Table of Contents

I. INTRODUCTION

II. IMPORTANCE OF THE JUTE SECTOR IN THE NATIONAL ECONOMY OF BANGLADESH

III. THE ROLE OF JUTE EXPORT EARNINGS IN NATIONAL FOOD SECURITY

IV. SAMPLE SURVEY OF JUTE FARMERS

V. CONTRIBUTION OF JUTE TO FARM HOUSEHOLD INCOME AND FOOD SECURITY

VI. CONCLUSIONS

I. INTRODUCTION

1. The production and export of agricultural commodities play an important role in generating foreign exchange earnings, domestic savings and employment and in providing a material base for national economic growth. At its Sixty-first Session in February 1997, the Committee on Commodity Problems underlined the importance of export earnings to the food security of developing countries, noting that trade and food security was one of the themes addressed by the World Food Summit.

2. In the Declaration of the World Food Summit, food security is defined as existing "when all people at all times have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preference for an active healthy life". This implies the existence of food availability, accessibility and stability at the global, national, household and individual levels. Through positive effects on economic development and employment, international trade makes it possible for countries to access additional safe and nutritious food and allows food consumption to exceed food production. Generally speaking, export earnings from agricultural commodities can make significant contributions to several aspects of food security in developing countries.

3. The objective of this study is to identify linkages between earnings from production and exports of jute and food security in Bangladesh.

4. In order to supplement information already available, a sample survey was conducted of jute farmers in several major jute growing areas in Bangladesh.

II. IMPORTANCE OF THE JUTE SECTOR IN THE NATIONAL ECONOMY OF BANGLADESH

5. Since 1990, the area devoted to jute production in Bangladesh has varied between 459 000 ha and 588 000 ha. Although the area devoted to jute has been significantly lower in the nineties than in the seventies or eighties, output is not much lower as yields per hectare have increased (Table 1). Jute currently accounts for about 4 percent of the total crop land in the country (Table 2). With improved land development activities, mechanization and irrigation facilities, land which was at one time suitable only for jute can now be redeployed to other crops, increasing farmers' economic choices. However, there are still areas of land in various parts of the country where jute is the only crop which can generally be grown, and where, as a consequence, farmers are more heavily dependant on income from jute production than in other areas.

6. No firm figure is available on the number of households involved in various activities relating to jute, viz. production, manufacturing, making of jute handicrafts and various utility items, transportation, insurance, packaging and handling, etc. However, experts suggest that between one-fourth and one-third of all rural households are directly involved with jute related activities, which may mean that between 4.6 and 6.0 million rural households have at least one member involved in one way or another with jute. Even though jute production is seasonal and employs producers for only a month or two of each year, employment in jute production and associated activities could be in the order of one million on a full time equivalent basis. Most of these households belong to small and marginal farmer categories. In fact, 67 percent of the rural households are landless or considered to be marginal farmers, owning less than 0.4 ha, while a further 20 percent are small farmers owning between 0.4 and 1 ha (Table 3).

7. While jute manufacturing employs considerably fewer people than does its production, it is also a significant contributor to employment in Bangladesh. It accounts for about 130 000 jobs, 10 percent of the total employment in manufacturing industries, and second to the manufacture of ready-made garments.

III. THE ROLE OF JUTE EXPORT EARNINGS IN NATIONAL FOOD SECURITY

8. The jute sector's contribution to export earnings was as high as 95 percent in 1971/72, but it declined to about 60 percent in the early eighties as exports of other items grew and demand for jute contracted in the face of competition from synthetics. It has since contracted further with the growth of exports of ready-made garments and jute fibre plus manufactures now account for only about 10 percent of export earnings, while ready-made garment and knitwear account for over two-thirds. Despite the decline in relative importance, export earnings from jute and jute goods have generally remained between US$400 and US$450 million, much the same order of magnitude as in the eighties (Table 4) and remain larger than the food import bill (Table 5).

IV. SAMPLE SURVEY OF JUTE FARMERS

9. In order to assess the importance of jute production to food security at the farm household level, a sample survey of jute farmers was five major jute growing zones in Bangladesh, viz. Dhaka, Comilla, Mymensingh, Faridpur and Jessore. A structured questionnaire was used to collect information on production of jute and other agricultural crops, and on income and expenditure patterns of a sample of 79 jute growers.

10. The number of respondents, grouped by farm size, is shown in Table 6. The preponderance of small and marginal farmers in the sample is reflective of the whole agricultural sector's farm size pattern. Within the sample, 20 percent of the cultivated land was used for jute production, with up to 30 percent being used for jute on the smallest farms. (Table 7).

V. CONTRIBUTION OF JUTE TO FARM HOUSEHOLD INCOME AND FOOD SECURITY

11. The total average annual household income and its composition (from jute, other crops and other sources) are shown in Table 8. "Other sources" include service in local organizations, small business (including trading in jute), sale of poultry and eggs, daily labour, and money sent by household members working elsewhere.

12. Over the whole sample, jute contributed, on average, 6.5 percent of household income. Had data been collected for a year when jute prices were higher, the contribution of jute to income would have been greater.

13. The sample included farms ranging from 0.21 to 16.61 ha, and growing 0.02 to 2.53 ha of jute. The survey shows that the sale of jute fibre accounted for between 4 and 6 percent of total annual household incomes in medium, small and marginal farm size categories, but as much as 12 percent in the case of larger farmers (Table 8). The variation between individual farms is quite marked. Forty-one of the 79 farms in the survey derived less than 5 percent of their household income from jute, while 15 derived more than 10 percent and a few more than 20 percent (See Fig 1).

14. The size of farm households covered by the survey ranged from 2 to 22 persons, but the input of labour to jute production in 1997 was given in almost every case as either 1 or 2 person months per household.

15. Two conclusions on the relationship between farm size and dependence on the sale of jute emerge from the analysis of these data. Firstly, there is a positive relationship between farm size and the proportion of income which comes from the sale of crops. Non-crop income is more important for smaller farms, while larger farms apparently have less need to seek off-farm sources of income (Fig 2). Secondly, however, there is a negative relationship between farm size and the proportion of crop income derived from jute. Smaller farms devote a higher proportion of their land to jute, and derive a higher proportion of their crop income from jute than do larger farms (Fig 3). The net effect of these two trends is that income from jute constitutes a larger proportion of expenditure for large farms than for small farms (Fig. 4). Smaller farms rely more on income from a variety of off-farm sources, and may be less affected than larger farms by variations in the price of jute.

16. Over the whole survey, expenditure on food is positively related to income from jute (Fig. 5). A regression analysis^{1 shows that for every additional 100 taka derived from the sale of jute, 31 taka are spent on food. Jute sales, however, represent only the equivalent of 17 percent of total food expenditure, while other crops and non-crop sources represent the equivalent of 85 and 165 percent respectively.}

17. Food items accounted for 56 percent of the expenditures of farmers in the smallest category (less than 1.0 ha), falling to 51 percent for the biggest farms (over 5.0 ha), although the raw data shows wide variation between farms. The largest item of food expenditure for all farm size groups was cereals. The composition of household expenditure is shown in Table 9.

18. In addition to income received from the sale of jute fibre, jute growing contributes to income and food security at least in two other ways. Soft leaves of young jute plants are consumed as a green vegetable within the farm households and are sold for this purpose. Also, jute sticks are used as cooking fuel and sold for use as raw material in the manufacture of boards and panels, as substitutes for wood products. Income from these items are not included in the analysis of this document, as adequate information was not available.

19. The timing of the jute harvest is also important, as it takes place at a time (July-September) between two foodgrain harvesting seasons. In this period, food stocks of farmers run low and jute provides them with a much-needed source of income, and its contribution to ensuring regular access to food may therefore be greater than is suggested by the aggregate data.

VI. CONCLUSIONS

20. It may be concluded from the analyses presented in this paper that, despite a major decline in the share of earnings from jute in total income in the past two decades, it remains a small but significant contributor to income and hence to food security at the national level, along with other export items. Production of jute employs roughly one million people (on a full-time equivalent basis), while others are employed in trading, packaging, handling, transportation, etc. In addition, the jute sector accounts for 10 percent of the manufacturing workforce, and contributes a similar proportion of Bangladesh's export earnings.

21. Survey data for 1997 shows that, for most farm households, income from the sale of jute is considerably less significant than income from other crops and from non-crop sources. The analysis shows that higher incomes from jute lead to higher expenditures on food. For a few households, particularly on larger farms, income from jute provides up to 30 percent of total household income. On smaller farms, however, the more limited capacity to generate income from crops leads households to seek a higher proportion of their income from non-farm sources and consequently they are less dependant on income from jute than are larger farms. Because of the timing of the jute harvest, between two rice harvests, earnings from jute play a more important role in food security in certain periods of the year.

22. Farm prices for jute in 1997 averaged only 55 percent of their 1996 levels and clearly depressed farm incomes and contributed to a decline in export earnings for the country. Any recovery in jute prices would enhance the contribution made by this commodity to food security at both the household and the national level. In the longer term, however, jute's relative contribution to the national economy is likely to continue to trend downward.

Table 1. Area and production of jute in Bangladesh

Source: Bangladesh Bank, Economic Trends, April 1998, Vol. XXIII, No. 4, p. 21.

Table 2. Share of Jute in Cropped Area, 1990-95

Source: BBS, GoB, Statistical Pocketbook of Bangladesh 1997, p. 191.

Table 3. Distribution of Rural Households by Ownership of Land, 1995/96

Source: BBS, GoB, Household Expenditure Survey, 1995/96, p. 231

Table 4. Value of exports by commodities (million US$)

Year	Ready-made garments and knitwear	Frozen foods	Jute			Leather and products	Tea	Fertilizer	Naphtha	Others	Total	Share of jute and jute goods (%)
			Jute goods	Raw jute	Total
1983/84 1984/85 1985/86 1986/87 1987/88 1988/89 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 Percentage 1981/82 1991/92 1996/97	31.57 116.20 131.48 298.67 433.92 471.09 609.00 735.63 1 182.60 1 435.50 1 551.16 1 988.40 2 548.10 3 000.70 1.1 59.3 67.9	95.00 86.85 114.70 134.16 139.65 141.38 137.89 141.80 130.53 164.00 210.50 298.90 314.60 321.60 8.4 6.4 7.3	356.17 389.80 295.18 301.54 301.31 279.86 328.05 357.79 201.60 290.00 283.00 319.00 329.70 318.30 46.5 14.7 7.2	117.19 150.81 123.89 104.00 80.53 97.27 124.62 104.21 85.50 74.00 57.00 72.00 90.00 116.00 16.2 4.3 2.6	473.36 540.61 419.07 405.54 381.84 377.13 452.67 462.00 378.80 364.00 340.00 391.00 419.70 434.30 62.70 19.00 9.80	85.26 69.80 60.73 134.82 147.17 136.98 178.89 134.29 144.50 147.90 168.20 202.00 211.70 185.00 10.1 7.2 4.2	68.90 61.02 32.70 29.66 38.80 39.83 39.48 43.21 32.40 41.00 38.00 32.80 33.40 38.30 6.1 1.6 0.9	9.73 4.79 2.57 4.18 24.93 53.37 17.04 36.30 21.40 51.20 51.40 91.00 94.70 85.00 0.0 1.1 1.9	26.00 20.68 13.91 10.24 8.08 11.94 7.92 13.68 8.30 15.00 7.00 4.00 4.10 16.50 4.8 0.4 0.4	32.18 34.05 43.84 57.73 56.61 59.28 81.11 151.09 98.40 146.40 158.80 462.90 256.70 336.60 6.8 4.9 7.6	822 934 819 1 075 1 231 1 291 1 524 1 718 1 994 2 365 2 525 3 463 3 883 4 418 100 100 100	57.60 57.90 51.20 37.70 31.00 29.20 29.70 26.90 19.00 15.40 13.50 11.30 10.80 9.80 62.7 19.0 9.8

Source: Export Promotion Bureau (EPB), Government of Bangladesh; and Economic Trends, April 1998, op. cit. , p. 16

Table 5. Earnings from Exports of Jute and Cost of Food Imports

Source: Economic Trends, April 1998, op. cit., pp. 16-17

Table 6. Distribution of Respondents to Jute Questionnaires by Farm Size

Farm size (hectare)	Farmers
	Number	Percent
Up to 1.0	30	38
1.0 - 2.5	27	34
2.5 - 5.0	13	16
Above 5.0	9	12
All farms	79	100

Source: Sample Survey 1998.

Table 7. Agricultural Land and Land under Jute by Farm Size Category, 1997 (average per household)

Farm size (ha)	Agricultural land	Cultivated land	Land under jute
	(ha)	(ha)	(ha) ( % of cultivated land)
0-1.0	0.69	0.64	0.19	30
1.0 - 2.5	1.58	1.39	0.30	22
2.5 - 5.0	3.17	2.85	0.43	15
Above 5.0	9.75	8.20	1.65	20
All farms	2.43	2.12	0.44	20

Source: Sample survey, 1998

Table 8. Annual Household Income of Selected Jute Farms, 1997

Farm size (ha)	Total household income	Household income from jute		Household income from all crops other than jute		Household income from other sources
	(Taka)	(Taka)	(%)	(Taka)	(%)	(Taka)	(%)
Up to 1.0	48 241	2 752	6	10 857	23	34 632	71
1.0 - 2.5	84 393	4 040	5	34 300	41	46 053	54
2.5 - 5.0	103 327	3 956	4	28 175	27	71 196	69
Above 5.0	159 806	19 916	12	84 539	53	55 351	35
All farms	82 371	5 346	6	26 271	32	50 755	62

Source: Sample Survey 1998.

Table 9. Composition of Household Expenditure in Selected Jute Farms, 1997

Item
Farm size (ha)	Up to 1.0	1.0 - 2.5	2.5 - 5.0	5.0 +	All farms
	(taka)
Expenditure on food	21 936	31 459	33 389	54 677	30 805
	(percent)
Food as percent of total expenditure	56.3	54.9	52.1	51.3	54.6
of which
Cereals	48.5	46.7	45.7	41.8	43.6
Meat and poultry	4.7	5.6	6.5	6.8	6.3
Fruits and vegetables	10.9	11.0	10.7	9.7	10.7
Oils and others	35.9	36.7	37.1	41.7	40.0

Source: Sample Survey 1998

1

y = 20 337 + 0.307x₁ + 0.108x₂ + 731x₃

(t=0.08) (t=2.91) (t=3.93) (t=3.02)

where y = expenditure on food, taka; x₁ = income from jute crop, taka; x₂ = income from other crops, taka;

x₃ = number of people in household.

r² = 0.53; F = 27.7