Bangladesh: 25 state-run jute mills shut, 45,000 workers laid off. ‘Suicidal’ says BAFLF

The shutting down of jute mills and laying off workers is the last nail in the coffin of the largest and most promising state sector: The government used the emergency caused by the COVID-19 pandemic as an opportunity.

The jute cultivation and jute industry are central to the agricultural economy of Bangladesh. Jute has been the principal cash crop of the country for a long time. A critical vegetable fiber next only to cotton. 4 million farmers and the lives and livelihoods of 40 million people are directly or indirectly dependent on this sector. They engage in jute cultivation, processing, manufacture, and trade of various materials such as jute and jute leaves, etc. The jute sector is the only cash crop in Bangladesh that is 100% value-added, self-sufficient in backward and forward connectivity industries. Historically, the jute economy has been an integral part of our entire economy. The destruction of that jute and jute industry means a blow to the heritage and culture of Bangladesh.

In a surprise move, on June 26, the government announced about the shutdown of the remaining 25 state-run jute mills and lay off about 45,000 permanent and irregular workers.

According to various sources, over the past years, government officials have made a roadmap to close jute mills through a ‘golden handshake.’ Farmers and workers allege that the reason behind this is to hand over huge assets, including factories, to private players under enabled through Private Public Partnership[PPP] arrangements.

The government is trying to hide the institutional looting and corruption by identifying jute mills as loss-making units and blaming it on the workers. But the reality is Bangladesh Jute Mills Corporation (BJMC)’s irregularities in jute purchase, poor management, and lack of an organized marketing strategy are the root causes of financial losses.

The government’s push for privatization is indeed a policy of ‘One doth the scath and another hath the scorn.’ BJMC is the umbrella entity of the state’s own jute mills, and its officials are the management authority. Minister-Secretary manages the BJMC officials. So if the jute mills have incurred a loss of thousands of taka crores, why should only the workers take the responsibility? Why should ministers-secretaries-chairmen not be under scrutiny? Why not give a golden handshake to the factory manager, i.e., BJMC officers, before giving a golden handshake to the workers?

This announcement by the government is a suicidal decision to destroy the jute industry. Hopefully, the government will move away from this suicidal decision. With the closure of jute mills, the government decided to modernize the jute mills and reopen under PPP. However, there is no time limit set for reopening or modernization. When and on what basis will these mills be introduced under PPP is not clear to anyone. Meanwhile, the private owners of the jute sector have rejected the PPP’s proposal and demanded that the closed jute mills for a lease of ninety years.

There was no discussion with stakeholders, no scope to provide an opinion from the stakeholders on this shutdown. It is also contrary to the spirit of the liberation war. It is even contradicting Article 13 of Bangladesh’s constitution on the ownership of the state.

The government pushed these changes while the country reels under the effects of a terrible pandemic like COVID19. The pandemic has already ruined the livelihood of the people. About 10.5 million people in the country have lost their jobs and are now unemployed. Now the jute mill workers are also added to the unemployed list. Even if about 25,000 workers of state-owned jute mills lost their jobs, millions of people who depended on them would have to suffer at the government’s hands. It is entirely unjust and inhumane to force the jute mill workers to change their profession by handing over some money when the pandemic is wreaking havoc on the country’s economy.

The jute sector’s contribution to the country’s GDP is 0.26 percent, and it is 1.4 percent of the agricultural GDP. But jute farmers are worried about the price of the crop, as so many jute mills are closed at the same time in the full season. At present, jute is cultivated in seven and a half to eight lakh hectares of land in the country, of which less than 80 lakhs bales of jute fiber are produced. This time the farmer has cultivated jute on more land. Currently, jute is being sold at Taka 1,800 to Taka 1,900 per Mound. Last year it was sold up to 2200 taka. It frustrates jute farmers over the reduction in prices. Jute production costs more than one and a half thousand taka per Mound. Since there has been a low price of paddy for the last few years and higher prices of jute, farmers were gradually leaning towards jute cultivation. The fear is that this time the production will decrease if the farmers lose interest in jute cultivation without getting the price. The private jute mills will also be in crisis.

Although the number of jute cultivators is 4 million as per the government, about 20% of the country’s total population is involved in jute cultivation and various post-cultivation processes such as processing, fiber weaving, warehousing, transportation/relocation, and marketing. Jute sticks found after fiber extraction are the primary source of fuel in the village; Decreased jute cultivation may increase the tendency to destroy trees without getting jute sticks, which can be a significant threat to the environment. The decision to abruptly shut down the jute mills just before the season will have a negative impact on agriculture as a whole. There are now several privately owned jute mills in the country. They will buy jute for the mill, but will not pay the price. The announcement of layoffs at this time of the coronavirus disaster will not only encourage private owners; it will make them reckless.

Jute cultivation is also an alternative way to protect the environment and soil health. It is a rain-fed crop with little need for fertilizer or pesticides. Jute fiber is available in just 100 to 120 days of cultivation. Studies have shown that per hectare, jute crops can absorb about 14.66 tons of carbon dioxide from the air. For which jute crop purifies the atmosphere by absorbing polluted carbon dioxide from the atmosphere. Thus, the jute crop helps the earth protect its environment by hindering greenhouse gases from the planet and its relative temperature.

On the other hand, per hectare jute crop purifies the atmosphere by releasing 10.66 tons of oxygen in 100 days. At this level, the cultivated jute crop of Bangladesh absorbs about 8115.19 thousand tons of carbon dioxide from the atmosphere of its total cultivated area in 100 days every year. It provides about 5900.95 thousand tons of oxygen. For this contribution to maintaining the natural balance, the budget should be allocated for this. It requires government investment for the development of the jute sector.

Another study found that 5 to 6 tons of jute leaves per hectare fall to the ground during jute crop production. Also, the jute plant roots that remain in the soil after harvesting the jute crop are later mixed with the decomposed soil to make fertilizer, which reduces the cost of fertilizer for the next crop production.

The food production assessment of the amount of fertilizer obtained from the leaves and roots is about 25174 tons of urea, 3733 tons of TSP, 2733 tons of MP, 38080 tons of gypsum, and 30545 tons of dolomite. Also, micro-nutrients such as ferrous sulfate 360 ​​tons, magnesium sulfate 180 tons, and zinc sulfate 33 tons are available. Studies have shown that the gas produced during the digestion of jute contains 50% to 60% of methane, which can be used to make fuel gas suitable for use in homes or factories. Jute is perishable and does not emit any toxic gas.

At the beginning of Bangladesh, the main export product was jute; it was called Golden Fiber of the country. About 51 percent of the jute fiber produced in the country was used in the jute mills, about 44 percent of the raw jute was exported abroad, and only about 5 percent was used for household and cottage industries.

Currently, the jute economy is recovering a lot. Jute production has increased compared to the past. In the ’90s, jute was grown in 12 lakh hectares of land in Bangladesh. Sometimes it goes down to 4.0-4.5 lakh hectares. But because of the realization of the demands and importance of natural fiber, the area under cultivation increased to 7 lakh hectares by 2010-15. The amount of jute that could be obtained from the 12 lakh hectare area earlier is now being got from 7 to 8 lakh hectares due to the use of advanced technology. The internal use of jute has also increased. The demand for jute bags in the domestic market has increased from 10 crores to 70 crores. Not only exports but also jute products have an enormous market in the country.

The demand for jute products has also increased in the world market. In the 2016-17 financial year, Bangladesh exported jute and jute products worth about Tk 7,700 crore. The volume of exports is growing. In contrast to the increasing losses in BJMC’s factories, new privately-owned jute mills are being set up. The number of jute products has risen to 240 due to the move to diversify environment-friendly jute products. Scientists in our country have worked for the versatile use and improved cultivation of jute. They have developed 38 high yielding jute varieties. It requires government investment for the development of the jute sector.

Jute worker’s termination at the cost of TK 5,000 crore, or to modernize it through BMRE at the cost of TK 6,000 crore and to close the jute mills in the bureaucrats’ plan will not solve the crisis in the jute industry. In contrast, the proposed fundamental reform proposals to triple production capacity by investing only TK 1,000 crore in advanced and automated technology, weaving, beam, and warp welding purchases.

Jute was the single largest industry in Bengal and Pakistan during the British rule. The jute industry started its journey in East Bengal in 1952 with the establishment of Bawa Jute Mill at Demra in Narayanganj. Due to the favorable climate of jute cultivation, the availability of readily available and high-quality jute led to this lucrative industry’s rapid development. After independence, 77 jute mills were nationalized in 1972 with the ownership of jute mills by the people. Of these, 25 have remained.

But the whole jute economy has been ruined since the time of General Ziaur Rahman in the eighties as per the advice of the World Bank and IMF and under bureaucratic management by starting the privatization of state-owned jute mills in the name of privatization. Later, during the tenure of General Ershad, thirty-five jute mills were left to the private sector, and the government withdrew capital from eight more jute mills. Since 1990, 11 jute mills have been closed, sold, and merged under the World Bank’s Jute Sector Reform Program. Then, during the BNP government, the country’s largest Adamjee Jute Mill was closed in June 2002. At last, the current government shut down the remaining 25 that were running on somehow.

In solidarity with the Jute mills workers’ struggle, BAFLF organized a protest demanding the reopening of all jute mills and factories.

Due to the closure of state-owned jute mills, not only 25,000 jute mill workers will be affected, but besides, 4 million jute farmers and 40 million people, directly and indirectly, involved in jute cultivation will be affected. The country’s national economy will suffer. It will hold them to become hostage by the private sector mills. It will not be easy to bring back the international market that Bangladesh’s jute products will lose, and the experienced jute mills workers will be lost. Jute laid the foundation of a sustainable industry in Bangladesh, of which the raw material is produced in the country. Jute products meet the demand of the country, and foreign currency is earned by exporting those. In the interest of those industries and workers-peasants, the government’s decision to close down the state-owned jute mills and the decision to lay off workers through the so-called golden handshake should be stopped now and the state-owned jute mills should be reopened, maintained, and reformed and modernized.

Here are some specific recommendations and suggestions to restore and sustain the jute and jute industry:

  • To provide high-quality seeds to jute farmers to increase jute production. Incentives for production of excellent quality jute.
  • The area under jute cultivation should be increased, and we should increase jute cultivation with necessary subsidies.
  • Providing subsidy is the initial investment in the jute sector. To sustain Bangladesh’s brand, the government must invest in the jute sector. This investment will have a multifaceted effect. With this investment, if it adds the latest modern technology to the jute mills, it will become an advanced factory and will be operational. Jute farmers will get a fair price. It will also protect the backward linkage industry.
  • To increase productivity, it is necessary to quickly replace the century-old equipment and replace it with modern and latest technology machines.
  • The government must take a sincere initiative to establish corruption-free jute management. The additional manpower required for the administrative management of the jute mills has to be reduced. The existing jute mills have to be managed under their own management, considering each jute mill as a separate enterprise.
  • Finance is important for jute mills in purchasing jute. Necessary funds have to be paid to the jute mills before the start of the jute season. For this, we have to allocate a lot in the budget.
  • Strengthening the supply and value chain of jute and jute diversified products is the key to bring lost glory of the “Golden Fiber” of Bangladesh back. Using jute and jute products should be made compulsory in all government offices and institutions from the center to the grassroots level. The government itself will do the same and involve the private sector in this work as well.
  • Under the government’s skill development program, upskilling and re-skilling training programs will have to be undertaken for the jute mills workers to develop skills to operate ‘modern machines’ on a large scale. No one will lose a job because of this skill of machine operation.
  • Incentives should be given to earn foreign exchange through the export of jute products. There is a need to raise awareness among the people about the use of jute products.

The jute and jute industry will restore its lost glory if we take proper steps and the above recommendations and suggestions. If we strengthen the jute economy, the country’s economy will be prosperous as well as the employment and livelihoods of Jute workers, and people depend on jute cultivation. Jute industries will be secured and enhanced. Bangladeshi brand jute will add an additional dimension to its tradition and culture.

Contributed by Golam Sorowor of Bangladesh Agricultural Farm Labourers Federation (BAFLF)

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