Jute millers are struggling as exports show no sign of recovery and demand in the domestic market remains lukewarm amid slack implementation of the mandatory jute packaging act.

Industry operators say falling demand for jute -- once dubbed the golden fibre of Bangladesh -- has forced jute yarn makers to slash production by up to 40 percent, with only two dozen of a total of 77 spinners under the Bangladesh Jute Spinners Association (BJSA) operating at full capacity.

"The health of the sector is dire. We are struggling too much. Only a few mills are solvent now," said BJSA Chairman Tapash Pramanik.

Jute yarn is the main export item within the sector, and shipments of jute yarn and twine have been falling since their peak of around $800 million recorded in 2020-21 fiscal year.

Many foreign buyers have switched to cotton yarn and polypropylene (PP) due to the high prices of jute yarn caused by increases in raw jute prices.

Overall earnings from the natural fibre-based yarn slumped to $492 million at the end of FY24, according to the Export Promotion Bureau (EPB).

Shipments of jute sacks and bags also declined during these years, bringing total receipts to $855 million in FY24 -- a 6 percent year-on-year decrease.

During the July-November period of the current FY25, exports of jute and jute goods slipped 10 percent year-on-year to $341 million.

"The situation of composite mills is not good either," Pramanik said.

"We are gradually losing competitiveness in the global market. We used to export to India, but exports there have declined after the imposition of anti-dumping duty by the Indian authorities."

The sector has not received the same level of policy support as it did in the past, while the cost of production has surged due to increased raw jute prices, according to Pramanik.

"We could have navigated this turbulent time had the mandatory jute packaging act been implemented effectively in the local market," he said.

The government enacted a law in 2010 making jute sacks mandatory for packaging 19 essential products, including rice, wheat, maize, pulses and flour.

This was aimed at stabilising the sector amid fluctuating international demand and promoting the use of biodegradable bags.

However, it took five years for the rice millers to start complying with the law, and many have since switched to plastic bags.

"We are facing competition from plastics in the domestic market," Pramanik said.

An industry insider said most mills have significantly scaled down production to maintain minimal operations because of bank loans.

"We have fixed costs despite the decline in exports. Our current income is barely enough to cover interest payments on bank loans," said Abdul Barik Khan, secretary-general of the Bangladesh Jute Mills Association.

Besides, jute hoarders are driving up raw jute prices, making the situation complicated further.

Industry operators previously blamed a poor jute yield for higher prices.

Bangladesh's jute production fell 18 percent year-on-year to 75.65 lakh bales (one bale is around 182 kilogrammes) in FY25, according to the Department of Agricultural Extension (DAE).

Jute millers and spinners process nearly 80 percent of the natural fibre to produce sacks, bags, yarn and twine, mainly for export markets.

Helal Ahmed, chief operating officer of leading jute exporter Janata-Sadat Jute Mills, said raw jute used for yarn production is selling for around Tk 4,000 per maund.

"However, export prices are declining. Demand for yarn from Turkey and Uzbekistan has decreased, as carpet makers there are exploring alternatives to jute yarn," he said.

"The overall jute industry is not in good shape," Ahmed said.

Helal said the demand for jute bags has increased in the domestic market recently following the government's move to discourage the use of plastic bags in shopping. But the government should come up with a solid plan to restrict the use of plastic bags, enabling local mills to be ready to meet the local demand.

"Many factories that once operated three shifts a day have reduced production to a single shift. We expect a positive outlook after the next harvest in August, as production is expected to increase," he added.