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Bangladesh is one of the world's largest producers of the vegetable fiber Jute, which is used to create a wide range of products including carpets and car interiors. Bangladesh's billion-dollar jute trade, which about 40 million people in the country rely on to make a living, has suffered major losses due to Western sanctions on Iran, the industry's biggest customer, and is also losing business with Egypt, Syria and Libya, Al Jazeera's Nicolas Haque reported 31 July 2012.

Bangladesh is one of the world’s leading producers and exporters of jute and jute products. Jute is long, soft shiny vegetable fiber that can be spun into coarse strong threads. Jute sacks are called gunny bags in some European countries. The fabric made from jute is popularly known as burlap in North America. Bangladesh used to enjoy almost a monopoly in Jute its share in the export market was 80% in 1947-48, but in 1975-76 it fell to only 25%. This fall in market share was due to the fact that many other countries had started growing jute and allied fibers.

Jute fiber is obtained from two varieties of plants which appear to differ only in the shape of the fruit or seed vessel. Thus, the fruit of the variety Corchorus Capsularis is enclosed in a capsule of approximately circular section, whereas the fruit of the variety Corchorus Olitorius is contained in a pod. Both belong to the order Tiliacea, and are annuals cultivated mostly in Bengal and Assam.

The main fibers used for ordinary textile purposes are cotton, flax, jute, silk, hemp and wool; in this group jute has been considered in general as being of the least value not only in regard to price but also in regard to utility. The fiber was so unlike any of the existing staples that those Europeans interested in textiles were not anxious to experiment with it, but ultimately they were persuaded to do so by the British East India Company in the middle of the 19th Century. It had been used in India for centuries in the making of cord, twine and coarse fabrics, because the fiber was indigenous to that country. And since all the manufacturing methods there, for a considerable time were manual ones, the industry — if such it could be called — moved along slowly.

It was only natural that the longer, but otherwise apparently similar and coarser, jute fibre should be submitted to the machinery in vogue for the preparation and spinning of flax and hemp. The subsequent rapid growth of the industry, and the demand for newer types of cloth, were perhaps due more to this experiment than to any other circumstance. About the year 1838, representatives of the Dutch Government placed comparatively large orders with the manufacturers for jute bags to be used for carrying the crop of coffee beans from their West Indian possessions.

By the year or season 1850-51, the British imports of jute fibre had increased to over 28,000 tons, and they reached 46,000 tons in the season 1860-61. For several years before the Great War, the quantity of raw jute fiber brought to British ports amounted to 200,000 tons. During the same period preceding the War, nearly 1,000,000 tons were exported to various countries, while the Indian annual consumption—due jointly to the home industry and the mills in the vicinity of Calcutta — reached the same huge total of one million tons.

A traditional and well developed value chain; with over 25% of the population involved in jute, there are millions of Bangladeshis involved with the production and post-harvest handling of jute. Hundreds of established firms transform the raw material into a range of diversified jute products such as yarn, bags, sacks and handicrafts. Tens of thousands of people are engaged in this type of off-farm employment with the majority women (60 to 70%).

Some of the best quality jute in Bangladesh comes from the Faridpur region, just 90 minutes from Jessore. This reputation is reflected in the maturity and dynamism of the value chain in this region, although the end markets were mainly found in Dhaka or overseas. And 70% of Bangladesh’s current cut flower production currently comes from Jessore making this area a very active cluster in the country.

Jute is a major agricultural industry in Bangladesh with an estimated 1.8 million metric tons in production and US $1.1 billion in exports in 2010–2011 [up from 913,000 tons and US $0.417 billion in 2008-9]. At a national level, jute is a major contributor to Bangladesh’s GDP and serves as a cash crop to millions of farmers. Jute was long Bangladesh's major foreign exchange earner, and although other products have become important, in 1987 jute still accounted for more than 50 percent of export revenue, with manufactures accouting for an increasing portion of the total (as compared with raw jute). Since independence, Bangladesh's largest customer for jute products was the United States; the bulk of sales has been divided fairly evenly between burlap and carpet backing.

But, consistent with the global pattern, the United States market eroded fairly steadily over the years. Sales to the United States reached a low of US$81.8 million in 1986 but increased again to US$104.5 million in 1987, when both prices and volume rose. The market for jute sacking was assisted by the fact that some recipient countries of American food aid specified burlap for their United States imports because they had a secondary market for the bags.

The value chain typically begins with input suppliers (seed and other), who supply farmers who come in a range of sizes. These farmers typically sell to a trader (or series of traders) who act as middlemen for either the raw jute exporters or processors. From here, the product flows diverge, with some raw jute leaving the country directly while the balance goes to various processors who typically export it as yarn (a major export), or a huge range of jute diversified goods. Generally speaking, sellers of jute or jute products have the opportunity to “shop around” and receive the best price possible for their product based on prevailing market conditions and the quality of their product.

A conglomerate of jute purchasing and sale organizations, some nationalized and some vested property were amalgamated to form the Bangladesh Jute Corporation (BJC), the central corporation to handle jute marketing. Under the Bangladesh Jute Corporation Ordinance, 1985 (XXX of 1985), erstwhile entities like Bangladesh Jute Marketing Corporation, Bangladesh Jute Trading Corporation, Bangladesh Jute Export Corporation, APC (Ralley) and Special Property (Jute) were incorporated into this giant nationalized corporation. The major objective was to stabilize jute prices by forcing floor prices, and regulate both external and internal jute trade.

This effort ended in a dismal failure with accumulated losses of over 1250 crores taka to the Government. by 1992 the Corporation was practically insolvent with little marketing activities. With a loss of about 912 crore takas in the previous five years only, the future of the Corporation was cloudy to say the least. They asked further funds from the Govt with scant chances of receiving them, and the Bangladesh Jute Corporation (Repeal) Act of 1993 dissolved the Corporation.

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