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BD vows to keep jute prices stable

DHAKA: Bangladesh said on Thursday it would try to keep jute prices stable on the international market despite a fall in production in Bangladesh, India and China.

"Bangladesh will, at any cost, prevent the inroad of artificial fibre as a result of the price rise of natural fibre," Jute Minister A.S.M. Hannan Shah told Reuters.

He said recent floods had damaged jute plantations in the three major producing countries, which would create a worldwide shortfall of the fibre.

He said the government was holding a high-level meeting on Thursday to review jute prices on local and international markets.

Floods and drought destroyed up to one million bales (181 kg each) of jute in Bangladesh, the world's major exporter, pushing up local prices by nearly nine percent, jute traders said.

They said jute output from India, the biggest producer, would also be lower this year.

The popularity of jute fibre, extracted from a reed-like plant, is increasingly threatened by cheaper and lighter synthetics.

"There will be a crunch in jute supply and this will have negative impact on jute prices in the international market," said Rezaul Karim, vice-chairman of Bangladesh Jute Association, a private sector trade body.

He said Bangladesh expected to produce 3.5 million bales of jute in 1995, against a target of 4.5 million bales.

Although India and China are two of the five jute producing nations they have already become importers. Last year, India bought about 300,000 bales and China imported 200,000 bales from Bangladesh.

The two other producing countries are Nepal and Thailand.

Karim said world demand for jute has been increasing.

Shah said Banagladesh was committed to export 1.5 million bales of raw jute, the current world requirement of the fibre.

Bangladesh also exports nearly 500,000 tonnes of jute goods annually. The country earns more than $300 million a year through exports of jute and jute products, which include sacks, rugs and rope.

The Dhaka-based International Jute Organisation (IJO) said in its April-June report that jute production in Bangladesh and India suffered from "drought conditions".

Press reports here earlier said India produced about eight million bales of raw jute, one million bales short of its annual requirement.

The IJO said in 1993/94 the average export price of raw jute was $275 a tonne. It decreased during July-September, 1994, but in April-June this year the average price exceeded $300 per tonne.

It said Pakistan and European Union countries were the major importers of raw jute.-Reuter