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                     CHINA'S JUTE AND KENAF MARKET: 
                          REVIEW AND PROSPECTS

 INTRODUCTION

China is the world’s largest producer of kenaf and third largest in that of jute and kenaf together. In 1997 and 1998 it emerged as the largest importer of jute but in 1999 its imports fell to an insignificant amount. In view of this, FAO undertook this study to assess the actual need of the country and its implications for the world market.

There have been big changes in the pattern of China's production, sales, imports and exports of jute and kenaf in recent years. Jute and kenaf imports increased rapidly, affecting not only domestic supply and demand of these fibres but also exerting a far-reaching influence on the international jute and kenaf market. A precise analysis of China's jute and kenaf production and consumption and the prediction of its future are of great concern of the Chinese producers and mills. It is also of common concern of the world jute and kenaf trading circles.

This document aims at giving a concise review of China's jute and kenaf production, circulation, consumption, import and export in the past 15 years and, on this basis, exploring the prospect of China's jute and kenaf production, consumption and import and export in the next 10 years.

China's jute and kenaf production since 1985
   1985 was a year of great importance in jute and kenaf production in China. As a result of the tight supply of jute and kenaf in 1984, prices soared, pushing production in 1985 to expand. The area planted to jute and kenaf climbed to 992 000 hectares and output reached 2.05 million tonnes in 1985, increasing 300 percent and 270 percent respectively from 1984. But the domestic jute and kenaf consumption was only 740 000 tonnes in the year and large quantities were stockpiled. China's output of jute and kenaf since then has never exceeded the level of 1985. That year was regarded as a dividing line in the jute and kenaf output in the country. 
    In 1986, the area planted to jute and kenaf in the whole country plummeted to 344 000 hectares because of the level of stocks and their depressing effect on prices. Jute and kenaf output that year came down to 690 000 tonnes, a more normal level. However, many small jute and kenaf textile mills had entered production and some big mills had expanded their output, with the domestic jute and kenaf consumption rising to 860 000 tonnes.

Table 1 - China's jute and kenaf output, 1987 to 1998 

         e : Estimate
         Source : Yearbooks published by China State Statistics Bureau

It is shown in Table 1 that China's jute and kenaf production since 1987 can be divided into two stages. The first stage was from 1987 to 1993, when china's annual planted area of jute and kenaf fluctuated between 270 000 hectares and 300 000 hectares and annual output between 520 000 tonnes and 720 000 tonnes. The planted area and the output were basically stable. In the second stage, from 1994, the planted area of jute and kenaf plummeted to the between 140 000 hectares and 170 000 tonnes and output fell to between 350 000 tonnes and 430 000 tonnes. The main cause for the decline was the fall in demand for gunny bags by domestic grain and other sectors, coupled with falling prices and stockpiles of jute and kenaf. Intense competition led to jute and kenaf textile mills selling their products below costs, and resulted in falling prices and shrinking demand for raw jute and kenaf. The big increase in imports of jute and kenaf in 1997 exacerbated the situation in 1998. Many jute and kenaf growers shifted to other crops for fear of jute and kenaf prices falling further. Coupled with the flood disasters in the year, the planted area of jute and kenaf was greatly reduced. Jute and kenaf output in 1998 was estimated at only 350 000 tonnes.

China's jute and kenaf textile enterprises: policies and structure

In 1985, the Chinese Government abolished its strict controls over jute and kenaf production, purchasing and allocation, by changing the mandatory planning into guidance planning. In 1993, guidance planing was also abolished. Now jute and kenaf production, trading and consumption rely completely on the market mechanism. This period of adjustment was one of some turmoil for the industry. A considerable part of the jute and kenaf textile mills halted operations or operated at below capacity. According to a survey by the Chinese Government in 1989, there were 443 jute and kenaf textile enterprises in China with 19 700 weaving machines with annual capacity of producing 1.5 billion gunny bags. A survey in 1997 showed that there were 349 jute and kenaf textile enterprises in China. They included 105 state-owned ones (30 percent of the total), 221 collectively owned ones (63.1 percent of the total), 10 self-employed ones (nearly 3 percent), three private enterprises (0.9 percent) and 10 joint ventures (nearly 3 percent). Among these jute and kenaf textile mills, there were 302 small ones (86.5 percent of the total), 47 medium-sized ones (13.5 percent). Altogether, these enterprises had 270 000 spindles and 13 400 weaving machines for producing gunny bags (as against 15 500 weaving machines in 1991). Their annual production capacities were one billion gunny bags, but annual domestic sales of gunny bags have been only three to four hundred million in the past few years. Some 100 enterprises remained in normal operation while the rest of them were operating below capacity, with production efficiency at very low level.

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