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Analysis of Growth and Instability of Jute in Bangladesh

M.M.U. Molla
Agricultural Economics & Rural Sociology (AERS) Division, Agricultural Research Council, Farmgate, Dhaka-1215, Bangladesh

S.A. Sabur
Department of Agribusiness & Marketing, Bangladesh Agricultural University, Mymensingh-2202, Bangladesh

Abstract/ Executive Summary:

The study attempts to examine growth and instability regarding various parameters of jute and jute goods in Bangladesh. Time Series data covering the period of 1981-82 to 2009-10 was used for the study. The growth rates were estimated by fitting exponential function and the instability index was used for better reflect the true instability situation. The study found an increasing growth trend of jute production (0.2%) and yield (1.7%) in post-trade liberalization period in spite of significant negative growth of area (1.5%). Growth of harvest time real price of raw jute and quantity exports and prices of raw jute and jute goods at world market showed positive trends in the same period. Moreover, instability in area, production, yield and harvest time price of raw jute also decreased remarkably in post-trade liberalization period. In contrast, internal consumption of jute goods decreased significantly in post-trade liberalization period, which might be due to the wide expansion of cheaper synthetic substitute usage over the previous period. Lower growth was observed for jute goods export compared to raw jute and it might be due to the stiff competition against cheaper synthetic substitutes of the world. Moreover, export prices of raw jute and jute goods in real term found more unstable in post-trade liberalization period. To avoid entire dependency on export market and to ensure more domestic consumption for bringing stability to raw jute and jute goods prices, mandatory implemented immediately.

Keywords: Growth, Instability, Jute goods & Raw jute.

Location:

Start Date:

End Date:

Program Area: Knowledge Management

Commodity: Jute

Objectives:

To analyze growth and instability of various parameters related to jute in Bangladesh.

Methodology:

In order to explore the potentials and possibilities of expansion in the acreage and production of the jute as well as jute goods in Bangladesh, it is therefore, essential to examine the past performance of jute and jute goods. Analysis of growth rates and instability can be most useful for policy making since they help understand both the magnitude and direction of the changes taking place. Growth rates are usually computed by fitting trend functions using time series data on different variables. Sometimes a best fitting trend is chosen from a pre-specified set of functions of time, so as to answer the question whether trend has or has not taken place over a given period (Krishnaji, 1980). Instability is one of the important decision parameters in development dynamics and more so in the context of agricultural production. Because price and yield instability affects area allocation of farmers to crop production enterprise. Such knowledge of instability will also be helpful to the farmers in making suitable production and making investment decision and to the financing institutions in judging the repayment capacity and risk to the farmers (Gangwar and George, 1971).

Sources of Data and Study period: The present study is based on published and unpublished data of various national and international agencies. For estimating growth and instability, secondary data were collected from Bangladesh Bureau of Statistics (BBS), Bangladesh Bank, Food and Agriculture Organization (FAO) and International Jute Study Group (IJSG). To study changes in the rate of growth and also in the magnitude of instability, the time period had been divided into different phases in order to calculate the growth rates and to measure instability in different parameters of jute and jute goods in Bangladesh. So, for better understanding, the time period had been divided into three phases: i) pre-trade liberalization period (1981-82 to 1994-95), ii) post-trade liberalization period (1995-96 to 2009-10) and overall period (1981-82 to 2009-10).

Analytical Procedures: There are alternative methods by which the growth rates can be calculated for a specified data series. In this study, the growth rates of were estimated by fitting exponential functions.

Source of Information: The Journal of Agriculture and Natural Resources Sciences, 2(2), 429-436. 2015

Article Link (Online Journal): http://www.journals.wsrpublishing.com/index.php/tjanrs/article/view/207

Funding Source:

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Achievement/Findings:

From the above findings it is mentioned here that there is an ample scope to revive jute as an internationally traded commodity. It has bright future prospect in terms of the growth of yield, world exports, export prices and internal consumption. Although both public and private sectors are engaged in this area, private sector is dominating largely. In a market economy, private sector has to play a vital role for the development of the industry. Government can assure some policy support for producing quality jute with low cost, providing incentives for increasing productivity, ensuring fair prices for the farmers and increasing infrastructural facilities also. But, market stability and market expansion both local and world perspective is largely depends on the rational behaviour of the private sector participants. They can play an active role to capture the opportunity of increasing trend of world demand. For achieving that goal, government has to take necessary supporting programmes through effective policy measures.

Knowledge Management: Journal