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    Beyond the Sunset: A New Dawn for Jute


    © International Trade Centre, International Trade Forum - Issue 4/2004

    Photo: Jute Manufactures Development Council, India Jute's versatility and eco-friendly profile has placed it back on the international scene as a golden fibre - with fashionable shopping bags just one of its end products.

    Once termed a "sunset industry", jute now offers fashionable, eco-friendly products that are attracting new consumers - thanks to innovative applications in the automotive industry, fashion, furnishings and landscape management. ITC's role in jute product development and marketing has contributed to the turnaround, and has helped very poor families to improve their livelihoods and hopes for the future.

    In the late 1980s experts were describing jute as "a sunset industry". Synthetic and bulk container packaging threatened jute as the traditional material for this purpose. Exports of jute and jute products shrank. Prices took a nosedive. The industry seemed almost terminal. Jute farmers were plunged into poverty.

    Just over a decade later, an independent assessor reported in 2000 that "market development and promotion of jute is a major success for the ITC. Working on modest budgets, ITC [produced] substantial results in assisting tens of millions of very poor people. […] ITC helped limit the extent and rate of decline. Investments of [US]$ 5.4 [millions in] projects funding reaped rewards of over [US]$ 500 million."

    In contrast to other major commodities, whose prices declined steeply between 1980 and 2002, jute was able to withstand the downward pressure, rising from US$ 369 per tonne in 1980 to US$ 400 in 2002. This was partly due to the Indian government's intervention in the domestic market. But it was also due to the activities of ITC and the United Nations Development Programme (UNDP).

    Diversification efforts have made jute a substitute in areas as wide-ranging as automobile manufacture, furniture, shopping bags and erosion control "geo-textiles". This humble, once-scorned commodity has established itself as a fashionable, eco-friendly item - a golden fibre - in niche markets.

    This article is based on views contributed by Nanda Kumar, Secretary General of the International Jute Study Group. Mr Kumar was formerly Joint Secretary in the Indian Ministry of Textiles and chairman of Spices Board India, and is the author of the ITC publication, Impact of the Uruguay Round on Spices (1995).

    Jute has always appealed to poor farmers. It is an ideal crop for rotation with rice, offering extra earnings for peasant growers and protecting rice cultivation. Its planting, control, harvesting and primary processing have given much-needed employment for women and landless labourers. Its industrial processing provides more jobs. Rural households use the jute sticks, after the extraction of the fibre, as an environmentally friendly cooking fuel.

    So when the industry took a nosedive, a number of people in India - the major producer - and international organizations decided to take action, believing that jute had more in its future than simple sacks.

    The Indian government established a Jute Modernization Fund and a Special Jute Development Fund. UNDP became a partner in jute diversification. Legislation and regulatory arrangements provided "market space" to the jute industry in the domestic market's packaging sector. The government invited ITC - which was involved in many projects of both the erstwhile International Jute Organization (IJO - now called the International Jute Study Group) and the Indian government in this industry - to become an active partner in the UNDP project.

    The National Jute Development Programme was approved in 1992 to run for five years, and was later extended for another year. The UNDP contribution was US$ 23 million, and the Indian government gave as much in counterpart funding.

    New technologies, designs, marketing

    The project sought to evolve new technologies and applications for jute, develop new machinery and promote small and medium-sized enterprises (SMEs) in jute diversification, quality improvement and market development for diversified jute products. It sought to develop human resources and create a national institution for jute diversification.

    ITC worked with designers, market specialists, jute mills and, most importantly, SMEs. New products were designed with an eye on the market, giving considerable attention to detail. ITC helped SMEs to design brochures and catalogues, arrange proper displays in exhibitions and improve the design, aesthetics and utility of the products.

    A National Centre for Jute Diversification was set up in Kolkata in 1994. As an active professional organization, the centre provides services to SMEs, supporting diversified  jute producers in design, marketing and infrastructure.

    The new products included fine yarn, upholstery and furnishing fabrics, aesthetically appealing shopping bags, fashion accessories, jute-plastic composites, jute particle boards (or chipboards) and hand-made paper. These are all commercially available. New applications for jute, such as non-woven articles and special textiles, have emerged.

    80,000 jobs

    Today, diversified jute products account for 20% of the jute product sales in India, including exports. The sub-sector involves more than 1,000 SMEs, providing employment for about 80,000 people.

    An evaluation of the project in 1998 concluded that it had achieved most of its objectives. ITC's expertise in jute market development and promotion was considered critical to the success of the project.

    The evaluation recommended continuing support to specific areas. This led to a Fibre and Handicrafts Programme supported by UNDP and the government of India. Jute was a major sub-sector. Its components: sustainable human development through non-governmental organizations; improving living standards for farmers through more profitable, fine jute fabrics; marketing support in domestic and international markets; commercialization of technologies for SMEs; machinery development; and quality assurance for an organized and decentralized sector. The programme ended in 2002.

    In Bangladesh, though the country did not have the spur of a major UNDP project, assistance from ITC and the Norwegian Agency for Development Cooperation helped the industry to produce high-quality yarns and fabrics, jute-fabric shoes and jute particle boards. A Jute Diversification Promotion Centre was set up in 2002 to give this effort more impetus.

    Paper pulp and SME development

    Meanwhile, in 1997 an international body, the Common Fund for Commodities (CFC), approved a US$ 1.49 million project on the "Biotechnological Application of Enzymes for Making Paper Pulp from Green Jute/Kenaf". This was successfully completed in 2004. The knowledge gained is now being transferred to entrepreneurs, with potential for substantially reducing the pressure on forests to harvest wood for producing paper.

    The CFC has also approved another project, building on the success of ITC and UNDP in India, to develop small-scale entrepreneurship in diversified jute projects, providing US$ 3.05 million to India and Bangladesh. Another diversification project, using jute poly-olefines as a composite material, is being implemented.

    Commercial successes

    The diversification effort can already claim a number of commercial successes:

    • Major automobile manufacturers have started using jute fibre to replace glass fibre in upholstery.
    • Some well-known furniture manufacturers in India

      and Bangladesh are using substantial amounts of jute particle boards in their products.

    • SME-produced shopping bags from India have become fashionable in a number of markets.
    • Jute erosion-control geo-textiles have established themselves on the market.

    Between 1979 and 1999, ITC spent over US$ 6 million on 28 projects in promoting the export trade in jute and its products, a large financial commitment by ITC standards. This, of course, was tiny by industry and trade norms, but remained the only market development and promotion undertaken for jute.

    A new road map

    Despite the successes, circumstances held back the progress that could have been achieved. The ITC evaluation said the organization should have marketed its corporate experience and technical capacities more aggressively in internationally funded projects: "The related projects would have been all the stronger for it." Similarly, the exigencies of funding led to a relative neglect of the crucial US market, while the existence of the International Jute Organization led donors to believe the sector had all the funds it needed for jute development. As a result, the IJO "did not have funds to go beyond a coordination role and ITC […] was starved of enough project funds…".

    Today, though significant, jute's share of the export market remains small. The jute sector has decided to draw up a new road map for the industry in the global market. With financial support from the CFC, ITC will bring together important stakeholders for a series of seminars and workshops during 2004 and 2005 to plan for accelerated and diversified growth.

    Writer: Peter Hulm

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