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China's jute and kenaf textile enterprises: production

Gunny bags account for about 90 percent of the total production of Chinese jute and kenaf textile mills. The variety of their products is very simple. Refined jute and kenaf cloth account for only five percent of the total jute and kenaf products and only a very small amount of jute and kenaf yarn is produced. Therefore, sales of gunny bags are decisive in determining the level of business of Chinese jute and kenaf textile mills. The total numbers of Chinese jute and kenaf textile mills and their level of production expanded rapidly following China’ s reform and opening to the outside in early eighties. China’ s jute and kenaf textile industry reached a peak in 1988 when the output of gunny bags rose to 931 million and the annual production capacity climbed to 1.3 to 1.5 billion. But the market demand, including export, was only 700 to 800 million. 

The oversupply of gunny bags became serious since 1989 as a result of the excessive expansion of jute and kenaf textile mills. Moreover, the low market price of jute and kenaf as compared with other crops dampened farmers’ enthusiasm for growing jute and kenaf. Many farmers shifted to other crops with total jute and kenaf output going down. While large numbers of gunny bags stockpiled, raw jute and kenaf became short of supply and its market price rose rapidly but its quality deteriorated. Market prices of gunny bags declined below their cost of production. Many jute and kenaf textile mills were in debt and some had to stop operation. During the years from 1989 to 1998, the output of gunny bags dropped year by year (see Table 2) except for a short period of a few months in a year. The whole jute and kenaf textile industry was in chaos and losing money as a result of surplus production capacity. Due to the competition between mills, about 50 percent had to restrict their output, or halt production or shift to other industries. Some went bankrupt.

China’ s jute and kenaf textile industry now shows the following features: Firstly, the supply and demand of jute and kenaf products is becoming balanced after market adjustment. The industry reached its peak production capacity in the eighties of 1.5 billion gunny bags a year, while actual annual output was 900 million. The actual output of gunny bags dropped to 216 million in 1996, 280 million in 1997 and 320 million in 1998. The present market demand for gunny bags stands at 300 million and actual output is in keeping with this amount.

               e : Estimate
                   Source : Yearbooks published by China Statistics Bureau

Secondly, the distribution of China’ s jute and kenaf textile mills has been improved as jute and kenaf textile mills in the big cities in the coastal areas have moved to the small and medium-sized cities and towns in the interior. More jute and kenaf textile mills have moved from non-jute and kenaf-growing areas to jute and kenaf-growing areas and many jute and kenaf mills are engaged in diversified business instead of producing only gunny bags. At present jute and kenaf is mainly grown in the provinces of Henan, Anhui, Hubei and Shandong, and the production and sales of gunny bags are mainly concentrated in the provinces of Jilin, Liaoning and Heilongjiang and Inner Mongolia region. Gunny bags are mainly used for grain storage and for transport and packing export goods.

China’ s imports and exports of jute and kenaf

(a) Fibre

During the past two decades and more, China’ s output of jute and kenaf ranked third in the world, with India and Bangladesh producing more. In normal years, jute and kenaf produced in China has been mainly for supply to domestic mills with a small part for export. Although China has imported some jute and kenaf, it has generally been a net exporter with exports exceeding imports.

According to Customs Statistics (see Table 3), during the 10 years from 1985 to 1994 the cumulative quantity of jute and kenaf imported was less than 20 000 tonnes while exports approached 300 000 tonnes. China’ s level of exports was second only to Bangladesh. After 1995, however, the situation became reversed with jute and kenaf imports surpassing exports. In 1996, China exported 3 100 tonnes of jute and kenaf, while importing 21 000 tonnes. In 1997, exports were 899 tonnes and imports rose to 165,800 tonnes thereby accounting for about half of China’ s domestic demand for jute and kenaf and nearly half of the world’s trade volume in that year. This increased level of imports not only affected domestic jute and kenaf production but also had a major impact on world trade in jute and kenaf, boosting the international price. The increased level of imports of jute and kenaf in 1997 was due to the following factors:

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