• .tA

Report No. EC -168

This report may not be" published nor may it be quoted .as representing the view of the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness.

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INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

INTERNATIONAL DEVELOPMENT ASSOCIATION

INDIAN EXPORTS

OF

JUTE MANUFACTURES

Problems and Prospects

January 21, 1969

Economics Department Prepared by: Bension Varon

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This report was prepa~~;-ed by Mr. Bension Varon or the Economics Department and is based largely on the findings of a three-week visit to India and on his continuing work on jute in the Trade Policies and Export Projections Division of the Department.

TABLE OF CONTENTS

Page No.

INTRODU CTION 1

I.

II.

III.

IV.

v.

SALIENT FEATURES OF JUTE AND THE INDIAN JUTE ECONOMY

Basic Characteristics of Jute

The Indian Jute Industry

The Raw Mataria1

11AJOR TRENDS IN THE IDRLD JUTE ECONOMY

4

4

5

7

9

Consumption of Jute Goods 9

Production of R&w Jute and Jute Goods 12

Trade 13

General Demand Outlook and Implications for 14 India

PAST PERFORMANCE OF INDIA 17

Post-War Trends 17

Development Plans and Achievements in Raw Jute 19

Devaluation and Recent Trends 25

COMPETITIVE POSITION OF INDIA

PLANS AND PROSPECTS

The "Old" Fourth Plan

Supply of Raw Jute

Agricultural and End-Use Research

Conclusions, Future Prospects and Recommendations

II

Supply\\Prospects

30

38

38

38

39

40

41

Demand and Price Prospects 42

Areas of Possible Investigation and Action 44 STATISTICAL APPENDIX

LIST O~., TEXT 'rABLES Page No.

I. Production of True Jute in India: 20 Development Plans and Achievements

II. Production Mix of Indian Raw Jute 22

III. Progress of Jute Development Measures 24 During the Second and Third Plan Periods

IV. Changes in Indian Export Taxes and 27 Excise Duties

v. Exports of Jute Goods from India and 31 Pakistan

VI. Conversion Costs of Indian Jute Goods 33

VII. Profitability Ratios of the Indian Jute 36 & 37 Industry and Total Industry

VIII. Projections for 1970 and 1975 43

INTRODUCTION -........~"'.-. ..-..-

1. Indian exports of jute manufactures have averaged nearly $350 million per annum over the last five years and accounted, on the average, for about 21 percent of the total export earnings of the country. Although during the second half of the fifties exports of

'. jute goods were exceeded in value by tea exports, jute manufactur'es have been the most important foreign exchange earner (and the most important hard currency earner, by far) of India for the last eight years. In calendar 1966 jute goods?ccounted for roughly 22 pel"'oent of India's foreign exchange earnings"'(compared to tea's share of 14 percent) and 28 percent of the value of exports to dollar and sterling areas.

2. The importance of jute to India can also be illustrated by the follotdng figures: The Indian jute processing industry (th7 largest in the world) is estimated to employ nearly 240,000 factory workers, or almost nine percent of total factory labor. In addltion, nearly four million families are employed in jute culti vat,.~()n. In­direct employment (in marketing and ancillary activities) generated by jute cultivation and processing is estimated at 1.7 million. The productive capital (fixed assets plus 'WOrking capital) of the industry is in the neighborhood of $175 million, and the industry IS annu['.l turnover is normally approximately $440 million. The ind·J.str;r pro­vides substantial revenue to Central and State governments t~CTll various taxes and charges. Furthermore, in addi tiOll to generating 011 r:1G aver­age $350 million of exports, the industry supplies the VD.st, and rapid­ly growing domestic packaging requirements of the country.

3. The importance of jute to India is enhanced by the fact that both jute cultivation and processing are concentrated in Eastern India, particularly in the State of West Bengal. Jute constitutes the most in~ortant cash crop in this region. The bulk of the industry is located along the banks of the Hoogly River within a hO-mile raoius around Calcutta. A major part of' the income of this port is derived from jute manufactures, which account for roughly 40 percent of the outgoing cargo. The future of the Indian jute industry is, therefore, of in~terest not only for balance-of-payments considerations but also from the point of view of the economic growth of this highly populated regiol".

4. Although her importance in the world jute economy has dj,mi.n-ished over the years, India retains a dominant position in the world market. India is the world's second largest producer of raw jute Carter Pakistan), accounting for roughly 40 percent of world output, and the world's third largest producer of jute-like fibers such as kenaf (after Thailand and Mainlanq China), with a share of 25 per­cent; she is, however, the world's' largest producer of jute and allied fibers combined. She has nearly 60 percent of the 'world jute 1'.::m1aga,

\\ though she accounts for about 40 percent of world production of' :;ute goods due to excess capacity and lower output per IIPom compared -bo the jute industries in developed countries. l.fore impor'~antly, however,

)j

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India accounts normally for about 70 percent of world exports of jute manufactures, and in some product categories, such as carpet-backing cloth, her share is as high as 90 percent. Thus, India has a propen­sity to suffer considerably from autonomous adverse developments in the world jute market and is, at the same time, in a position to in­fluence the major trends in world demand.

5. After achieving a moderately favorable export performance in the post-war period through the mid-196O ' s, the Indian jute in~ dustry has been going through a period of severe difficulties of near-crisis proportion, as evidenced by a decline of about 20 percent in the value of its exports over the last tw years, partly due to raw material shortages. The Indian jute industry has had its ups and downs in its more than a hundred-year-old history and has managed to recover from major crises such as the Depression, World War II and the Partition of the sub-continent in a relatively short time. The industry!s current difficulties have caused great concern, however, since India now seems to be facing several major problems which, though not entirely new, have converged all at one time.

6. First, India seems to have reached serious bottlenecks in expanding her raw jute output due primarily to pressures to grow more rice. The raw material situation has been aggravated by the continu­ation of the trade embargo imposed after the last Indo-Pakistan con­flict by Pakistan, which until then supplied India'S deficit in slJperior quality jute. The latter has been a serious blow to India since she has been diversifying toward jute products which require high-grade fiber, which she produces in limdted quantities.

7. Secondly, the share of India in world exports of jute manu-factures has been declining steadily since the early fifties due to increasing competition from the rapidly growing jute processing indus­try in Pakistan. India's share of the market has shrunk from 87 per­cent in 1950-1954 to 70 perg:ent in 1965 and 60 percent in 1967. While

. this has not prevented her I~ute exports from i11creasing in the past, the outcome in the future in this respect is i1:1 doubt. Meantime, Pakistan is planning a substantial expansion in capacity over the next few years and has several thousand looms on order or under installa­tion. The Pakistani industry enjoys certain b~Elsic advantages over India, such as ample raw material supply and a generous export bonus.

8. Thirdly, the demand outlook for jute has deteriorated con­eiderably over the last two to three years as l:L result of the intro­duction of new "man-made" substitutes in developed countries. Although it is difficult to assess the full market potential of these substi­tutes at this time, it appears quite certain that they will have some adverse effect on the potential jute market. Furthermore, the new substitutes are threatening particularly the hitherto most lucrative product lipes of India, such as carpet-backing.

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9. Last, but not least, the last two lean years have weakened the financial position of Indian mills and their ability to withstand the effects of adverse trends in demand and supply and to fight jute substitutes or competition from Pakistan.

10. The purpose of this report is to examine the problems in and prospects for Indian exports of jute manufactures within the context of recent and prospective developments.' in the world jute ec;pn0tn¥. The report is based largely on the findings'~~of a three-week rield trip to India undertaken at the request of the Asia Departmente It also draws heavily upon a prel:tminary draft of an 1/ Economics Department study projecting wo!'ld demal"ld, supply and pric~ and on the findings of an earlier (1966) field trip to Pakistan.

11. Chapter I presents some background information on jute and the Indian jute industry. Chapter II summarizes the major trends in the world jute economy and tha overall outlook for jute. ;Chapter III is devoted to an examination of the past performance of India. Chap­ter IV focuses on the competitive position of India. Finally, Chapter V evaluates the prospects for Indian exports of jute manufactures within the context of prospective developments in India and the rest of the vrorld.

1/ Economics Department, The World Jute Economy: Post-War Trends and Prospects, to be issued in January 1969.

I. SALIENT FEATURES OF JUTE AND THE DIDIAN j1JTE ECONOUY -----------_._----------""""_._--Basic Characteristics of Jute

12. Jute fiber is obtained from the inner bark of an annual plant of the same name which grows best in humid and very damp climatic conditions and in loamy alluvial soils. The jute-growing season (February - April to July - September, depending on the region and the variety planted) coincides closely with the groldng season for Summer Paddy (March - May to July - September), and the plant generally competes, therefore, for the same land with/rice, which is the principal staple food of the jute-growing region!. Jute culti­Vation, at least under current cultural practices, is highly labor­intensive due to the frequent weeding and thinning required and to the numerous operations involved in extracting the fiber from the bark and preparing it for the market (such as ret,ting, or soaking, stripping, washing, and drying), all of which are performed by handEl. These stringent climatic, soil and labor requirements explain the historical concentration ?f jute production in the Bengal region of the Indian Sub-Continentl •

13. In addition to jute, there are a number of jute-like fibers which, though generally inferior to jute, can be substituted for the latter in most of its end-uses, particularly when used in admixture with it. The most important of these is kenaf, also called mesta or meshta (in India and Pakistan) or Siam jute, due to its large-scale cultivation in Tbailand. The ecological and labor requirements of kenaf are lesa exacting than those of jute (for example, kenai does not require land suitable for rice and therefore does not compete for land with a major food crop), and its prpquction is, therefore, geo­graphically more widely spread than jut~. In the rest of the report, unless otherwise stated, the word "jute" refers to jute and jute-like fibers combined; jute proper is referred to as "true jute."

!/ There are, however, some lands which are suitable for growing either jute alone or rice alone, although the proportion of these lands is difficult to determine.

~/ Labor cost is estimated to account for roughly 65 percent of the total cost of production in Pakistan and 75 percent of the cost of production in India.

1./ Only 11ainland China and Brazil produce any sizeable quanti ties of jute outside the Indian Sub-Continent and, together with a few minor producing countries, account for 10 - 15 percent of world output.

l:!/ In addition to Asia, for example, kena:f' is grown in several countries of Afr~:i.ca and Latin America.

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14. Jute is used in the form of yarn and cloth in a variety of end-uses. The oldest and most important. end-use is the manufacture of packaging materials for bagging and baling a variety of agricul­tural commodities and raw materials (e.g., grains, cotton, wool, etc~). Jute has also been used for many decades in the manufacture of woven carpets (as face yarns or backing yarns), linoleum, furniture webbing, tailor's padding, cables (as insulating material), felts, cordage, etc., Several new uses for jute have be~n developed over the last few years the most important of which :i.s the manufacture of cloth for backing tufted carpets!/.

15. Woven jute goods are generally classified into II'standard goods" and "speCialty goods." Standard goods consist of sacking (a coarse, loosely-woven fabric made of inferior jute and jute cuttings~/) and hessian or burlap (a more expensive, lighter fabric of a finer texture made of superior quality jute). The most important specialty product is carpet-backing - a type of hessian of a wider construction. Other specialty goods include canvas, cotton bagging, webbing and laminated fabrics. Each of these three broad categories of products is generally manufactured in special looms of different widths and construction.

The Indian Jute Industry

16. Jute spinning and weaving is the oldest manufacturing in-dustry of India. The industry was established over 100 years ago, largely with British capital and know-how'. British capital and man­agement have been largely withdrawn over the years, however, and today the bulk of the industry is owned and managed by Indians.

17. The Indian jute industry consists of 88 ~Ills controlled by 79 companies with about 650,000 spindles and approxf~ately 75,000 loomsJ/,

11 Tufted carpets, unlike woven carpets, are manufactured by inserting the pile yarns through a pre-woven backing wi th '~housands of needles working Simultaneously. A large proportion of such carpets are covered with a second backing in order to give the carpet additional weight and dimensional stability. The tufting process was developed in the early fifties, and the manufacture of tufted carpets has spread at a phenomenal rate since then, particularly in the United States.

gl The damaged butt ends of the long jute fiber.

1/ As of January 1, 1966, according to the Indian Jute Mills Association. This figure, however, is reported to include the loomage of some companies which have closed down their mills but which may still exist as legal entities.

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or roughly 57 percent of the estimated current world jute loomage1/. Moreover, mills in India are relatively large in s7ca1e of production. The average number of looms per mill is about 850g compa1red to 550 in Pakistan (450, excluding one mill which has 3,178 loomis) and 120 in Western Europe. Also, unlike Western European mills, al1 Indian (as well as Pakistani) mills are integrated, i.e., combine both spinn­ing and weaving. About 96 percent of the loomage is loc8L ted in 1I\Test Bengal, mostly in the vicinity of Calcutta, due to the lcl.tter's prox­imity to the sources of raw material supply, to an ample supply of coal and labor, and to vast shipping facilities.

18. The Indian jute industry grew rapidly until 1940, but the expansion which has taken place since then has been confined to a few thousand specialty looms. The number of standard (sacking and hessian) looms in members of the Indian Jute Mills Association (which account for roughly 95 percent of the total loomage) for which his­torical data are available, for example, has remained p:ractically unchanged at about 65,000 since 1940. Moreover, while the spinning sector has been substantially modernized over the post-'war period, very little modernization has taken place in the weaving sector. Thus, OVer 95 percent of standard looms appear to be l1iore tha:n 25 years old, and a sUbstantial proportion is probably nearly 50 year,s old. This contrasts dramatically with the situation in Pakistan (India's major competi tor) where the bulk of the machinery is less thalrl 12 years old.

19. The Indian jute industry produces roughly 1.2 million metric tons of jute goods per year valued at over $400 million at prices of recent years. A significant aspe,.ct of the Indian jute picture is the rapid growth and huge size of the domestic market for j'U(te goods. ApprOximately one-third of the output is consumed locally (compared to 17 percent ten years ago) and the rest is expor1ted. India is currently the 't~orld t s third larg;est consumer of jute goods after the United States and Mainland China.

20. About 80 percent of India'S exports of jute manufactures consist of standard goods and 20 percent of specialty products, mostly carpet-backing. The United States, which does not have a jute weaving industry to speak of, is India's largest customer of jute goods and absorbs roughly 35 percent of her exports; the U.S.S.R. and Eastern Europe account for approximately 15 percent and the remainder

-~~.---------------------1/

~/

The other 43 percent are distributed as follows: Western Europe 18 percent; Pakistan 12 percent; centrally-planned countries five percen'c; other countries eight percent. It is significant to note that tne U.S., which accounts for 15 percent of world consumption of jute goods, does not have a jute weaving industry to speak of.

The median size works out to 91.2 and is not too different from the average size.

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is widely distributed in the rest of the world. Traditionally important markets for Indian jute goods include large agricultural producers such as Australia, Canada and Argentina, although the importance of the latter has diminished in recen-\:' years. It is significant to note that Western Europe, which has an old jute in­dustry traditionally protected by tariffs and quotas, takes less than 10 percent of India's exports of jute manufactures.

The Raw ~~terial

21. Until Partition, undivided India was practically the world's sole producer of raw jute (small quantities were grown in Brazil, the Congo and a f9wAsian countries) and had a substantial exportable sur­plus of the raw material. The Partition changed this drastically and set in motion significant trends. At Partition, 75 percent of the jute- grO'tnng area (including the best jute lands in terms of both higher yields and superiority of fiber grown and producing 79 percent of the crop) went. to Pakistan, while the bulk of the jute manufactur­ing industry remained in India. Total Indian production of raw jute at that time was sufficient to meet only 25 percent of the country's mill requirements. Although India imported large quanti ties of jute from Pakistan for a number of years under special trade agreements, it soon embarked on a vigorous drive to attain self-sufficiency in raw jute; Pakistan in turn, felt induced to establish an export­oriented jute manufacturing industry.

22. Over the last five years jute production in India has averaged roughly 7.0 million bales!/ per annum compared to mill con­sumption of 7.6 million bales. Excluding farm consumption of about 0.2 million bales, the self-sufficiency ratio of the industry (the ratio of commercially available domestic jute to mill consumption) works out to roughly 90 per(''.ent - a considerable improvement over the situation immediately following Partition. This ratio, however, tends to understate the vulnerability of the Indian raw jute situa­tion for a number of reasons. First, Indian mills have had to work below full capacity at various times in the last three years, under voluntary production curtailment programs, due to shortages of fiber. Thus, the self-sufficiency rat~o under full capacity would probably be much lower than 90 perceni1/ • Secondly, roughly 30 percent of

11 One jute bale equals 400 Ibs~, or roughly 181 kgs. net.

'£/ The degree of under-utilization of capacity cannot be estimated with any precision due to lack of information on current output per 100m compared to attainable output per loom under normal working conditions. It may be noted, however, that the original draft of the Fourth Plan (1966/67-1970/71) aimed at increasing production of jute goods from 1.23 million tons in 1965/66 to 1.7 million tons by 1970/71 without a major expansion in 100m capacity, implying that the present capacity can process at least 35 per­cent more jute.

\\ i!

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Indian raw jute output consists of meElta, which is generally inferior to true jute. The raw material deficj,:ency of India is mostly in supe·,,· rior quality true jute, which it needE~ in increasing quantities for specialty products, such as carpet-baoking, toward which it has been di versifying. Thirdly, jute production fluctuates widely with the jute/rice price ratio in the previous soason and with the vagaries ojt the weather, at times raising sharply the raw material import requirf!~­ments of the industry. For example, raw ,jute output was equivalent 'i/;O

78 percent of mill consumption in 1965/66 and 72 percent of the pea~ mill consumption of 1964/65G Finally, at least as far as importing true jute is concerned (additional kenaf or mesta supplies are usually available in sufficient quanti ties from Thailand), India faces a mOr!IO­polist, namely, Pakistan - one with a strong incentive to withhold supplies, particularly in view of its increasing competition with India in the export market for jute goods.

23~ While Pakistan jute continues to be grown in traditional areas, jute production in India has spread outside the traditional areas of West Bengal and to marginal lands. Today roughly 55 per­cant of true jute in India is grovm in West Bengal, 19 percent in Bihar, 16 percent in Assam and most of the remaining 10 percent in thf.: :J3ighboring states of Orissa,Trip'lJ.ra and Uttar Pradesh. r~esta production is more widely distributed than true jute; the above six states, for example, account for only 65 percent of mesta output. Largely as a result of spreading of cultivation to both marginal lands and to less experienced labor, true jute yields in India are roughly 25 percent lower than in Pakistan, and mesta yields are nearly 40 percent below kenaf yields in Thailand.

24. Another significant feature of the Indian jute economy is the wide margin between the prices received by jute growers and the pricei/ paid by mills. A major portion of the marketable surplus of raw jute: is sold by the growers in the villages, gi vin g rise to a long chain of intermediaries between the growers and the mills. In addition to marketing proper, middlemen often perform subsidiary functiuns as well, such as assembling, storing, transportation and financing. After reaching the secondary markets, jute is baled into kutcha bales or ~~ bales~/. The mills buy most of their jute from Calcutta brokers, although some have purchasing agents in primary or secondary markets. The margin between farm prices and prices paid by mills vary according to the distance between jute-growing districts and Calcutta and runs sometimes as high as 30 percent of the Calcutta price.

1/ Only 3 - 4 percent of the crop is retained by the farmer either for seed or for village consumption.

£/ Kutcha bales are half-pressed bales of jute of 140 -330 lbs; pucca bales are strongly compressed bales weighing 400 lbs. Most jute reaches the mills in kutcha bales.

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II. MAJOR TRENDS IN THE WORLD JUTE ECONOMY!/

Consumption of Jute Goods

25. World consumption of jute goods reached a peak of almost two million metric tons in 1927-29 and thereafter showed little growth until the early fifties. Since then, however, consumption has grown at a rate of about 4.1 percent per annum, which compares favorably wi th the consumption growth of many primary commodities, such as other natural textile raw materials, over the same period. Consumption grew fastest in the centrally-planned economies (which account, at present, for roughly 22 percent of world jute consumption) and in developing countries, and slowest in developed countries, whose share fell from 48 percent in the early fifties to 40 percent in 1965g/.

26. Consumption trends among both developed and developing countries were mixed. Among developed countries demand grew fastest in the United States and Canada, where it averaged an annual growth rate of 4.4 percent over the last 10 years, and in Japan where it experienced a rate of over 10 percent per annum. In western Europe, on the other hand, consumption showed a modest growth between 1953-55 and 1958-60 and no growth between 1958-60 and 1963-65: it fell con­siderably in the United Kingdom and stagnated in most EEC countries (particularly in the last five years). Only in South European coun­tries such as Spain and Portugal did any growth in consumption occur. Demand for jute in the rest of the developed world (South Africa, Australia, and New Zealand) showed some growth in the late fifties but either stagnated or declined in the first half of the sixties.

21. On the other hand, upward trends of varying degrees were experienced by most developing countries. On a regional basis, con­sumption grew fastest in Asian developing countries and slowest in Latin American countries. Notable was the remarkable increase (doubl­ing ill 10 yea.rs) in India and the 40 percent decline since 1953-55

l/ This ch~ter presents an overview of the major trends in the world jute economy. A more detailed examination of these trends is pre­sented in the Economicf3 Department report The l\brld Jute Economy: Post-War Trends and Prospects, to be issued in January 1969.

Semi-logari thIl'\.ic trends wereti tted to consumption data for devel­oped, developing and centrally-planned countries and the world as a whole. lfllile upward trends were observed for all three areas, the slope or growth rate of the trends varied considerably. Con­sumption in devel~ped countries grew at a rate of 3.1 percent per a,nDum, or slower than world consumption (4.1 percent); consumption in deve~oping countries grew at a rate of 4.2 percent per annum, or at approximately the same rate as the world; and the growth rate of centrally-planned countries was highest, or 6.9 percent per annum.

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in Argentina which, in the early fifties, used to be the fifth largest consumer of jute goods in the world.

28. Demand in centrally-planned countries increased by nearly 2.5 times. More or less uniform growth rates were experienced by the Soviet Union, Eastern Europe and Mainland China. Mainland China, according t9 estimates by FAD, has recently become the second largest consumer of i)jute goods after the United States, and the Soviet Union has risen to fourth place after India, which now occupies third place.

29. It is beyond the scope of this report to present a detailed analysis of the above trends. The major factors which have shaped these trends, however, can be summarized as follows:

30. The remarkable growth of U.S. consumption of jute goods over the post-war period was brought about by significant changes in the pattern of consumption. Consumption in traditional packaging usesl/, which had been declining since the late thirties (due to substitution, mostly by paper, and displacement by bulk-handling, consumer packag­ing, etc.) leveled off after 1956. Jute consumption in carpet-backing mnmdscellaneous industrial useaSl, on the other hand, increased spec­tacularly and accounted for the bulk of the gro\~h in total consumption. The share of bagging and baling in total jute consumption thus fell from 54 percent in 1950 to 39 percent in 1965; that of woven carpets declined from 13 percent to two percent; and while the share of industrial u.ses remained unchanged at 33 percent, that of carpet-backing rose from nil in 1950 to 26 percent by 1965.

31. Since U.S. production of the major commodities historically bagged in jute in that country generally maintained an upward trend over the post-war period, the stagnation of jute consumption in bagging and baling suggests that jute continued to lose ground to substitutes or bulk-handling in the U .8. ovet- this period. Although the degree of substitution cannot be measured with precision, the evidence of substi­tution is plentiful. For example, the proportion of commercial feed shipped in new jute bags has been more than halved in the last 10 years (from 16.8 percent to 7.2 percent), whereas the proportion shipped in bulk has increased five-fold to 55 percent, displacing jute as well as cotton and paper bags.

11 Bagging ~~ains, flour, sugar, feeds, oilmeals, potatoes, etc.; and baling cotton, wool, etc.

g( Industrial uses include some packaging uses such as laminated bags and cloth for wrapping textiles, burlap tubing for various purposes, and miscellaneous uses in the automobile and furniture industries.

/1

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32. While high jute prices in some periods (such as W::>rldWar II, the Korean War, etc. ), particularly when combi:ned with fears of interruption in supply, undoubtedly were a significant factor in inducing substitution against jute, the loss of. large markets was also attributable to other factors. The shift to bulk-handling, for example, was motivated principally by the desire to save on labor (in high wage countries) and shorten the time that ships are required to spend in port for loading and unloading. In the case of paper, the technical advantages of the latter (including such considerations as use of printing and cleaner conditions for workers), in bagging certain com­modities such as cement and fertilizers, outweighed price considera­tions,!/.

33. The success of jute in carpet-backing is associated with the development of the tufting process in the manufacture of carpets in the early fifties. Nearly 90 percent of all carpets currently manufactured in the United States consist of tufted carpets compared to only nine percent in 1951. This success is attributable to the numerous cost advantages of these carpets compared with woven carpets. Tufted car­pets are especially suited to the use of man-made fibers rather than the more expensive wool, require less labor per unit of output, cheaper machinery, and allow a faster rate of production. In 1966 the average price of one yard of tufted carpet was nearly 80 percent cheaper than one yard of woven carpet. Thus, the introduction of the tufting pro­cess (together with rising incomes and an apparent change in the pattern of consumer expenditures in favor of household goods) was instrumental in accelerating the growth rate of total demand for carpets to unpre­cedented levels. The income elasticity of demand for carpet~ in the U.S. in the 1950-1966 period has been estimated at 3.5 and is showing no signs of decline.

34. The sluggishness of the growth in Western European consump-tion of jute textiles since the mid-1950's is attributable to the f~ct that large-scale substitution against jute in this region did not begin until then. Unlike the U.S., therefore, substitution in traditional uses is still the dominant trend in Europe: jute consumption in packag­ing uses appears to have declined in absolute terms, and consumption growth in industrial uses or carpets has been barely sufficient to off­set that trend. Demand for carpets, though accelerating in recent years, has not grown as rapidly as in the United States due probably to the lower level of average income, a lower income - elasticity of demand (reflecting the priority ,given to other durable goods such as automobiles and refrigerators) al~d the lack of vigor (in advertising, tor example) of carpet manufactu~ers. In addition, the introduction

It should. be noted, however, that these technological considerations do not have equal value and have not made equal progress in all coun­tries or regions, as is brought out later.

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of tufted carpets has progressed slowly due, in part, to differences in tastes, such as a preference for woven wool carpets. Although tufted carpet consumption has grown rapidly in the United Kingdom, this could not prevent a fall in total jute consumption because of greater losses in other uses than were experienced in other European countries. Although the high tariffs and other restrictions of Western Europe no doubt contributed to dampening demand, they do not appear to have been the critical factor!/.

35. Jute consumption in Canada has followed the general trend in the United States. The remarkable upward trend in Japanese con­sumption can be explained by high income growth and apparently less substitution in the bagging field; Japanese farmers apparently prefer the jute bag because of its resale and re-use value.

36. Reflecting a lag in substitution, trends in jute textile consumption in most developing countries have been set by growth re.tes in agricultural production or in the volume of the major agricul't'u'rll exports which are still bagged in jute. Several exceptions can bG noted, however. The extraordinary growth of consumption in India is attributable to the increasing production of several processed goo\ls packaged in jute such as sugar, cement, fertilizers and textiles d.11U. to the volume of P.L. 480 imports. These imports generally arri'tre in bulk but are bagged in jute for internal distribution. In I:~,i,:in America, the slow~r.growth of consumption compared to other dev~.;,op­ing regions reflects the increasing usage of hard- fiber bags anf.~. the introduction of bulk-handling (for grains and sugar) in Argentina and Cuba.

37. Trends in centrally-planned economies are as usual difficult to interpret. The surprisingly low level of jute consumption in the pre-war period (given the size of agriculturaJ. production)suggests that, contrary to trends elsewhere, jute may have since then displaced other fibers such as cotton, flax or sisal which may once have :;.~rJn used in the manufacture of bags and cordage. Urbanization, lea\iil'lg to an increased internal volume of trade in agricultural goods, and increased intra-Bloc trade and aid may have also stimulated jute con­sumption.

!roduction of Raw Jute and Jute Goods

38. The post-war period also witnessed significant changes in the pattern of world raw jute production. While Pakistani output

,11 The price elasticity of demand for jute goods in Western Etlr::.pe is in the order of -.2 percent. It may also be noted in tbi:.; connection that in Japan, which has tariffs as high as Western Europe, jute consumption has risen by over 2.~ times over the last 10 years, and in the United Kingdom, where trade barriers have been reduced over the last two to three years, jute consump'l:iion haa continued to decline.

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more or less stagnated, production increased rapidly in India after Partition. The desire to reach self-sufficiency in jute, to diver­sify their agriculture and to provide employment, particularly in de­pressed areas, also led to the expansion of introduction of raw jute production in a number of countries. Thu.s, the share of the Indian Sub-Continent in world raw jute output fell from 95 percent in 1947 to 65 percent in recent years. Most of the growth in world output, however, occurred in jute-like fibers, such as kenaf, whose share increased from practically nil in the pre-war period to roughly one­third at the present time. The most spectacular expansion took place in Thailand where kenaf output reached an estimated 585,000 tons (or 15 percent of world production of jute and allied fibers combined) in 1966/67. It is significant to note that the bulk of the expansion in world output of these fibers was achieved, by and large, through acre­age expansion rather than through any appreciable improvement in yields.

39. Another important post-war development has been the progres­sive shift in the lrorld jute textile industry from developed countries to developing countries. The share of the latter in world jute loom­age increased from about 65 percent in 1939 to about 80 percent in 1966. This reflects largely the establishment of an export-oriented jute industry in Pakistan beginning in the mid-fifties and an absolute decline in western European loomage. Pakistan currently manufactures 40 - 45 percent of its raw jute output locally and is the second larg­est exporter of jute goods after India, accounting for about 30 per­cent of the market. It must be noted, however, that while the n~ber of looms in Western Europe declined in the last 10 years, European production of jute goods has shown little change due to upward trends in output per spindle and output per loom.

Trade

40. Developed countries, which do not grow any jute t{J speak of, account for roughly 10 percent of world exports of jute mqrlufac'C"lres. Exports of jute manufactures from these countries grew only marglnally over the post~war period, and the bulk of this modest growth represented increased intra-European trade, particularly in jute yarn.

41. The volume of jute exports (in raw or manufactured from) from developing countries grew at a rate of 2.1 percent per annum between 1953-55 and 1963-65, compared to a growth rate of about four percent in world jute consumption. Exports of raw jute generally stag­nated but exports of jute manufactures increasedlit about 3.3 percent per annum. The stagnation in raw jute exports reflected an absolute decline in raw jute exports from Pakistan (resulting from the sluggish­ness of growth in output and the trend toward exporting an increasing proportion in manufactured form) which was, however, offset by a phe­nomenal increase in kenai exports from Thailand.

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42. The unit values of both ra't~ jute and jute manufactures, on the other hand, increased by nearly 30 percent over the same period. The principal factors behind this increase appear to have been the relative scarcity of true jute and the rise of the opportunity cost of growing jute (namely, the price of rice) bolstered by the exercise of some monopoly power in the sale of true jute for export by Pakistan, which also pushed the prices of jute goods up. Consequently, the value of jute exports (raw and manufactured) from major producing countries increased at about four percent per annum, or at roughly the same growth rate experienced by the aggregate export earnings of developing countries during the period. In the last two years some of this gain apparently has been lost. Prices and total export volume of jute fiber and jute goods have fallen,indicating a fall in export earnings. However, suf­ficient data are not available to determine the causes. One factor may have been insufficient supplies of fiber due to short crops.

43. Briefly, then, although there have been mixed trends in the world jute economy in the post-war period, the export performance of developing countries as a group with respect to jute (particularly when jute and jute goods are considered together and at least in terms of ~!) has not been too unfavorableJ

General Demand Outlook and Implications for India

44. The overall outlook for jute in the future, however,is marred by several clouds overhanging the horizon. The most important of these are: (a) substitution, (b) the lag of imports behind consumption, and (c) the uncertainties concerning future demand in centrally-planned economies.

45. The threat or penetration of substitutes in jute is, of course, not new. As shown above, world consumption of jute goods has grown at a rate of about four percent per annum over the post-war period in spite of SUbstantial losses to substitutes. The present concern with sub­stitutes stems, first, from the fact that the old or common substitutes (such as bulk-handling and paper) are still spreading. For example, for the first time, attempts are being made in the U.S. to ship pota­toes (an important outlet for jute) in bulk. In addition, synthetic substitutes (such as polypropylene) have been developed over the last three years. This has caused grave concern since these are products of the chemical industry and as such are backed by vast financial resources and a rapidly advancing technology. More importantly, these chemical substitutes have been particularly aimed at,. and bave been succeeding in penetrating, carpet-backing - the fastest growing market for jute and the highest priced jute product - and are also threatening the vast market for wool-packs, which is still the principal means for shipping raw wool. The fact that these synthetic materials are being directed toward agricultural products is particularly ominous since in many countries the paokaging specifications of' some agricultural

•

.

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commodities are determined by commodity boards or tra~/organizations and, therefore, an entire market may be lost overnight: •

46. The lag of trade 'iti=&~:t.-e goods behind world consumption of jute goods has been due to the expansion or introduction of jute cul­tivation or processing for internal consumption in a number of coun­tries. This trend is expected to continue more or less regardless of what happens to prices, since the major motives behind it a,pear to be to save foreign exchange and provide employment in depressed re­gions. 11oreover, the establishment of primarily domestic-criented jute industries in the developing world outside India and Pakistan may lead to some, albeit small, additional loss of markets to the tra­ditional exporters. Thailand is already exporting some jute goods to Malaysia and Indonesia, and Brazil is reported to have exported some jute bags to Argentina last year.

47. The uncertainties regarding future consumption in centrally-planned economies stem from the lack of information on the factors which have shaped past trends. For example, it is not known how much of the record imports of the Soviet Union in the last few years (under bilateral agreements with India), if any, have gone into stocks or were re-exported.

48. Finally, another problem faced by exporting, ~ol~tries - one which is not new but has a direct bearing on export prospects - is the tariff and quota restrictions on imports of jute goods in Western Europe. Tariff reductions in the Konnedy Round have been meagre and slanted. Rather large concessions were made in categories such as sacking, with shrinking markets, and minim,l ones in categories such as carpet-backing, with promising markets~ , although there was an understanding that further concessions might be made under bilateral negotiations in the future. Discussions with EEC officials on this subject, however, indicate that the prospects for future major con­cessions are rather dim and that, category-wise, they are likely to follow the same lines as those of the Kennedy Round concessions.

49. In view of the above problems, it appears quite certain that the growth rate of 4.1 percent in world consumption and 3.3 in import demand for jute goods registered during the post-war period will not be maintained in the future. More precise projections are discussed in Chapter V •

1/ The problems posed by these new substitutes are discussed in greater detail in Economics Department, The World Jute Econom~: Poat-War Trends and Prospects (preliminary draft).

'1:/ The EEe tariff on carpet-backing for example, was reduced from 23 percent to 22 percent.

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50. The above general outlook for jute has serious implications for India, especially in view of the tendency of her share of the market to decline. It may be recalled that during the post-war period a rather favorable trend in import demand for jute goods, despite sub­stitution and the emergence of Pakistan as a major supplier, enabled India to register an absolute growth in exports, although her share of the total export market was declining. Theoretically, a deceleration in the growth of import demand in the future almost certainly implies a similar deceleration in Indian exports (even if her share remains constant in the futtt:t"e) in view of her dominant position in the market. A continued decline in her share, however, may this time prevent any gro~~h in exports or even bring about an absolute decline.

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III. PAST PERFORMANCE OF INDIA

Post-War Trends

51. Although India's share of world exportts of jute manufactures declined from 85 percent in 1953-55 to 10 percent in 1963-65, her ex­port performance up to 1965/66 was remarkable, considering the raw material problem of the country. Indian exports stood at about $)80 million in fiscal 1965/66 compared to an average of about $250 million in 1953/54-1955/56. Most of this growth, however, was achieved during the first half of the sixties and was due to a number of fortuitous, although favorable, developments, as explained below. Othenv.ise, India's progress in areas (such as the yield and quality of raw jute and modern­ization of the weaving sector) which might ensure sustained growth or a constant share of the market in the future has been rather limited.

52. Indian output of raw jute increased from roughly 300,000 metric tons (1.7 million bales) in 1947/48 to a peak of 1.46 million tons (roughly eight million bales) in 1961/62. Although output has fallen below this level since then, it has remained, on the average, nearly 25 percent above the 1956/57-1960/61 average. This long-term progress, however, has been marred by several related developments.

53. First, nearly one-third of the growth in output since Partition has taken place in the less desirable masta (instead of true jute), whose share in total Indian jute output increased from practi­cally nil in the late forties to over 20 percent in recent years. Secondly, the bulk of the increment in both true jute and mesta out­put was achieved by acreage expansion rather than by any appreciable and sustained improvement in yieldsl/. In fact, because of the ex­tension of cultivation to marginal lands, yields declined in a number of districts. Thirdly, little progress was made in improving the quality of the true jute fiber grown, which remained substantially in­ferior to the quality of Pakistani jute. Finally, the real cost and the opportunity cost2Jf grolnng jute rose substantially with the rise in the price of ric~. The average wholesale price of jute (or the cost to the mills) rose even further due to the increase in internal transportation costs resulting from the extension of the jute area

1/ To eliminate fluctuation~ semi-logrithmic trends were fitted to 1950-1966 data for true. jute yields and mesta yields. The b co­efficients were statistically non-Significant, and the trend growth rates were, in any case, less than one perc6i:ic'h~ c~e:;.J3 for mesta and 0.2 for true jute).

g/ In addition to representing the opportunity cost of jute, the price of rice is the most important element in the real cost cf jut~~ since it constitutes the major food of labor, which accounts for as much as 15 percent of the total cost of production.

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further away from Calcutta. The wholesale price of jute in India nearly doubled over the last 10 years compared to a rise of 60 percent in the wholesale price in Pakistan.

54. The expansion of raw jute production was accompanied, as was intended, by a progressive decline in fiber impo~ts. Raw jute imports shrank from about 500,000 tons in the period immediately following Partition to a record-low of 26,000 tons by 1963/64. Fiber availabilities (stocks, production plus imports) rose from 1.2 million tons in 1950/51 to 1.5 million tons in 1955/56; they fluctuated around this level in the next five years; and they averaged 1.8 million tons during the first half of the sixties.

55. Less success was achieved, however, in translating this achievement into an increase in exports of jute textiles. While pro­duction of jute goods followed the general trend in fiber availabilities, there were significant changes in the composition and disposal of out­put.

56. First, the proportion of standard goods (hessian and sacking) in total production fell from 97 percent in the late forties to about 85 percent in recent years, while the share of higher-priced specialty products rose from three percent to almost 15 percent, eight percent being accounted for by carpet-backing alone. This was a desirable de·velopment.

57. Secondly, tl?ie proportion of sales for internal consumption rose from 14 percent ~;n 1950/51 to 34 percent in 1965/66. The size of the internal marke'(, for jute goods grew from 116,000 tons to 416,000 tons over this period, or at a phenomenal rate of 8.9 percent per annum, making India the third largest consumer of jute goods in the world after the U.S. and Mainland China. As noted earlier, this spectacular growth (compared to a growth rate of about 2.5 percent in agricultural production) can be explained by the rapid growth of industrialization (particularly, heavy jute consuming industries such as textiles, cement, sugar and, lately, fertilizers) and P.L. 480 imports. The consequence of the latter development was that the growth in export availabilities of jute goods lagged behind the growth in total production. In fact, exports stagnated during the second half of the fifties when production made little progress. The bulk of the modest growth in production in that period went to meet domestic demand for jute goods.

58. Between 1957/58-1959/60 and 1965/66, however, Indian exports of jut~ manufactures increased from $227 million to $)84 million, or at a remarkable rate of 7.6 percent per annum. Volume rose at a rate of 2.2 percent compared to a growth rate of 5.5 percent in unit value. This rather favorable trend was brought about by the following fCl.ctors.

59~ First, there was a substantial improvement in the raw m~teria1 situation in the early sixties. India had a series of good crops be­tween 1961/62 and 1964/65 and was able to accumulate large stocks whirh

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were used in 1965/66 when fiber production fell by about 2$parcent. As noted above, raw jute imports stood at a record low of 26,000 tons (two percent of total mill consumption) in 1963/64. At the same time, demand continued to expand rapidly in the United States and particular­ly in the Soviet Union. Indian exports of jute goods to the U.S. rose by about 25 percent between 1959/60-1961/62 and 1965/66, while ship­ments to the Soviet Union expanded five-fold (all under bilateral agree­ments), making the latter the second largest importer of Indian jute goods. In addition, the growth of the Pakistan industry slowed down in the early sixties as production suffered some setbacks due to labor problems. India wa.s thus able to take maXirrrum advantage of the growth in import demand. Lastly, after the sharp increase in raw jute prices ~Thich accompanied a severe shortage in 1960/61, Pakistan was able to prevent prices from falling back to their original levels (through a variety of measures) thus keeping prices of jute manufactures on a new plateau and benefitting India.

60. In the last three years, a reversal of the above favorable developments (bad jute crops in India, slackening of demand growth in the U.S., resumption of the growth of Pakistani jute goods output, and lower jute prices)brought out the basic weaknesses of the Indian jute industry, and exports fell from $388 million in calendar 1965 to an estimated $295 million in 1967. This adverse trend is examined in detail later in the chapter.

Development Plans and Achievements in Raw Jute

61. As already mentioned, India has been handicapped by short-ages of supplies of true jute. Although India's progress in true jute output since Partition has been remarkable, production has lagged be­hind the targets set out in the development plans, as show~ in Table 1. Some relief was obtained, however, by expanding mesta output which was not included in the Plans.

62. The First Plan (1951/52-1955/56) sought to raise true jute output from an average of 2.53 million bales in the pre-plan period to 5.39 million bales in 1955/56. Production increased to 4.68 million bales in 1951/52, stimulated by the high prices induced by the Korean boom, but averaged 3.9 million bales over the plan period. While area continued to expand, average yields remained unchanged at 2.46 bales per acre.

63~ The Second Plan (1956/57-1960/61) set out a target of 5.54 million bales for 1960/61, or.rnarginally above the First Plan target (5.,39). This was expected to be achieved by raising yields from 2.41 bales per acre in 1955/,6 to 3.0 bales in 1960/61 and by expanding the area by 10 percent. Output reached a high of 5.16 million bales in 1958/59 but averaged 4.42 million bales over the five year period. The jute aroa exceeded the 1960/61 target in 1956/57 and came close to it in 1958/59 but remained below this level in the other three years. Average yields showed very little improvem.ent and ;remained 15 percent below the objective.

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.',

.:1

Table 1: PROm OTION OF TlIJE JUTE IN nmIA: DEVELOPMENT PLANS AND ACHIEVEMENTS

Area Production (million acres) (million bales)

. Pre-Plan Average (1947/48 to 1950/51) 1.03 2.53

First Plan Target fZr 1955/56 5.39 Highest=(1951-52) 1.95 4.68 Average 1.59 3.91

Second Plan Target for 1960/61 1.84 . 5.54 Highes~1958-59) 1.81 $.16 Average 1.13 4.42

Third Plan Target for 1965/66 1.71 6.20 Highes~1961-62) 2.28 6.35 Average 2.09 5.66

1/ In tAru or output. - .,

Yield (bales/acre)

2.48

2.40 2.46

3.00 2.85 2.56

3.50 ·2.78 2.69

Source: rUnistry ot Food, Agriculture, ~mmunity Development and Co-~peratio\n, "Jute Development - Retrospect and Prospects," April 1967 (India)

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64. The Third Plan (1961/62-1965/66) provid9d a rather ambitious target of 6.2 million bales for the terminal year compared to an aver­age output of 4.4 million bales in the Second Plan period. Area was to remain roughly unchanged lmi1e yields increased from 2.56 to 3.5 bales per acre. Output exceeded the 1965/66 target level during the first year of the Plan (due to a major expansion in area, .stimulated by the high prices prevailing in the previous season) but remained below this level in the next four years. AI though the area was on the average nearly 20 percent above the Plan target in the five-year period, yields improved by only 3.8 percent.

65. It is noteworthy that little progress was made in improving the quality of the fiber grown (the proportion of the desirable grades in the production mix) over the post-war period, as shown in Table 2. The proportion of the "Middle" grade obtained in the Third Plan period, for example, was 28 percent compared to a proportion of 35 percent re­quired, while the share of the lowest quality "X Bottom" grade was 14 percent, or four percentage points more than desirable.

66. In order to explain the lag of output behind plan targets, the above record should be viewed within the context of the specific development measures taken. During the First Plan period, in view of the pressing raw materi~l problem, the emphasis was put on extensive cultivation. Toward the middle of the Plan, the importance of improv­ing yields and quality became quite clear, and the Export Committee on Quality of Jute was set up, to make appropriate recommendations. These and other recommendations were incorporated into the Second and Third Plans.

67. The measures taken to improve both yields and quality center­ed on five fields: (a) fertilizer, (b) improved seeds, (c) line-sowing, (d) plant protection, and (e) the excavation of new or improvement of old retting tanks. Before examining the record of achievement in these fields a few explanatory comments on the above measures are in order:

(a) Agromonic research carried out since the early fifties has shown beyond doubt that jute yields can be raised dramatically through proper application of fertilizersl/. The results obtained, however, depend on the suitabil­ity of the type of fertilizer used to individual soil and weather conditions and to the timdng and spacing of the doses applied.

(b) Several strains of improved jute seeds have been devel­oped over the last 10 - 15 years in agricultural ex­perimental stations. These both yield higher quality

1/ See Government of India, Planning Commission, Study of Jute and Mesta in India, New Delhi, 1964, pp. 23-25.

/ j

1:

. .J'

- '22 -

,',

Table 2: PRODU CTION MIX OF INDIAN RA.W JUTE

Top Middle Bottom X Bottom Total

(Percentages)

Third Plan Period,V

12 28 46

~ 14 100

Desirable 2/ Proportions-

15 35 40 10

100

11 Average of 1961-62 to 1964-65.

'!:./ As' set out in thE~' Fourth Plan.

Source: Agricul turaJL Prices COrmnission, fI~eport on Price Policy for Jute for' the 196j7_68 Season," l1arch 1961 (India).

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jute and respond better to fertilizers. In addition, they can 'tn thstand water-logging" cand can therefore be sown in areas which are flooded early in the season.

(c) Line-sOl;nng with the help of seed drills, instead of "broadcasting" of jute seeds, which is the traditional practice, improves both the yield and quail ty of the fiber and help to reduce seed and labor costs. First, the plant gro'tvs better because of the larger space allowed between the plants; secondly, the amount of weeding and thinning required is reduced; thirdly, some of the weeding can be done by wheel-hoos; and fourthly, line-sowing reduces th~ amount of seed required by at least 50 percent!/.

(d) After harvesting, the jute plant is retted, or soaked for a rew days, in order to soften the bark before the fiber is stripped. Ideally, this should be done in clear, slowly flowing water (such as slowly reced­ing flood water) in order to bring about the proper chemical decomposition in the plant and avoid dis­coloration of the fiber. In the absence of such water, ret ting can be done in exca va ted tanl{s, although at some expense in quality.

(c) The jute plant is often subject to diseases such as "seedling blight, stem-rot and color-rot" which may cause as much as 11 percent losses of normal yields. In addition, pests such as the ,I jute semi-looper" can cause about 14 percent losses in normal/years and about 50 percent under epidemic conditionsS. These diseases and pests can be largely controlled or pre­vented with known chemicals and pesticides.

68. India's achievement in the above fields has been meagre (see Table 3) and what progress has been made was interrupted or re­versed in several years. The proportion of the area covered with fertilizers, for example, rose from 6.7 percent in 1956l~)7 to 18.8 percent in 1959/60 but fell to 8.0 percent by 1965/66.

3/1mproved seeds

were applied to only 12 percent of the area in 1965/6~ and line-sowing

"l:,/ Planning Connnission, QP. cit., p. 1.

£/ Planning Commission, OPe ci~., pp. 26-27.

1/ Although it is claimed that 75 percent of the area was covered with improved seeds through "natural spread," i.e., continuous multiplication by the fa.rmers, during the Second Plan period, there are doubts as to whether these seeds could retain much of their purity and improved character, due to multiplication in unfavorable surroundings and because of admixture with inferior

) seed.

1/ !i

1956-1957 1551-1958 1958-1959 1959-1960 1960-1961

1961-1962 1962-1963 1963-1964 1964-1965 1965-1966

Table 3 : PROGRESS OF JUTE DEVEWPi'~NT MEASURES DURI~JG THE SECOND AND THIRD PLAN PERIODS

NWiiberof Fertilizer Improved seed Line-sowing. Plant Protection Retting tanks

(% of total area) (% of total area) (% of total area) (% of total 'area) (old am new)

6.14 7.14

15.24 18.83 16.40

1l.26 8.9) 5.46 1.18 B.05

1.63 2.B2 4.16 B.25 9.50

7.86 9.ll B.05

10.25 ll.93

.40

.60

.79 1.25 1.98

1.93 2.64 3.20 3.43 3.34

2.11 4.20

10.33 4.96 6.95

14.04

9.12 9.34

4,519 4341 3!012 2,721 2~612

4,031 2,825 2,222 3,621 2,617

I\)

~

Source: Ministry of Food J Agriculture , Community Development am Co-operation, "Jute Development ... -Retrospect and Prospects," April 1967 (India). "

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was limited to 3.3 percent of the land. In short, achievement fall substantially below targets. During the Second Plan (for which de­tailed figures are available), for example, the degrees of fulfill­ment of the plan targets were as follows:

F'ertilizers Improved seeds Line ... sowing Retting tanks

37 percent 27 percent 17 percent 11 percent

69. The major obstacles appear to have been shortage of fertilizers and improved seeds, distribution problems, insufficient credit, strong­ly-embedded cultural practices, and low jute prices in some years which limited the resources of farmers to purchase the inputs. Some of these problens will be discussed in greater detail in paragraphs 105-109.

70. Efforts to deal with these problems outside the Plan also have had very limited success. In 1961, realizing that yields were not materially increasing, the Indian Jute Mills Association decided to assist the government in this field and undertook a pilot program for raw jute development with the object of demonstrating to the cul­tivator the method of improving the yield as well as the quality of the fiber. The program encountered several difficultie~ in the first two years. Although substantial improvement was made in the demonstra­~ farms during the third year, progress in spreading improved cuI. tural practices appears to have been limited.

Devaluation and Recent Trends

71. On June 6, 1966 India devalued the rupee by about 58 percent!/. Exports of jute goods have failed to respond to the devaluation so far; on the contrary, they fell by $93 million, or 23 percent, in the last two calendar years.

72. In examining the recent trends it is important to distinguish between the effects of the devaluation (and the measures which accom­panied it) and the effects of autonomous developments. Much of the current difficulties of the Indian jute industry can be traced to 1964/65 when mill consmnption of raw jute exceeded production plus imports substantially, and stocks shrank by about 150,000 tons. In the following year, raw jute output fell by about 20 percent and was only partly offset by increased imports, leading to another decline in stocks of about 150,000 tons. Thus, at the beginning of the 1966/67 season, or at apprOximately the time of devaluation, fiber stocks stood at about 200,000 tons (equivalent to less than two months' consumption) compared to a level of about 500,000 tons (equivalent to about 4.5 months' consumption) in 1962/63-1964/65.

1/ The exchange ra.te was. changed from Re. 4.76 to a U .B. dollar to Rs. 7.50 to the dollar.

•

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73. on June 6, 1966 (concurrently with the devaluation), the government, recognizing the relatively inelastic nature of supply (due to raw material bottlenecks), imposed export taxes on jute goods with the apparent purpose of encouraging a rise in export prices in terms of rupees arId thus preventing a sharp fall in the dollar value of exports and reaping part of the profit which might accrue to ex­porters (see Table 4). At the same time, the tax credit certificates which~ had been given to exporters of jute goods since 1965 were abol­ished!f. Although raw jute output recovered partly in 1966/67, it liaS insufficient to meet mill requirements and 300,000 tons of jute had to be imported. Since the devaluation had raised the price of imports by roughly 58 percent, the government granted subsidies on jute and mesta imports. These, however, were substantially below the increased cost of imported raw jute. The above measures (the export taxes on jute goods and insufficient subsidies on raw jute imports) almost offset the benefits of the devaluation to the jute manufactur­ing industry. The effecti ,re exchange rate for jute goods increased from Rs. 4.76-5.24 (depending on the product) to only Rs. 5.30 com­pared to the new par rate of Rs. 7.5.

74. On May 26, 1967 the government reduced the export taxes and raised the excise duties on jute goods sold in the domestic market in order to curtail consumption (Table 4). Export taxes on sacking, in which Pakistani competition was s'l:iiffest, were reduced by a greater proportion than t~~es on hessian. Pakistan responded on July 8, 1961 by raising the export bonus on sacking from 20 percent (10 percent free, 10 percent reserve~/) to 30 percent (10 percent free, 20 per­cent reserved); the export bonus on other jute goods remained unchanged at 20 percent (10 percent free, 10 percent reserved). As a result of

1:/ On February 28, 1965 the government be gan granting tax credit certificates equal to two percent of the value of jute goods exported. On October 1, 1965 the rate of tax credit on exports of carpet-backing was raised to five percent. These certificates were roughly worth twice their nominal rate.

g/ Free or regular bonus vouchers could be used to import a large variety of specified commodities. Reserved or Ifstamped bonus vouchers" on the other hand, were originally meant to be used by the jute mills themselves for imports of machinery and spare parts. Subsequently, however, other imports were added to the eligible list for reserved bonus vouchers but the list was much more limited than for regular bonus vouchers and the premium on reserved bonus vouchers in the market was substantially lower.

27 -

.'.

Table 4: cHANGES IN nrnIAN EXPORT TAXES AND EXCISE IlTTIES

(Rupees per metric ton)

1965/66 June 6,1966 May 26, 1961 February 1, 1966

,~rt taxes

Hessian 900 150 500 Sacking 600 450 250 Carpet-backing 900 600 600 Cotton-bagging 600 200!/ 200 Special ties (9OO) 600

~cise dutiesY

Hessian 250 250 315 450 others 12S 125 115 2S0

1/ From February 11, 1967.

~/ Plus a special exoise duty or 10 percent or the basic d~ty chargeable.

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the above adjustment in the export bonus for aacking and the continued upward trend in the market price of bonus vouchers (both free and re­served), the effective exchange rate for jute goods exports in Pakistan rose from about Rs. 6.00 per dollar (for both hessian and sacking) at the beginning of 1967 to Rs. 6.13 for hessian and Rs. 6.65 for sacking by October 1961. In November 1967 partly in response to the devaluation of Sterling and to the increased cost of freight after the closure ot the Suez Canal, Pakistan increased the export bonus on a number ot commodities. At the same time, it freed the reserved po~ tion of the bonus tor all jute manufactures but reduced the bonus rate on sacking from 30 percent to 20 percent, making it 20 percent for both hessian and sacking, but all tree. Since free bonus vouchers had tra­ditionally commanded a higher price in the market than reserved vouch­ers, the above changes raised the effec'tive exchange rate tor hessian from Rs. 6.13 per dollar to Rs. 6.46 per dollar, although they resulted in a slight reduction (from Rs. 6.65 to Ra. 6.46) for sacking. The July and November changes in the export bonus policy, together, thus helped Pakistan to maintain a competitive edge over India in spite of the reduction in Indian export taxes.

15. In addition to these factors, the Indian jute goods in-dustry was experiencing several difficulties induced partly by the devaluation. Immediately after the devaluation new import orders ceme to a standstill due to the difficulties and delays in settling contracts entered into before the devaluation. Consequently, several importers turned to Pakistan. Moreover, the imposition of export taxes created the fear of inventory losses in importing countries, which expected the taxes to be temporary. MOst importers, therefore, attempted to meet part of their requirements from stocks. Burlap stocks in the United States, for example, fell from 260 mdllion yards in July 1966 to 223 million yards by February 1968. Demand, in any case, was sluggish due to depresssd economic conditions in a number of ill'p)rting countries.

76. In addition, on the supply side, because of the trade boycott imposed by Pakistan atter the last Indo-Pakistan conflict, India had to import some quantities of Pakistani jute from Europe, paying double freight. Nearly 100,000 bales of scarce jute is esti­mated to have been smuggled to Nepal where jute retched higher prices due to large export incentives given in the form of import entitlements. Furthermore, sales taxes on raw jute were introduced or raised in several jute growing states.

77. FinallY'f, conversion costs1/ continued to rise sharply in continuation of a well established trend as shown below:

1/ For a list of the major components of conversion costs, see Table 6 in Chapter IV.

•

1962/63

1961/68

- 29 -

CONVERSION COSTS (Rs. per ton)1/

Hessian

602

925

Sacking

406

597

The major reasons for this trend 'tolere the riS~/in wages due to periodic upward adjustments in the "dearness allowanc~ n and a hike in the cost of electricity. The industry's problems were further compounded occasionally by labor problemal/.

78. As a consequence of all these problems, India's exports of jute goods fell from 844,000 tons in 1965/66 to 764,000 tons in 1966/67. Exports during the first seven months of the 1967/68 season were at about the same level as a year ago. In addition, export prices fell by about 20 percent between June 1966 and May 1968. Consequently, the value of Indian exports declined from $384 million in fiscal 1965/66 to $332 million in 1966/67, and $311 million in 1967/68. Stocks of jute goods, on the other hand, rose from an average of about 115,000 tons in the first few months following the devaluation to almost 150,000 tons in September 1967, leading to pressures by trade circles to establish a Jute Goods Buffer Stock Association in order to lift excessive stocks from the market and raise prices.

79. There has also been a fall in consumption of jute goods recently, but it is difficult to determine whether this is attributable to higher excise duties or to recessionary conditions in the economw.

80. On February 7, 1968, further downward adjustments were made in the export taxes, but these were followed in ~.farch by a substantial increase (from 20 percent to 30 percent) in Pakistan's export bonus. The effects of these changes on the competitive position of India are examined in the next chapter.

11 Based on unpublished estimates of the Indian Jute Mills Association. Data for intervening years not available.

gl Monthly wages per worker are reported to have increased from Rs. 94 in 1962 to Ra. 124 in 1966 (IJMA, Indian Jute r~lls Need Assistance, 1967).

11 The number of man-hours lost due to strikes and/or lockouts in 1966 was almost 11.6 million (IJMA, Report of the Cellini ttee for the Year Ended 31st of December, 1966, Calcutta, 1967).

! I f

J I

"

•

- 30 -

IV. COMPETITIVE mSITION OF mDIA

81. The current problems faced by the Indian jute industry have been hinted at in the previous chapters. These problems are mani­fested most clearly in the cor~etitive position of India versus Pakistan, the only other major exporter of jute textiles. As shown in Table S, the share of Pakistan in total exports of jute goods from India and Pakistan combined increased from 9.3 percent in 1957 to 23.3 percent in 1965, and, in spite of the Indian devaluation, reached 33.3 percent in 1967. Pakistani competition has been particularly acute in "sackingll exports in which her share increased from 12.2 per­cent in 1951 to a phenomenal 51.1 percent in 1967. The most immediate problem faced by India is, therefore, competition from Pakistan. The purpose of this chapter is to highlight the major elements of this prob­lem.

82. It is difficult and hazardous to compare the current co~ petitive position of India and Pakistan with precision and confidence for several reasons. First, the price of raw jute, which accounts for about 60 percent of the total cost of production of jute goods, fluctu­ates widely in the short r.un. Moreover since mdlls carry working stocks (which also fluctuate frequently), it is difficult to estimate the average cost of the raw material input at the mills at one given time. Furthermore, it is not known whether and to what extent raw material costs reported by some mills reflect the actual prices paid, since a number of mills are reported to have overt or covert interests in raw jute trading. While there are some estimates of relative raw material costs in India and Pakistan prepared by the Indian Jute Mills Association, these are based on a primitive rule-of-thumb method (which assumes that the raw materials cost is a certain constant factor of a specific grade of jute, even though the mix of grades may vary among different batches), rather than on mill reports.

83. Se;1:~)ndly, information on conversion costs in India and Pakistan is limited. The Indian Jute Mills Association prepares from time to time rough estimates of comparative costs in the two countries, but the reli­ability of these is difficult to ascertain, ~lthoufn the figures for India are probably more reliable than those for Pakistan:/ • Moreover, these estimates are limited to heSSian and sacking, i.e., there are no estimates for important specialty products such as carpet-backing. Nor are there estimates on the range of costs, or the cost structure in the two indus­tries.

1/ Estimates prepared independently by the Jute Commissioner's Office are similar to the Association's estimates, and Bank starf conve~ sations with mill managers in India tend to support~hese estimates. The number of mills visi ted, however, W'llS very small.

_ 31-

Table 5: EXPORTS OF JU TE GOODS FOOl'! INDIA AND PAKISTAN

(Thousand metric tons)

1957 1965 196711

India Hessian 399 448 380 Sackin~ 430 283 183 Other~/ 45 198 199 Total 874 929 762

Pakistan Hessian 30 79 100 Sacking 60 181 244 Others 22 36 Total 90 282 380

India and Pakistan Hessian 429 527 480 Sacking 490 464 427 Others 45 220 23, Total 964 1,211 1,142

Share of Pakistan Hessian 7.0 15.0 20.8 Sacking 12.2 39~0 57.1 Others 10.0 15.3 Total 9.3 23.3 33.)

1/ Estimated.

g/ Of which carpet-backing is eight thousand metric tons in 1957, 100 thousand metric tons in 196" and 141 thousand metric tons in 1961.

Source: Indian Jute :t-1i11s Association, data sheet (mimeographed) •

- 32 -

84. Last but not least, average costs in Pakistan are in a state of flux due to continued new entry into the industry. In addi tion, the market price 0 f the export c,)nus vouchers, which are a significant element in the competitive picture of the two countries (as shown below), fluctuates widely in the market with changes in demand and supply.

85. The following assertions can be made, however, on the basis of available information. Domestic raw jute prices have been tradi­tionally higher in India than in Pakistan. The Indian devaluation brought prices in the two countries more or less into line (in terms of a third non-devalued currency). However, the devaluation raised the price of imports, and the subsidies offered for raw jute imports were insufficient to offset the added cost of such imports. In cate­gories where significant proportions of imported grades are used, therefore, the Pakistani industry maintained a raw material cost advantage over India. Moreover, raw jute prices in India have been rising steeply since January 1968 due to a poor crop and insufficient imports. In July 1968, according to the Indian Jute Mills Association, the estimated cost of the raw material mixes for hessian and sacking (in dollar terms) were 11 percent and 25 percent, respectively, lower in Pakistan than in India. Also, according to the Indian Jute Hills Association, in July 1968 conversion costs in India were 40 percent lower than in Pakistan in the case of hessian and 45 percent lower in the case of sacking.

86. Although these figures may not be entirely reliable, the weight of the evidence leaves little doubt that India has a substan­tial competitive edge in conversion costs over Pakistan. The com­position of estimated average conversion costs in India is shown in Table 6. The principal reasons for the substantially lower costs in India appear to be higher efficiency of machine utilization, higher productivity of labor, lower depreciation, and lower cost of mill stores, such as batching oil, wood (for spools), leather (for belts, etc.), most of which are produced locally. The rate of capacity utilization, for example, appears to be 70 percent on old looma and as low as 60 percent on new looms in Pakistan, compared to 75 - 85 percent in India. Labor productivity is probably at least 25 per­cent higher in India than in Pakistan, although this advantage is somewhat offset by India's significantly higher wage rates.

87. On the other hand, India's current export duties work out to roughly 18 percent of the FAS selling price in hessian and I) per­cent of the FAS selling price in sacking, using July 1968 prices. In contrast to this, the Pakistani industry enjoys an export bonus which was raised from 20 percent to )0 percent in March, in apparent response to the recent reduction in Indian export taxes. Bonus vouchers retch an attractive premium in the market.

1. 2. 3. 4. 5. 6.

... - 33 -

.:'

Table 6: CONVERS1'ON OOSTS OF INDIAN JUTE OOODS (AB on February 1, 1968)

(Rupees per metric ton)

Hessian Sacking

\eJ'ages 1.4, 312 Stores 116 78 Power 58 47 Depreciation L4 19 All other work expenses 22 14 Administration 129. 49 (including salaries)·

Insurance 19 11 Interest 11 8 Others 3 1

. Selling and distribution 24 22 -expenses

Total 871 .$61 -=:lIS -

-

- 34 -

88. . Assuming, tor the sake of illustration, that raw jute prices (in dollar terms) were the same in India and Pakistan (and that in Pakistan the market premium for the vouchers was 150 percent of face value, which is a conservative assumption in view of recent trends}!/, the Pakistani mills' advantage in costs over Indian mills, after allowing for the export bonus in Pakistan and the export taxes for India, works out to roughly $130 per ton in hessian and $80 per ton in sacking. Thus, since Indian manufacturing costs are lower than in Pakistan, the Pakistani export bonus, together with Indian export taxes, clearly emerge as the principal reason for the competitive disadvantage ot India. It is significant to note, however, that Indian export taxes are much lower than Pakistanis export bonus, in­dicating that the removal of the export taxes would narrow but not close the competitive gap.

89. Some ot the basic problems of India (such as raw material deficiency, generally inferior quality of the fiber, and the age of tbe machinery) have been discussed aboveo Three more factors may be pointed out, however.

90. One, Pakistani manufacturers ot jUt9 goods are more aggres-sive sellers than Indian manufacturers for two reasons. First, new mills have a strong incentive to sell (sometimes be10w cost) in order to obtain cash to meet their debts. Secondly, since the domestic market for jute goods is much smaller than in India (compared to total mill output), there is much greater competition among Pakistani mills and exporters for the export market.

91. In addition, the prices of certain key grades of raw jute (such as cuttings) in Pakistan are as much as SO percent lower than in India even in dollar terms. This arises from the fact that they are in ample supply, since they are obtained as a by-product of a jute output which far exceeds mill requiremertts. This explains largely the success or Pakistan in exports of sacking for which a large proportion of cheap jute cuttings {or butt-endS} are required.

92. Finally, most Indian mills are reported to be incurring losses or barely breaking even in hessian and sacking, though the situation in carpet-backing appears to be much better. While re­ports of the extent of these losses may be somewhat exaggerated and the proport ion of the industry incurring such losses is not known, there is little doubt that the industry has been in a tight financial position for some time. Although this was brought about largely by the several problems listed above, it constitutes a major problem in

1/ The bonus voucher has been selling at about 160 percent of face value.

- 35 -

itself since it restricts the ability of the indu~stry to withstand and fight some of the above difficulties, such as rising raw material and conversion costs and losses to substitutes. A financial anal­ysis of the mills cannot be undertaken here. It nmy be pointed out, however, that the jute industry has fared rather poorly in the last few years, particularly compared to total Indian industry. Gross profits as a percentage of sales declined from 11.8 percent in 1962/6) to 4.4 percent in 196.5/66 and gross profi tIS as a percentage of capital employed shrank from 11.1 percent to 6.6 percent, while both ratios declined only marginally (by less than one percentage p<.'dnt) in total Indian industry (Table 1). It is Elignificant to note, however, that bigger mills and mills of diversified companies with larger total tundr.l appear to have done better than smaller mills.

Table 7: PROFITABILITY RATIOS OF THE INDIAN JUTE INDUSTRY AND TbTAL INDUSTRY

1960-61 1961-62 1962-63 1963-64 1964-65 1965-66 . Jute -~-- .~ .. -- .- ; ,-c' .

Profits reta.TOed as perce.nt- 33.0 -1901.6 57.6 42.6 -32.1 33.7 ago of profits after ,tax

Gross profit as percentage of sale

Gross profits as percentage of total capital' employed

Profits after tax as per~ centage of net worth

Dividends paid as percent­ago of net worth

Dividends paid as percent­age total paid-up capital

Total Industry Profits retained as per­centage of profits after ·tax

S.2 2.3

8.1 3.8

7.6 0.2

5.1 3.8

8.7 6.4

39.9 36.4

11.8 8.5 4.1 4.4

17.1 11.3 5.6 6.6

16.7 9.9 2 .• 8 5·.4

7.1 5.7 3.7 3.6

13.3 11.3 7.3 7.2

33.8 38.7 38.5 .35.9

"

\A)

0'-

•

Table 7 Continued

1960-61 1961-62 1962-63 1963-64 .1964-6, 1965-66

Gross profit as percentage 10.3 10.~ 10.1 10.2 ·9.9 9'.4· ':', of sale

Gross profit as percentage 10..2 10.1- 1Q.2 10.1 10.4 9.9 of total capital employed

Profits after tax as per- il.O 10.0 8.7 9.5 9.3 8.7 centage of net worth \..t,)

~ I

Dividends paid as percent- 6.6 6.4 5.8 S.8· 5.7 S.6 age of net worth

Dividends paid.as percent- 11.2 11.0 10.1 10.S 10.7 10.6 ago of total paid-up capital

Source: Reserve Bank Bulle tin, Dacember 1967.

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v. PLANS AND PROSPECTS

The 11 Old II Fourth Plan

9.3.. The original Fourth Plan of India (1966/67-1970/71) set ambitious targets for raw jute and jute goods and several programs were undertaken to reach these targets. Although this plan has been abandoned recently, the measures undertaken for jute and jute goods in conjunction with it are, for the moment, being continued. Some attention, therefore, is given here to the "old" Plan.

94. The "Fourth Plan II aimed at expanding raw jute output from an average of rou~~v 7.3 million bales in the Third Plan period to 11.0 million bales_~ in 1970/71 and raising production of jute goods from about 1.22 million tons to 1.8 million tons over the same period. Internal consumption of jute goods was expected to increase from

~ 416,000 tons in 1965/66 to 600,000 tons in five years, and exports were envisioned to rise from a peak of 927,000 tons in the base period to 1.2 million tons in 1970/71. The principal measures already under­taken or contemplated to achieve these targets are summarized below.

95. Supply of Raw Jute: In view of the growing demand for food productiqn, no further extension in the jute area is envisaged, except through '6:qe introduction, of double- cropping (i. e., by introducing jute as a'\'first crop preceding rice) on about 900,000 acres. A major part of the planned increase in output is expected to come from i~ provements in yields. The principal development programs undertaken to improve both average yields and the quality of jute focus on the same areas which have been emphasized in the past, such as fertilizer application, improved seeds, line-sowing and excavation on ratting tanks.

96. A new feature of the Plan is the "package program approach n in true jute. There are two auch programs: (a) a program for stepp­ing up the unit yield and improving the quality of jute in five dis­tricts Where some irrigation facilities exist but where yields and quality are poor, and (b) a program aimed at maximizing production in areas where present yields are quite high but where there is a potential for further improvement.

97. No progress ha~ been made in raising jute output during the first two years of the Plan period. Actual production of jute and mesta in 1966/67 was 6.6 million bales compared to that year's target of 9.1 million bales and the 1967/68 crop is estimated at

11 9.0 million bales of true jute and 2.0 million bales of mesta.

,-

- 39 -

7.6 million bales compared to a ta rget for the year of 9.4 million bales. While weather conditions were generally unfavorable (par­ticularly in 1966/61), the shortfalls from the targets also reflect the limited progress made so far under the development programs, particularly in ext,ending the area under double-cropping!7 and in­tensive cultivatiorl.. The major obstacle appears to have been a shortage of water. It is reported, for example" that in some areas where tube-wells e,dst, these could not be energized due to a short­age of power. Substantial progress was made, however, in the use of fertilizer, particularly in the foliar spraying or urea, iq the ab­sence of which output probably would have been even lower~.

98. Agricultural and End-Use Research: Both the government and the industry are presently conducting or sponsoring large programs of agricultural and end-use research with a view to improving both the yield and quality of the fiber and diversifYing the production and exports of jute manufactures.

99. Most of the agricultural research is carried out by the Jute Technological Research Laboratories (operated by the Indian Council of Agricultural Research) and"at the Agricultural F.esearch Farm. In addition, the industry is coiltinuing its joint eff/orts in carrying out "demonstration projects" or extension services] •

100. In addition to continuous research on developing improved seeds, all of the stages of plant growth and hand operations are being scrutinized in order to find ways to improve the yield and quality of the fiber and to reduce costs. Attention is also given to improving the agricultural implements and to developing uses for jute wastes and sticks. Promising results have been obtained in producing rayon­grade pulp from discarded ju~e sticks.

11 Achievement in 1966/67 was 177,000 acres compared to a target for the year ot 225,000 acres.

g/ For a more detailed examination of the various jute development programs, see Ministry of Food and Agriculture, Jute Development ~ Retrospect and Prospec~~, April 24, 1967.

J/ The industry has received an added incentive in this field recently wi th announcement of an "agricultural development allowance" in the new budget= companies using the products of agriculture, animal husbandry, etc., are allowed a tax deduction of 1-1/5 times their expenditure on providing agricultural inputs and extension services in related fields.

- 40 -

101. End-use research, which has been conducted for a number of years, has expanded recently in hopes that it will help to improve both the competitive position of jute versus substitutes and the co~ peti ti va position of India versus Pakistan. Most of the research is carried out by the Indian Jute Industries Research Laboratories (IJIRA)lI. The research conducted at the present time aims at (a) im­proving jute products, when these are threatened by substitutes, (b) developing new uses tor jute, and (c) improving the efficiency of jute utilization.

102. Several promising results have been achieved in these fields. For example, in view of the threat posed by the newly developed poly­ethylene woolpacks, a new and finer jute woolpack has been developed (the newwoolpack is 3., pounds lighter than the old one). These woolpacks are presently being tried out in the major 1'1001 producing countries. Secondly, the problem of bleaching is reported to have been solved, thus increasing the dyeability of jute. Considerable progress is also reported in improving the color-fastness of jute. This provides several new opportunities for jute, particularly in the -neIcf-of interior decoration (wall coverings and draperies, for ex-ample)Y.

Conclusions, Future Prospects and Recommendations

103. The foregoing analysis in the report indicates that the Indian jute industry has perfor.med rather well under generally adverse conditions during the post-war period. It has managed to survive some adverse demand and supply problems and to recover through diver­sification and through continuous progress in adapting itself to generally inferior raw material, compared to the pre-Partition period. In the last two or three years, however, its performance has been hin­dered by intensification and convergence of mostly autonomous factors such as inadequacy of raw material and competition from the Pakistani industry, due largely to the export bonus enjoyed by the latter.

y

An organization sponsored by the Government and the industry with an annual budget of about Rs. 3., million. In addition to con­ducting research in its own laboratories, IJlRA also commissions technological and market research abroad. Furthermore, it is entrusted by the Indian Standards Institute with carrying out a program of quality control and pre-shipment inspection.

The marketing of new products abroad has been encouraged by the announcement of an ~ort Markets Development Allowance in the new budget: companies incurring expendi ture for development of export markets are allowed a tax deduction of 1-1/3 times such expenditure.

-41-

104. The Indian jute industry has responded rather well in the past to any help it has been given to alleviate its problems. Most of the technical or financial measures designed for this purpose, however, either have been taken too late or ware rather limited. Similarly, the measures being taken or contemplated at the present time do not address themselves tully to the problems of the industry. In addition, they are mostly ot a long-term nature and are unlikely to bring about a major improvement in the Indian jute situation in the near future. The prospects tor the Indian jute economy are ex­amined in greater detail belo'w~

105. Supply Prospects: On the supply side, although Indian raw jute production is likely to increase in the future, output in 1970/71 is certain to fall considerably short of the 11 million bales target of the original "Fourth Plan." The potential of most of the develop­ment measures discussed above for leading to the desired results is not in doubt; this has been tested with satisfaction in experimental farms. The major element of concern is whether these can be applied on a sufficiently large .scale and in an integrated fashion to raise output to the target level.

106. The double-cropping of jute and rice on which much hope is placed, for example, presents certain problema.· First, it can be done only in high rainfall or irrigated areas. Secondly, because the seasons of jute and winter paddy overlap by one month, it may lead to a reduction in the yields of either jute 0·1' rice, Since either jute has to be harvested early or rice has to be planted late. Although this problem can be circumvented by introducing special jute or rice seeds (which either mature earlier or can be sown later), the ex­pected expansion of area through the device of double-cropping seems to be somewhat exaggerated, since water will continue to be a major constraint.

107. The major problems in fertilizer applications are avail-ability (due largely to the priority given to food crops) and distri­bution. Another major obstacle seems to be the long distance (as much as 12-20 miles) between farms and the nearest distribution center. This seems to be a problem in the distribution of improved seeds also.

108. Line .. sowing is not likely to spread swiftly since it takes more time than broad .... casting. Jute has to be sown during an optimum climatic period which lasts for about a week. The farmer is usually eager to plant his jute as fast as possible and prefers, therefore, to broad-cast his seed. Moreover, line-sowing requires seed-drills which are not available in suff~.cient quanti ties and would require finanCing even if they were.

- 42 -

109. Little improvement in excavating retting tanks has been made in the last few years in spite of a government subsidy of So percent for the cost ot such tanks which was offered as far back as 1954. Even if substantial progress is made in this field in the next few years, it should be pointed out that artificial tanks are a poor substitute tor the slowly flowing rain water which is avail­able practically at the farmer's doorstep in Pakistan.

110. Taking the above and other obstacles into account, raw jute output in India is projected at 1.5-1.6 million tons (compared to a target of 1.95 million tons, or 11 million bales) in 1970 and 1.65-1.75 million tons in 1975, i.e., the 1970 target does not appear likely to be achieved even by 1975. This output can be manufactured with present capacity, i.e., there is no equipment constraint. Assum­ing a domestic demand for jute goods (including farm consumption of raw jute) ot about 550,000 tons in 1970 and 6,0,000 tons in 1975, this leaves an exportable surplus of jute goods of 1.0 million tons (compared to a target of 1.2 million) in 1970 and 1.1 million tons in 1975.

111. Demand and Price Prospects: The Bank's current projections for world demand and supply of jute in 1970 and 1975 developed in a separate study (to be published in the near future) are summarized in Ta~le 8. Demand projections were arrived at by projecting, as a first approximation, "hypothetical consumption levels" on the basis of income ela.sticities of demand (where possible) or extrapolation ot past trends tor individual regions or countries. These were then adjusted, on the basis of both quantitative ,and qualitative info~ ation and assumptions for the possible effects of substitution against juto , introduction of new end-uses and other relevant factors. Supply was projected by assessing the development targets and possi­bilities of individual countries ('~ere available), or past trends. Due consideration was given to the views ot FAO and the European Institute for the Study of Industrial Fibers (Paris), in view of their special knowle~ge of agricultural conditions and access to relevant. information:'.

112. Taking the mid-points ot the high and low projections, world consumption of jute goods is expected to grow at a rate of 2.9 percent between 1963-65 and 1970 and 2.8 percent in the 1970-75 period. These are based on rather favorable assumptions on the development of new uses but they nevertheless· imply a substantial deceleration ot the growth or

11 A more detailed discussion of the met,hods and assumptions and the projections for individual countries or regions is given in The Wbrld Jute EconomY: Post-War Trends and Prospects, mentioned earlier.

~43

!!-ble 8~~: PROJECTIOHS· FOR 1910 AUD .197S

:' (Thousand metric tons)

1970 196.3-65 Low High

.World consumption at jute goods 3,250 3,600 4,100

World production ot raw jute 3,.350 4,000 4,400 Consumption in producing countries!' 1,550 1,800

Exports (ral-l and manufactured)£/ 2,232 2,450 2,600

Raw 1,009 9S0 1,000 I-Ianufactures 1,223 1,500

. India 973 1,000 ~are at India (percent) (80) (67)

1975 LOlf High

4,100 4,750

4,300 4,100

1,800 2,100

2,500 2,600

7'" 850 1,750

1,100 (63)

11 Far.m consump~ion ot raw jute plus consumption or jute goods in fiber producing countries.

Y Excluding exports ot jute goods trom rlestern Enrope

'.

..

- 44 -

4. S percent per annum experienced in the previous 10 years. A signifi­cant feature of the above projections is that contrary to ! priori expectations of a declining growth rate over the next 10 years due to increased substitution, demand appears likely to grow at a steady rate. This can be explained by two factors: (a) the expected progressiv'e slowing down of substitution in packaging uses, and (b) the assumption that demand for carpets and therefore carpet-backing in developed coun­tries and centrally-planned economies, and for packaging materials in developing countries, will accelerate between 1970 and 1915.

113. While world production potential is likely to exceed consump-tion requirements by about 10 percent in 1910, it may be more or less in balance with consumption in 1915, particularly after allowing for manu­facturing waste. Assuming a price elasticity of demand for Jute goods of -.3, prices are likely to fall by about 25 percent between the base period and 1970 and remain at this level or decline marginally in the folloWing five years. In spite of the projected growth in demand up to 1975, jute exports (in raw or processed form) are likely to show some growth until 1970 and little or no growth thereafter. 1~i1e exports of raw jute are certain to decline, however, exports of jute goods may grow at a rate of two ,to three percent per annum.

114. The exportable surplus of India in jute goods, as prOjected in paragraph 110, is expected to grow more slowly than world demand and, ! priori, could be marketed without difficulty. ThiS, however, will d~d on the future competition from Pakistan which, ceteris paribus, is likely to intensif.y rather than let up. First, Pakistan is pursuing a vigorous program of capacity expansion. Secondly, it is diversifying its output and moving into fields such as carpet-backing. Thirdly, the gap between conversion costs in Pakistan and India may narrow do~m as a result of falling depreciation costs and better adaptation to the new machiner,y. Thus, even marketing the exportable surplus projected in this report, which is lower than the original "Fourth Plan" target, will require great vigilance on the part or the Indian jute industry.

115. Areas of Possible Investigation and Action: The major technical measures being taken or contemplated in order to improve the prospects tor Indian exports seem to be in the right direction and no recommendations in the technical field are made in this report; the major problem is implementation. Some comments on the overall approach to the problem, however, are offered below.

116. First, it is necessary to distinguish between short-term problems and long-term problems and devise appropriate policies to deal with each. This seems to be crucial, since short-term developments have a significant bearing on long-term trends. For example, onGe a given market is lost to substitutes or to Pakistan, it becomes quite difficult to regain it later. One or the major short-term problems of India, for example, is undoubtedly deficiency of raw jute. Since im­proving average yields may take time, more attention should be given to increasing the jute area in the interim period. If this cannot be done, or in years when output declines due to poor yields, measures should be

•

- 4S -

taken to meet mill requirements through prompt imports. There appears to have been some delays in granting import authorizations in the past. As noted in Chapter III, the export taxes on jute goods imposed atter the devaluation have chan~d the buying habits of importers from for­ward procurement to purchasing on a hand-to-mouth basis. The removal ot the remaining taxes may restore trade to its nonnal pattern and help to regain confidence in jute. The mills seem to be caught in a profit squeeze due to competition from Pakistan. Considel1ation should be g1. ven to devising some measures to ofrset the advantage enjoyed by Pakistan due to its export bonus. The short-term cost of the above measures to the government should be weighed against the benefits that may accrue over the long-run.

117. As far as long-term measures are concerned, more emphasis should be placed on agricultural and end-use research. To this end, more funds should be made available to existing research organizations. SOMe of the research equipment used is antiquated and some or~nizations are under-starred due to their inability to attract or keep talent be­cause of the official low employment grades and wages. At the same time, the overall research effort should be reviewed with a view to eliminat­ing any possible dup1.j~cation. More technological end-use research should be carried out abroad; (i.e., where the new markets are likely to be) or wi th the help ot contJultants, and this should be coupled with marketing studies. The latter is particularly important since over-estimation of the market potential of a new product may lead to misinvestment.

118. More attention should be given to modernization of the weav-ing sector. This is particularly necessary at this jllDcture not only trom the point of view of raiSing productivity but in connection with the program ot divorsification. The new products which are being de­veloped require modem and improved machinery. Although India has a sizeable jute machinery manufacturing industr,y, its current production seems to be insufficient to meet demand.

119. Finally, in view of the problems raced by India and the di-versity of the g~ups with vested interests in the Indian jute economy, it may be advisable to prepare a comprehensive "jute plan" in connection with the new Fourth Plan, with the participation of all parties. Such a plan may contribute to coordinating the various policies affecting jute, studying their implication and integrating them better into the overall Plan •

( )

n.a.

I.J.M.A.

P.J .M.A.

P.J.A.

A.E.J.I.

C.E.C.

,'.

. NOTES TO TABLES

Rough estimates

nil

Not available

Indian Jute Mills Associati CI'l

Pakistan Jute Mills Association

Pakistan Jute Association

Association ot European Jute Industries

Cbmmonweal th Economic Commi t tee

LIST OF TABLES

1. Share or ExPOrts ot Jute Iwfanutactures in. tl:le Total Export Earnings o~;, India, 1953-1967

./#

2. Growth of World Raw Jute Production

3. Production, Area and Yield of Raw Jute and Mesta in India

4. Average Production, Area and Yield of Tnle Jute in India During the Third Plan Period, b,y Status

S. Supply and Distribution of Raw Jute in India (Trade Estimates.)

6. Number of Jute Looms in India, by Type

7 • Growth of Standard 'Looms in India, 1900-1966

B. Supply and Distribution of Jute Manufactures in India

9. India: Production and Exports of Jute Manufactures 'by Type

10. Estimated Apparent World Consumption of Jute Manutactures, by Countries

11. Estimated Apparent Wbrld Consumption' of Raw Jute and Allied Fibers, 19.$0/51-1965/66

12. Exports of Raw Jute and Allied Fibers trom the Chief Producing Countries

13. l~orld Exports of Jute Manufactures, 1950-1967

14. Distri bution of Exports of Jute rmnufac tures trom India

1S. Value, Volume and Unit Value of Exports of Jute Manufactures from India and Pakistan, 1950/51-1965/66

16. Market Prices ·of Raw Jute and Kenai' in Selected Countries

17. Market Prices of Jute Uanufactures, 1950-67

..

,',

Table 1: SHARE OF EXPORTS OF JUTE MANUFACTURES IN THE . TOTAL ExPoRT EARNINOS OF INDIA, 1953-1967

April -March

1955/56 -1959/60

1960/61 1961/62 1962/63 1963/64 196L/65 1965/66 1966/67 1967/6a!1

(million dollars)

Exports at Jute

Manufactures

236

284 304 327 331 354 384 332 311

Total Exports

1,264

1,328 1,427 1,499 1,666 1,714 1,100 1,S58 1,592

Y Preliminary

Percentage share or Jute Manufactures

18.7

21.4 21.3 21.8 19.9 20.7 22.6 21.3 19.5

Source: IJMA, Annual; SUI!II!!arY. of Jute and Gunny Statisticr \ 1965/66, and national trade statistics. .

'Table ,:2: GRbWTH OF WORLD RAW JUTE. a:tOIlJ orION

" :'

1950/51- 195,/56- 1960/61- 1965/66-19S1aI55 1959/60 196.4'65 1966/61

Index Numbers ~1952/S3-1956/51=1(0). 96.11/ Wbrld Agricultural Output 109.4 124.8 135.0

Jute and Allied Fibers 94.3 ll1.2 14Pl.3 161.6

Volume (1000 Metric Tons) Pakistan - Jute 995.4 1,031.2 1,083.2 1,133.$ India - Total 758.8 1,042.0 1,301.2 1,130.,

Jute 674.9 804.0 1,012.6 ' 885.S Mesta 83.9 238.0 288.6 245.0

Thailand - Total 14.0 28.2 241.4 488., Jute 2.0 ).2 . 7."6 11.0

Othe:r1/ K.enai' 12.0' 2S.0 233.8 477.5

- Total 68.0 103.6 171.0 234.5 Jute 37.0 57.8 1c6.6 152.0 Other 31.0 45.8 ~,;~.4 82.,

. USSR and Maj.n1and China - Total 206.0 321.0 3B;6.2 50S.0 Jute 91.0 96.0 1()9.8 147.5 Other 115.0 231.0 276.4 3~7.S

Vbrld - Total 2,038.2 2,532.0 "'. 3,183.0 3,492.0 Jute 1,799.2 1,992.2 2,)19.8 2,327.5 Other 239.0 539.8 86).2 1,164.5

Percenta~e share of )2., Pakistan 48.8 40.7 34.0

USSR and 11ain1and China 10.1 12.9 l2.1 '14.5 All Other CoUntries 41.1 46.4 53.9 53.0

True Jute 88.3 78.1 72.9 66.7 Allied Fibers 11.7 21.3 27.1 )).3

11 1952/53-1954/S'.

g/ Excluding U.S.S.R. and Mainland China.

Source: Vbrld agricultural output from FAC, State of Food and Agriculture, 1966, Pakistan, India and Thailand from national statistics; others from FAO, "Post-W!:lr Trends in the Production of Jute, Kenar and Allied Fibers," (CCP/Jute/64/8, 31 July 1964) and AEJI, Statistical Yearbook, 1966

Table 3: PnoDUCTlOl~, AREA lUi.!D fiELD OF J.tA~.! JUrE Al~"D HESTA lI~ liIDlA

(Official Crop Estimates)

Jute I~lesta ProCluctron -~-~ Area- ------yield Pr~duction Area -Yield

(1000 ~. tons) (1000 hectares) (Kgs/hectare) (1000 m. tons) (1000 hectares) (Kgs/hectare)

1)50/51 595 571 1,042 1/ 1/ '. 1/ ,. .. : 195J/52 849. '7\~O 1,075 I/ II II 1~52/53 833 734 1,135 124 196 633 i953/54 561 497 Ij127 UB 187 631 1954/55 531 503 1,056 163 177 921 1)55/56 762 701+ . 1,082 211 231 92.3 1)56/51 178 712 1,008 26:; 297 906 1957/58 124 705 1,021 237 309 761 1)58/59 938 733 1,280 210 334 B08 1:159/60 818 681 1,201 203 285 112 1960/61 124 612 1,183 205 219 135 1)61/62 1,154 922 1,252 308 389 ·192 1962/63 983 851 .1,155 306 319 807 1963/64 1,1l6 868 1,286 338 393 860 1)64/65 1,OB6 839 1,294 286 359 191 1965/66 80S 751 1,063 224 320 100 1966/67'Y 962 798 1,206 218 318 686

1/ Included in the jute figures. ~ Preliminary.

Source: lJi\1A, Annual Summa~Qr __ J!lt~_~d G~ _S1;ati~t:l.Q~ and MJnthly Swmnary of Jute ~._ Gurmy Statistics '. variol:1s issues.

... '

Table 4: AVER4.GE PRQmcTlou, AREA AND YIELD OF TRUE JUTE Ii\! INDIA DURING, , .. THE THIRD PLAll PERIOD,Y BY STATES , ~

Production Area Yield State ('000 bales)£! Percent (, 000 acres) Percent ('bales/acre)

~I~st Bengal. 3J 1l5.S 55.05 1,089.0 52.01 2.85

Tripura 86.) 1.53 30.2 1.Q4 2.83

Assam 912.0 16.11 336.6 16.08 2.70

. Bihar 1,051.3 18.58 410.3 22.46 2.24

. Orissa 321.2 5.18 116.0 5.54 2.78

uttar Pradesh i61.2 2.95 51.6 2.47 3.24

Total India 5,659.5 100.00 2,,093.7 100.00 2.69

!I 1961/62-1965/66

2/ 1 bale = 400 pounds.

Source': Hinistry of Food, Agriculture, Community Development and Cooperation, Jute ~velopment,. April 24, 1967 •

Table 5: SUPPLY AND. DISTRIBJTIOrS OF RAW JUTE TIJ. INDIA (TRADE ESTIMATES)-

(1000 metric.tQns)

SUEE1l Distribution Beginn~ Pro- Mill eon- Farm con-

July-June Stock~ duetton Imt>orts Total Exports sumption sumption Total

.1950/51 95 596 467 1,1.58 953 n.a. 9.53 1951/52 138 849 332 1,319 1,031 n.a. 1,031 1952/.53 168 833 240 1,241 9.53 n.a. 953 1953/54 213 .568 268 1,049 929 n.a. 929 1954/55 334 769 2,2 1,355 1,102 38 1,140 1955/56 215 956 343 1,514 1,208 42 1,250 1956/57 264 1,J14 111 1,495 1,145 38 1,183 1951/58 340 1,083 l26 1,549 1,187 38 1,225 1958/59 328 1,268 62 1,658 8 1,172 42 1,222 19.59/60 444 I,D3'!. 111 1,',89 30 1,215 )6 1,281

- 1960/61 299 943 75 1,)17 1,134 21 1,161 1961/62 157 1,4S1 13 1,681 1,1"'9 27 1,206 1962/63 490 1,451 49 1,990 21 1,342 27 1,390 1963/64, 563 1,397 26 1,986 21 1,411 36 1,468 196L/65, 518 1,270 95 1,883 18 1,466 36 1,520 1965/66 . 363 1,06] 218 1,644 18 1,379 36 1,433 1966/67'1/ 211 1,197 291 1,705 36 1,296 )6 1,368 1961/6~,~ .336 1,379 1,115 18 ls~15 36 1,369

1/ There are Bome discrepancies between the stock figures as published and the . difference between supply and distribution.

'£./ Estimated.

Source: IJMA figures as reprinted in PJMA, Monthly Summary or Jute Goods Statistics, and LJMA, Monthly Summa~ ot Jute and Gunny Statistics, various issues.

Table 6: :. NtJjJBER OF JU'rE LOa-IS TIl Ii1DIA, ,BY TYPE ,',

.~ . (AS OF JANUARY 1, 1966) .• ,1

Type ~\1umber

Hessian 44,105

.'iicldng 24,958

Broad Loans 2,792

Carpet Looms 2ll

Cotton Bagging Looms 23

Webbing Looms 2,545

Circular Looms 24

other Looms 607

Total Looms 15,265

Source: IJMA, Loan & Spindl.~ statistics, 1966.

Table 7: GRO~1TH OF STArIDARD 1001\15 IH INDIA, 1900-1966

(~1embers of the Indian Jute Hills ,', Association only)

"

Percentage of Hessi~ to

Year Hessian Sackins Total total looms

1900 6,609 8,727 15,336 43 1910 18,334 13,421 31,755 57 1920 24,3.53 16,124 40.477 60 1930 36,745 21,894 58,639 61 1940 42,026 23,360 65,386 64 1944 42,265 2),121 65,386 65 19L,7 42,523 23,014 65,537 65 1949 42,661 23,101 65,762 65 1951 42,811 22,909 65,720 65 1953 42,771 22,978 65,749 65 1955 42,383 22,711 65,094 65 1958 42,081 23,013 65,094 65 1960 41,839 23,255 65,094 65 1962 41,411 23,807 65,314 63 1964 41,596 23,582 65,3~ 64 1966 42,418 23,190 65,14 65

11 In 1966 there were, in addition, 5,584 specialty looms in Association mills and 3,931 miscellaneous looms in non-member mills ,bringing the total to 15,265.

Source: IJHA, Loom and Spindle Statistics, Calcutta, 1966.

•

Table 8: SUPPLY,AND DISTRIBUTION OF JUTE NANUFACTURES nJ ThTDIA ,

,',

(1000 metric tons) "

SUEEly Distribution July-June ~~nf/Production Total Exports Consumpti.on Total

Stock~

1950/51 13 812 945 724 116 840 1951/52 92 960 1,052 797 149 946 1952/53 100 906 1,006 697 170 867 1~?53/54 136 880 1,016 805 119 924 1954/55 88 1,011 1,099 864 140 1,004 1955/56 89 1,113 1,202 871 193 1,064 1956/57 129 1,042 1,171 867 182 1,049 1951/58 118 1,073 1,191 846 201 1,047 1958/59 136 1,057 1,193 869 224 1,093 1959/60 97 1,092 1,189 841 252 1,099 1960/61 83 1,023 1,106 742 279 1,021 1961/62 78 1,069 1,147 772 287 1,059 1962/63 80 1,218 1,298 876 320 1,196 1963/64 96 1,.249 1,345 878 333 1,211 1964/65 126 1,320 1,446 927 386 1,313 1965/66 126 1,227 1,353 809 416 1,225 1966/67 125 1,152 1,277 762 379 1,149

11 There are some discrepancies between the stock figures as published and the difference between supply and distribution.

Source:, IJr-1A, r-1onthly Summary of Jute and Gunny Statistics, various issues~

Table 9: INDIA: PROmOTION AND EXPORrsY OF JUTE MANUFAaruRES BI TYPE

•

(1000 metric tons)

,'.

Carpet-July-June .: Hes sian Sacking Backing

Production

1934135 - 1938/39 449.2 596.6

1953/54 - 1955/.56 40.3.9 550.4

19.56/57 435a2 535.3 1:0..11 1951/58 398.2 606.2

1958/59 453.4 ,17.8 11.3 19.59/60 4.56.5 539.3 19.1 1960/61 371.9 532.7 26.3 1961/62 414.3 508., )2.3 19<12/63 514.9 531.8 64.6 1963/64 533.8 495.5 9.5.5 1964/65 526.6 544.3 97.1 1965/66 488.2 547.8 94.0 1966/67 442.7 ,07.6 119.9

Exports!/

19)4/35 - 1938/39 n.a. n.a.

1953/54 - 1955/56 385.3 445.1

1956/57 408.8 418.7 0:7'1:/ 1957/58 387.0 429.8

1958/59 441.0 380.1 11.3 1959/60 la4.1 365.6 18.1 1960/61 346.6 315.8 24.8 1961/62 378.3 294.3 32.3 1962/63 465.1 282.2 61.2 1963/64 415.2 249.7 80.1 196W65 477.2 215.4, 91.9 1965/66 435.1 219.0 100.5 1966/67 393.0 213.1 U7.9

!/Mill Dispatches for export purposes.'

~/Three months.

,Cotton ~ggi,ng Others

n.a • 33.5

n.a. 46.6

n.a. 71.2 16.3 49.5 17.2 57.4 33.1 43.5 36.6 ".0 45.1 68.8 41.3 65.4 49.0 7,.3 49.8 72.5 3,.6 61.2 10.9

n.a. n.a.

n.a. 16.1

n.a. 39.1 12.9 .15.5 19.8 16.3 35.1 14.1 36.4 18.1 42.4 25.1 42.7 24.5 48.3 2,.1 50.0 26.3 34.0 20.2 11.8 26.4

~ Source: IJMA, Annual Summary of Jute and Gunny Statistics 1964-65 and ~bnthly Summa;y of Jute and Gunny Statistics.

Total

1,079.3

1,000.9

1,041.7 1,073.2 1,057.1 1,091.5 1,022.5 1,069.0 1,218.2 1,249.1 1,320.) 1,226.8 1,152.1

n.a.

846.,

866.6 845.9 868 • .5 841.0

. 742.3 712.4 875.7 878.4 926.8 808.8 762.2

Table 10: ESTIMATED APPARENT l~ORLD CC'l!SUl-1PTION 9F JUTE MANUFAcruRES, BY CGUNTRIES

(1000 ~etric tons)

,',

Average Average Average 1937 1953-55 1958-60 1963-65

_ t i

Western Europe 562 517 557 556 United Kingdom 211 199 188 169 France 94 71 68 72 Germany ·82 80 91 94 Italy 32 47 55 45 Belgium 35 25 30 30 Netherlands 26 25 31 36 other 82 70 94 no

United States 458 303 351 469

Canada 33 38 41 58

Asia 455 429 574 804 India (247 182 286 417 Pakistan ( 96 87 104 Japan 33 26 37 77 Thailand 14 29 31 60 Other 161 96 133 146

Latin America 20) 235 220 256 Argentina 107 103 70 63 Brazil 26 41 48 75 Cuba 23 42 48 34 other 47 49 54 84

Africa and Near East 191 200 266 284 South Africa 52 40 79 65 U.A.R. 25 23 38 65 Other 114 137 149 154

Oceania 108 106 133 132 Australia 95 87 100 101 New Zealand 13 19 33 31

total above 2,010 1,828 2,142 2,564

Cen-planned countries 85 288 467 696 Soviet Union 22 76 85 193 Eastern Europe 49 34 50 82 ~1ain1and China 14 178 332 421

World 2 2095 22116 2,609 3z225

Source: Derivod from FAO and national statistics.

Table 11: ESTIVlATED APPARElJT t'JORLD CONSUMPTIOn OF RA1'l JUTE AND ALLIED FIBB:.1S, 1950/51 - 1965/66Y

.' .~.

July-JuneY India

1950/51 953 1951/52 1,125 1952/53 968 1953/54 944 1954/55 1,141 1955/56 1,251 1956/57 1,183 1957/58 1,225 1958/59 1,214 1959/60 1,252 1960/61 1,161 1961/62 1,207 1962/63 1,370 1963/64 1,448 1964/65 1,502 1965/66 1,415 1966/67'V 1,330

(1,000 metric tons)

Pald.stan

55 72 90

127 145 182 206 206 251 309 309 348 363 381 344 508 489

~veste!'V / Europe!!

396 469 442 504 506 538 527 536 503 473 462 388 512 495 498 512 5h7

other

415 5h6 734 514 351 554. 424 613 628 772 673

1,032 753 984 970

1,,191 1,153

!I Calendar years, first of year shown, for Western Europe. Y Preliminary

lV-orld

1,819 2,212 2,234 2,089 2,143 2,525 2,340 2,580 2,596 2,806 2,605 2,975 2,998 3,272 3,314 3,626 3,519

Source: Compiled from CEe, Industrial Fibres and FAO, "Trends in tvorld Demand for Jute Manufactures", (CCP/Jute ad hoc 62/4/Add. 1) 18 September 1962. --. ---

• Calendar Year

19S0 1951 1952 1953 1954 1955 1956 1957 19S8 1959 1960 1961 1962 1963 1964 1965W 1966!!

,' .

. : '

Table 12: EXPORTS OF RAW JUTE AND' ALLIED· FIBERS FRol-1 THE cHIEF PRODUCING COUNTRIES

(1000 .me·trict~ns)

Pakistan!/ India Tha1lan~/ Othersl/

933 7 1 IS 1,053 7 2 17

840 2 23 980 .3 12 904 .3 3 9B1 .3 10 859 6 10 78S 1 15 9 906 28 10 809 34 .37 9 7SB .3 62 1.3 60S 1 144 12 741 7 238 10 739 19 126 13 791 36 162 IS 75B 24 .317 25 675 16 486 (75)

Total

956 1,0.79

865 995 910 994 875 810 944 889 836 762 996 897

1,004 1,124 1,254

1/ ·Jute only. In addition, Pakistan is reported to have exported 20-)0 thousand tons of mesta in recent years.

2/ lbst1y kenat. 1/ Nepal, Congo (Kinshasa), Burma and Brazil. It excludes small

quanti ties exported by Mainland China. 1!1 Preliminary .<

Source: FAO: Trade Yearbooks j Bank of' Thailand, Monthly Reports; Central statistical Office of Pakistan, Monthly Statistical Bulletin.

•

•

.,' ~

Table 13: . WO~ EXPORTS OF JUTE rvIANUFAaIURES., 19,0-196~

.:' (1000 metric tons)

Calendar Developed Developing Year Vbrld ~untries Countries India Pakistan

1950 1&4 92 692 692 1951 904 114 190 790 1952 869 118 151 151 1953 87, 116 1,9 159 1954 98, 121 864 854 (,.",) -I., 1955 1,010 125 945 890 55 1956 1,016 116 960 884 76 1951 1,063 110 953 881 12 1958 991 114 877 790 87 1959 1,181 114 1,067 814 193 1960 1,116 123 1,053 862 l~Jl 1961 1,040 104 9.36 131 2",01

,,)

1962 1,221 122 1,105 872 2~3 1963 1,267 128 1,139 904 2 .,~) 1964 1,421 128 1,299 1,064 " "'r' L);;

1965 1,370 1361/ 1,234 954 280

19662/ 1,243 139-= 1,104 740 364 1967- 1,267 125 1,142 162 380

1/ Of which Western ,Europe 131.

~/ Preliminary. ",

Source: CEe, Industrial Fibers and WI, Static.'Jical Yearbo')k of the Eur.opean Jute Indust17-;. Vat1.ous i'Ss'\ii:~:-

- ' .

,', "

.,. I

Table 14: DISTRI1lJTION OF EXPORTS OF JUTE lI'1A~lUFACTURES FROr[ INDIA

(1000 metric tons)

1959/60 1960/61 1961/62 1962/63 1963/64 196L/65

United States 260 2,8 266 30, 317 395 Egypt 22 30 1, 17 9 ,2 Australia 74 77 49 ,8 S3 68 Canada 41 41 39 48 S3 47 United Kingdom 54 ,0 38 41 43 48 Argentina S4 26 26 44 S9 4, New Zealand 16 17 17 14 Ii 16 Th&iland 1, 11 12 10 3 12 Nigeria 10 13 24 27 S 13 CUba 26 50 37 28 3S 11 Burma 1, , 8 9 3 32 Germany 13 1,' IS 9 11 , Ghana 4 6 13 9 8 Belgium 10 10 10 6 8 5 netherlands 4 , 3 9 9 3 Peru 10 8 5 ~ 4 6' , . Indonesia 21 11 22 27 15 . 1 U.S.S.R. 21 22 25 31 71 132 Others 204 167 17u l~ 190 206

Total 874 822 798 913 1,097

Source: Cormnonweal th Econo~c Committee, Industrial Fibs 1'8 J and Co~:imonwea1 th Secretariat, "Wool Intelligence and Fibers Supplement."

1965/66

323 74 51 46 39 19 20 1 3 2 6 7 6 4 4 S 2

129

i~

•

•

.,

Table 15: VlILUE, VOLUHE AND {nUT VALUE OF EXPORTS OF JUTE HA.NLTFACTURES F.R.Cl-I IiTDIA lum PAKIBrA;:r, 1950/51-1965/66

P~stan!l India.~/ Value '. Volume Unit Value Value Volume Unit Value

million $ 1,000 m.t·. $/m.t. million $ 1,000 m.t. ~)/m.t.

1950/51

1951/52

1952/53

1953/54 (2.0)

1954155 4.8

1955/5..6 22.1

1956/57 19.1

19.57/58 19.1

1958/59 32.6

1959/60 47.7

1960/61 65.9

1961/62 63.6

1962/63 64.4

1963/64 67.9

1964/65 63.8

1965/66 118.6

Y' July-June.

Sf April-r1arch •

(9) (222.2)

14 342.9

89 248.3

74 258.1

70 272.9

138 236.2

206 231.6

208 316.8

219 290.:4

229 281.2

257 264.2

220 290.0

'356 333.1

Source: Computed fran national trade statistic s.

23903 tiJo 362.6

567.8 820 692.4

272.0 717 379.4

239.2 790 302.8

260.4 865 301.0

248413 878 282.8

249.9 91.5 273.1

233.4 847 275.6

214.0 797 268.5

234.5 867 270.5

283.8 800 354.8

304.1 792 384.0

326.9 874 374.0

330.6 909 363.7

353.5 950 372.1

384.0 975 393.8

.t

•

.,

Table 16: N'ARKET 'PRICES OF RAW JUTE AND KENAF IN SELEGrED COUNTRIES

,', ..

" .,'

Calendar Loose Jute Wholesale Prices Import ~ce Year 1/ Pakistan2! India)! PakistanBJ India2! Thailand~7 U.K.-

(1) - (2)- (3) (4) (5) (6)

1950 29,,94 '56.24 150 288 1.91 115.7 1951 28.37 50.26 . 2u9 265 1.75 177 .0 1952 11 •. 37 27.00 134 150 4.L1 113.1 1953 22.00 29.50 106 174 1.00 95.2 1954 23.00 32.10 135 178 1.87 102.8 1955 28.25 30.30 150 179 2 0 85 98.2 1956 34.75 32.41 187 213 3.04 101.6 1957 31.50 29.68 21U 222 2.58 114.3 1958 28.00 25.14 188 202 2.30 110.6 1959 33.75 33.07 190 2uO 2.24 110.9 1960 62.21 53.11 288 334 3.17 141.1 1961 42.48 35.63 362 265 ) .. 61 174.1 1962 32.99 31.66 248 271 2033 133.7 1963 34.67 33.16 249 260 2.73 137.3 1964 44.48 41.97 258 289 2.85 146.0 1965 45.65 (57.05) 273 383 3.02 142.5 1966 50.16 61.87 293 418 3.31 155.3 1967 1.a.12 50.34 219 379 n.a .. 141.4

.!I Crop year' (July-JW1e) beginning With year sho1tm for loose jute; calendar year for the rest.

2/ Unassorted jute, Bottoms, Rs. per'maund (37$3 kgs.), B. Bottom for 1966-67. 3/ Unassorted jute, Assam J1iddle, Rs. per maund. 4/ Baled jute, Export Firsts, f.o.b. Chittagong, Rs. per bale (400 1bs.). ~/ Baled jute, Mill Firsts, Calcutta, Rs. per 180 kgs. b/ Kenar, High Grade" Bangkok, Baht per kg. 1/ Jute, Mill Firsts, c.i.f. Dundee, t per long ton.

-Sources: Colunm 1: PJMA, Annual Reports.

Colunm 2: IJI1A, Annual and "MOnthly Summaries of Jute and Gunny Statistics. -

Column 3: UN, Monthly Bulletin of Statistics • Column 4: FAO, ··lToduction' Yearbook, 1966. Column 5: Thaili"'rid Ministry of Agriculture, Agricultural Statistics

of Thsiland;and Bank of Thailand, Monthly Reports. Column 6: "Fiber Market News, tJ New York. -

Table 17: MARKET PRICES OF JUTE MANUFACTURES ,1950-67

:'

.' ;

Calendar India ' U.S. Year Hessian!! SackingV BurlapJ/

.~

1950 55.10 . li8.1 24.22 1951 81.00 139.6 32.83 .. 1952 57.30 154.1 17.15 1953 43.13 155.1 13.57 1954 44.14 233.1 13.11 1955 42.11 1l~1.1 12.34 1956 40.17 96.1 11.41 1957 42.17 111.1 12.01 1958 41.10 115.1 11.42 1959 41.20 111.8 11.15 1960 52u34 138.2 13.42 1961 61.19 161.1 15.48 1962 61.15 125.2 15.45 1963 53.03 112.5 13.32 1964 ·)1.60 127.4 13.07 1965 62.11 166.9 15.91 1966 70.60 183.7 15.68 1967 60.14 158.0 14.1G Jan-June 196' 64.19 167.0 14.6

Jan ... June 1968 ,6.97 159.9 12.77

~ 40n 10 oz., Calcutta, Rs. per 100 yards.

~ B. Twill, Calcutta, Rs. per 100, bags. Hessian, 40" 10 oz., New York, cents per yard.

Source: IJMA, Month1l Summa~ ot Jute an4 Gunny Statistics, various issues •

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