the best grades of the natural fibre at prices not above Tk 2,300 each maund from their suppliers.

The development came at the end of last week and the prices declined.

Farmers are selling the highest quality of jute at Tk 2,300-Tk 2,350 each maund, said jute traders and industry insiders.

Jute spinners also demanded the government impose an export duty of $250 on each tonne of raw jute to curb shipment and meet the requirements of the local mills.

The Bangladesh Jute Mills Association (BJMA), a platform of private jute millers, also voiced concerns.

On 19 August, BJMA urged the Department of Jute (DoJ) for holding an urgent meeting with all stakeholders to take stock of production and internal requirements for the sake of keeping the jute mills up and running.

"The season has just begun but prices of raw jute are too high. We will not be able to sell the produce if prices go up to a very high level," said BJMA Chairman Mohammed Mahbubur Rahman Patwari.

There has been speculation of damage to a large amount of crop for floods in the northern districts. "There might not be any surplus this year," he said, adding that mills and export of jute goods would not be affected if prices remain within Tk 2,300 a maund.

"If the prices exceed that level, the cost of our products will increase as well. As a result, it will be difficult for us to sell our goods and this will impact the industry in the long run," he said.

Farmers sowed jute on 7.26 lakh hectares this year, up 9 per cent year-on-year, according to data from the Department of Agricultural Extension (DAE).

DAE estimates that repeated floods damaged jute on more than 26,000 hectares causing farmers a loss of about Tk 211 crore.

"The overall production situation is very bad as a huge amount of crop has been damaged," said Md Shahid Hossain Dulal, a raw jute trader.

Farmers produce nearly 80 lakh bales of jute annually as a cash crop to profit from bulk purchases by state-owned and private jute mills as well as raw jute exporters.

This year, the Bangladesh Jute Mills Corporation (BJMC) is not buying the natural fibre as the government has shuttered all the 25 state-owned jute mills to get rid of continuous losses.

Private millers and raw jute exporters are the only buyers now: private mills consume nearly 50 lakh bales of raw jute to make yarn/twine, sacks and hessian products, mainly for the export market, while 14 lakh bales of raw jute are exported annually.

BJMA Chairman Patwari said they are not in favour of banning the export of raw jute but the government should take measures to create a win-win situation for all.

"We want all in the value chain to make a profit," he said.

BJSA Chairman Md Zahid Miah echoed the same, saying that floods damaged 25-30 per cent of the crop and total production might be below the industrial and other domestic requirements.

Against this backdrop, excessive export would hurt local spinners and jute millers.

"We will earn some money if we sell our raw materials. But our foreign currency earnings will be higher if we export by adding value. We have no objection to exporting the surplus after meeting the domestic demand," he added.

Jute spinners use 35 lakh bales of raw jute to make exportable yarn, which accounted for 64 per cent of the export receipts for the industry in fiscal year 2019-20.

Exports from jute and jute goods rose last fiscal year, while shipment in July in the current year is also showing an upward trend.

Miah said carpet factories, mainly in Turkey, are the major buyers of Bangladesh's jute yarn, but because of the pandemic, demand has died down.

"Carpet is not an essential item. As its demand has fallen, prices also declined."

Buyers will move away from jute yarn and look for alternatives such as cotton if prices of jute go up further.

If spinners can buy the best quality raw jute at Tk 2,300 a maund, all the stakeholders, including farmers, workers and buyers, will survive, Miah added.

However, Muzibor Rahman, a farmer at Charbhadrasan of Faridpur, one of the major jute-producing districts, is not willing to offer a discount.

Prices of the best quality jute were Tk 2,500-Tk 2,600 each maund and farmers are making some profit due to this high range of price, he told The Daily Star over the phone yesterday.

"We will not grow jute if we don't get good prices," he said.

The government should not put any bar on the export of raw jute for the interests of growers and jute exporters, said Arzu Rahman Bhuiyan, senior vice-president of the Bangladesh Jute Association.

Both the farmers and exporters suffered for the ban on the export of raw jute in the past, he said.

The issue of discouraging export depends on policymakers and only the textiles and jute ministry has the authority to take such a decision, said DoJ Director General Sowdagar Mustafizur Rahman.

He said farmers are benefitted if prices of their produce such as jute increase during the harvesting season.

"Now farmers are getting the benefits, which is good. This will encourage them to produce more in the next season. If prices go up three months later, we should note that the benefit is going to the pockets of the middlemen," he added.

Textiles and Jute Secretary Lokman Hossain Miah could not be reached by phone for comments.