Assignment on “The Golden Fiber” Jute of Bangladesh

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EXECUTIVE SUMMARY

Bangladesh is the largest exporter of raw jute. Bangladesh export and supply jute and jute products. Jute is the single most important export item of Bangladesh. About 50 million people of this land are directly involved in various activities related to jute and jute manufacturing. The country made bags, best quality jute sacks, jute hessian bags, food grade bags, jute yarns twines etc. by jute. There are 187 jute mills in Bangladesh. We worked on 2 sectors. One is Latif Bawani Jute Mills Ltd and another one is Aarong Bangladesh. Because we wanted to show both the manufacturing side and service side. Customers’ thoughts are also as important as anything for us.Assignment on The Golden Fiber Jute of Bangladesh

 Introduction:
Jute   is a natural fiber with golden and silky shine and hence called “The Golden Fiber”. It is the cheapest vegetable fiber procured from the baste or skin of the plant’s stem and the second most important vegetable fiber after cotton, in terms of usage, global consumption, production, and availability. It has high tensile strength, low extensibility, and ensures better breath ability of fabrics.
Jute fiber is 100% bio-degradable and recyclable and thus environmentally friendly.  It is one of the most versatile natural fibers that has been used in raw materials for packaging, textiles, non-textile, construction, and agricultural sectors. It helps to make best quality industrial yarn, fabric, net, and sacks.
Jute, the golden fiber, is the raw material for one of India’s oldest industries. The first jute mill started production in Bengal in 1856. After more than 150 years, the jute industry is now challenged by competition from alternative materials, by the recession in the international markets and by low awareness among consumers of the versatile, eco-friendly nature of jute fabric itself. Yet this industry still provides a livelihood to more than 250,000 milljute of bangladesh workers and more than 4 million farmers’ families. It is a golden bond with the Earth, Its use is a statement about ecological awareness as it is a fully bio-degradable and eco-friendly fiber . It comes from the earth, it helps the earth and once its life is done it merges back into the earth. The industry of jute is not active enough due to lack of government subsidy.
Advantages of jute include good insulating and antistatic properties, as well as having low thermal conductivity and a moderate moisture regain. It include acoustic insulating properties and manufacture with no skin irritations. Jute has the ability to be blended with other fibers, both synthetic and natural, and accepts cellulosic dye classes such as natural, basic, vat, sulfur, reactive, and pigment dyes. While jute is being replaced by relatively cheap synthetic materials in many uses, but  jute’s biodegradable nature is suitable for the storage of food materials, where synthetics would be unsuitable

Where does the jute plant grow?
Jute is one of the most important natural fibers after cotton in terms of cultivation and usage. Cultivation is dependent on the climate, season, and soil. Almost 85% of the world’s jute cultivation is concentrated in the Ganges Delta. This fertile geographic region is shared by both Bangladesh and India (West Bengal).

What is a Jute rug made of?
Add exotic texture to your living room or bedroom with a simple jute rug. Jute, also known as hessian, is a long vegetable-fiber spun into coarse strands commonly used to make burlap fabric. These natural fiber rugs are often hand-woven using hessian and other plant fibers, making them organic home decor pieces.

Types of raw jute materials:
⦁ Jute Yarn
⦁ Jute Twine
⦁ Raw jute
⦁ Trossa Jute
⦁ White jute
⦁ Jute ropes

Position of jute industries in Bangladesh:
⦁ Bangladesh holds the 2nd position as a Jute producer in the world with the average production of Jute 1.08 m ton/Year.
⦁ More than 85% of world production of Jute is cultivated in the Ganges Delta & having the major portion of it; Bangladesh became the largest producer of Raw Jute or Jute Fiber in the world. For centuries, Bangladeshi Jute had and still has demand in the international market for higher quality fibers. This fact makes Bangladesh the major exporter (80%+ market share) of Jute Fiber in the world; while India has nominal dominance over export of Raw Jute Fiber.
⦁ Total average export earnings from jute & jute goods is US$ 611 million (60 lakh bales)/Year
⦁ Average export value of raw jute is US$ 140 million
⦁ Why Bangladesh famous for jutes: As Bangladesh is currently the second largest producer of jute fiber and now over taken by India she is very famous for jutes. The Jat area, popular for highest quality of jute fiber is located in Bangladesh. Therefore, Bangladesh is able to supply the highest quality of jute fiber in the world. However, Bangladesh falls behind its other competitors in applying recent technological advancements. In terms of world export of jute fiber, Bangladesh’s share is more than 70%, which makes Bangladesh the largest exporter of jute fiber in the world.
Size of the global Jute import Market:
The size of the global jute yarn import market is estimated at 450 000 tons with Bangladeshi spinners accounting for around 80 per cent of the supply.

Recent News/Updates:
⦁ Earnings from jute and jute product exports hit the billion dollars mark for the first time in the country’s history this year.
⦁ Jute sector is contributing 4.68 percent in export earning last fiscal year and two per cent increase during last two years
⦁ Govt. targets to double jute production in 2011-12 season

What are the new applications?
Jute in Organic Fashion:
⦁ Fabrics made of jute fibers are carbon-dioxide neutral and naturally decomposable. These properties are also why jute can be used in high performance technical textiles.

Jute as raw material for Paper:
⦁ A unique combination of long baste and short core fibers along with lower lignin content than some other feedstock of pulp/paper makes jute suitable for a range of paper and cardboard products.
⦁ The stem of jute consists of two fibrous components. The bark (fibrous material) with about 2.5 mm fiber length is suitable for quality paper making and is similar to soft wood fibers (constitutes 25-35% by weight of stem).
⦁ Paper and packaging materials to be produced from Dhanicha will be less expensive and can be recycled after a life-cycle.
⦁ The new technology will save valuable bamboo, wood and jute resources of the country which are now being used widely for producing paper pulp destroying the country’s forests and environment.

Jute in Home Textiles:
⦁ The core of jute (stick/woody portion) with shorter fiber of 0.9 mm length has strength properties similar to hard wood (constitutes 60-65% by weight of stem)
⦁ Diversified jute products are becoming more and more valuable to the consumer today. Among these are espadrilles, floor coverings, home textiles, high performance technical textiles, Geotextiles, composites, and more.
⦁ Jute has many advantages as a home textile, either replacing cotton or blending with it. It is a strong, durable, color and light-fast fiber.
⦁ Its UV protection, sound and heat insulation, low thermal conduction and anti-static properties make it a wise choice in home décor.

Jute in Home Textiles
What percentage is presently from jute in GDP contribution for Bangladesh?
Agricultures contribution to GDP is 18.64%
List of jute mills in Bangladesh: Total 187 mills are here in Bangladesh.

⦁ Dhaka zone:
⦁ Karim jute mills Ltd.
⦁ Latif Bawani jute mills Ltd
⦁ U.M.C jute mills Ltd
⦁ Jatio jute mills Ltd
⦁ Bangladesh jute mills Ltd
⦁ Rajshahi jute mills Ltd
⦁ Chittagong zone
⦁ Amin jute mills Ltd
⦁ Amin old field Ltd
⦁ Gul ahmed jute mills Ltd
⦁ Hafiz jute mills Ltd
⦁ Karnafuli jute mills Ltd
⦁ Development of decorative fabric
⦁ M.M jute mills Ltd
⦁ R.R jute mills Ltd
⦁ Bagdad-Dhaka carpet factory Ltd
⦁ Furat-kanafuli carpet factory

3. Khulna zone
⦁ Aleem jute mills Ltd
⦁ Carpeting jute mills Ltd
⦁ Crescent jute mills ltd
⦁ Eastern jute mills Ltd
⦁ Jessore jute industries Ltd
⦁ Khalishpur jute mills Ltd
⦁ Platinum jubilee jute mills Ltd
⦁ Star jute mills Ltd

4.Non jute mills
⦁ Galfra Habib Ltd
⦁ Mills furnishing Ltd
⦁ Jute-fiber glass industries
Bangladesh Jute Mills Corporation (BJMC) controls these 3 zones.

We would like to briefly explain 2 jute mills. One is Latif bawani jute mills and another is Aarong Bangladesh (only jute sector)

Latif Bawani Jute Mills Ltd:

Their condition before 6 years:
year Sales net
Gross profit (Loss) Profit/loss
(before taxation) Shareholder’s equity Total current assets Total current liabilities
2010 99.45 24.27 9.37 22.16 18.88 133.41
2011 209.51 48.19 35.07 74.64 30.56 81.60
2012 195.25 48.72 22.27 89.34 22.01 50.04
2013 209.97 48.95 15.29 97.56 21.09 48.96
2014 238.60 57.68 21.95 111.06 25.24 38.06
2015 123.79 (1.9) (28.63) 90.16 20.99 62.49

Ethics:
1. Respect of individuals
2. Fair business practices.
3. Comply with all the regulatory requirements and laws of the country
4. Transparency in transaction and following proper acceptable accounting procedures as approved by international and national standards and regulations.
5. Anticipate integrity, honesty and responsibility from all the employees in doing business.
6. Safe guarding and proper use of company’s assets.
7. Avoid political affiliations and contributions.

Effects in economy:
⦁ Exchanging foreign currencies
⦁ Investing shares in stock market and producing dividends.
⦁ Taxation
⦁ Revenue earning
⦁ Long term deposits in banks
We all know about aarong. It takes a major part in jute made things every year. When we go there we see a lot of things such as shoes. Bags, toys, dresses, lamp shades, show pieces etc. now come to the point Aarong

Aarong:

The word aarong comes from “village fair” and this brand is meant to invoke a deeper connection to its rural roots. Born out a humble resolve to empower the marginalized rural women and enable them to realize their full potential. Aarong is one of the 18 Aarongenterprises of BRAC. It has been working towards BRAC’s poverty alleviation through economic development and human capacity building with a specific focus on the empowerment of women.
Some unique objectives of Aarong:
⦁ Women empowerment establishment
⦁ Representation of our country
⦁ Showing our nationality
⦁ Introducing our culture
⦁ Capturing foreign customers.

SWOT analysis of Aarong:
1. Strengths:
⦁ The organization is a respected employer that values its workforce.
⦁ Valuable physical asset
⦁ Valuable human asset and intellectual capital
⦁ Valuable intangible asset
⦁ Market advantage
⦁ Innovative power
2. Weakness:
⦁ Inability supply on time
⦁ Collection and distribution channel of the organization is not that much structured.
⦁ Charges higher price.
⦁ Branches only in prime location
⦁ Workforce lacks of proper training

3. Opportunities:

⦁ Go for new distribution channel
⦁ Can expand its business globally
⦁ Sell new products for special occasions
⦁ Produce products on the basis of seasonal variations
⦁ Enter into alliance
⦁ Start its business full online
⦁ Create and retain new rural customer
⦁ To integrate more supplier and customer

4. Threats:

⦁ Have some small competitors
⦁ Face price wars with their competitors
⦁ New competitors may slow down the market growth
⦁ Competitive pressure may produce the sale of jute made products
⦁ Demand of handicraft product may deteriorate.
Economic effects of Aarong: every year people of all over the country come to our motherland, to see our beautiful country, to know our culture our nationality. Aarong does this very beautifully. They show them our resources, our handicrafts. They sell these products and earn for our economy as well as show our beauty of hands. Jute made products are: s
⦁ Ropes in different colors

⦁ Toys

⦁ Bags

⦁ Carpets

⦁ Dresses

⦁ Saree

⦁ Wall mat

⦁ Tissue boxes

⦁ Lamp shades

⦁ Dolls

⦁ Photo frame

Porter’s five model at Aarong:

This theory is based on the concept that there are five forces that determine the competitive intensity

And attractiveness of market. Porter’s five forces help to identify where power lies in a business situation. This is useful both in understanding the strengths of a organization’s current competitive position and the strength of an organization may look to move into.

Aarong uses this forces to understand whether the new products and services are potentially profitable. By understanding where power lies, the theory can also be used to identify the areas of strengths, to improve weakness and avoid mistakes.

Impacts of jute industry in Bangladeshi economy: Bangladesh is the world’s leading exporter of raw jute and jute products, including carpet backing, twine and sacking. It accounts for as much as 24 percent of world jute production. Agriculture is the single most important sector of Bangladesh’s economy. 80% of the population is engaged in agriculture (66% of the labor force). Fifty-seven percent of the labor force is engaged in the crop sector which represents about 78% of the value added in the agricultural sector. The share of agriculture in GDP has fallen from around 57% in the 1970s to 35% in recent years but agriculture is still the largest economic sector. It is also the source of many of the small industrial sector’s raw materials, such as jute. The jute mills of the West Bengal recently cancelled import orders of as much as 2.5 lakh bales (1 bale=5 mounds) of raw jute from Bangladesh due to their prolonged labor strike and production suspension.
The country is carrying over at least 15 lakh bale of raw jute to which, some 60 lakh bale is likely to be added this year, according to the government’s harvest projection. Although one of the world’s poorest and most densely populated countries, Bangladesh has made major strides to meet the food needs of its increasing population, through increased domestic production augmented by imports. Many economists believe the key to preservation of the viability of jute as an international commodity lies in maintaining price and supply stability. That has proved a difficult task. Of thirty major primary commodities traded internationally, only about six have as much price and supply instability as jute. Demand is highly sensitive to price increases, but not nearly as sensitive to decreases; once a portion of the market is lost to synthetics, it is very difficult to win it back through price competition. Introduction Jute dicotyledonous fiber-yielding plant of the genus Corchorus, order Tiliaceae. Jute was once known as the golden fiber of Bangladesh, since it was the most important cash crop for the country. Jute fiber is produced mainly from two commercially important species, namely White Jute (Corchours capsularis), and Tossa Jute (Corchorus olitorius). The centre of origin of white jute is said to be Indo-Burma including South China, and that of tossa Africa. Jute grows under wide variation of climatic conditions and stress of tropic and subtropics. It is grown in Bangladesh, India, Myanmar, Nepal, China, Taiwan, Thailand, Vietnam, Cambodia, Brazil and some other countries. Bangladesh used to enjoy almost a monopoly of this fiber commercially, its share in the export market was 80% in 1947-48 but in 1975-76 it fell to only 25%. The optimum range of temperature required is 18°-33°C. Jute is cultivated in the rainy season. In Bangladesh sowing usually starts at the end of February and continues up to the end of May, depending on the species This fall in the world market was due to the fact that many countries had started growing jute and allied fibers.
The substitutes of jute are multiwalled paper bags, poly-propelin, polyethylene, and natural fibers from kenaf, hemp, sida, sunhemp, etc. Jute fibers are used in Hessians and gunnies, carpet and rugs, paper, canvas, tarpaulin, handicrafts, etc. Dundi (UK) purchases high class jute of all grades, particularly white tossa. Belgium, Italy, USA, South America are the buyers of superior quality jute. Jute and jute-based products are put to a wide range of uses. Since antiquity it has been used as a raw material for packaging. Before being used as a commercial commodity it was used in different parts of the world to make household and farm implements such as ropes, handmade clothes, wall hangings, etc. In Bengal sacks and saris made of jute were commonly used in the Middle Age. Export of sacks started in the 18th century. Its leaves and roots were used as herbal medicine, and as vegetable by the local people. Its use as an industrial commodity began in the Crimean war when it was used as a substitute of flax. Its use was popularized primarily in Western Europe, particularly at Dundee. Traditionally, use of jute products are limited to packaging materials like twine, hessian, gunny bag, twill, carpet backing, wool pack, tarpaulin, mats, canvas, wall cover, upholstery, and as furnishing fabrics of different types and natures.

Problems of jute farmers and workers:

⦁ Situation in the domestic market is not encouraging
⦁ Farmers are counting losses in jute cultivation
⦁ Wage increase of the labor is also having impact
Recommendations:

⦁ Marketing system of BJMC jute mills needs to be changed
⦁ Political environment should be stabled
⦁ An appropriate mechanism has to be found in this regard
⦁ Government should ensure that farmers get their fair prices
⦁ Encourage the dealers/traders to improve quality and punctual delivery of jute goods
⦁ Govt should provide a good amount of budget in jute sector
Conclusion: If our government and private sector properly regulate and focus in our jute exporting and manufacturing then our economic growth rate will be increased.

References:

https://bangladesheconomy.wordpress.com/category/jute/
http://www.assignmentpoint.com/business/economics/assignment-on-estimation-of-gdp-on-jute.html
http://documents.mx/documents/swot-analysis-of-aarong-55844f9588c40.html

http://bv-f.org/VOL-14/08.%20BV%20Final.pdf
http://peoplesdemocracy.in/2014/1102_pd/problems-jute-cultivation-and-jute-industry