Tulika Eco: A business model to revive jute
Small and medium entrepreneurs in the country are gradually taking an interest in exporting jute and jute-based products. Their efforts, along with initiatives taken by the government, may help in reviving the long lost jute industry
For more than a hundred years, jute made up the single largest crop of this region, exported around the world. However, over the last few decades, the rise of synthetic alternatives, higher production cost, and decline in export price have resulted in the extinction of major jute mills in the country.
In 2002, the government shut down Adamjee Jute Mills - the largest jute mill in Bangladesh. The downfall continued into 2020, as the government announced the shutting down of 25 state-owned jute mills due to recurring losses.
And yet, in a world where awareness about sustainable products is growing rapidly, you would have expected jute and jute products to thrive. The government of Bangladesh also appears to have noticed that. In 2017, a project was taken to upgrade production technology of jute mills under a $350 million foreign loan.
In FY 2020-21, jute and jute-based goods fetched $116.14 crore from exports, breaking the record of the previous 12 years. The industry ranks second in the export category and provides direct and indirect employment to around five million people. Although impressive, we are nowhere near exploiting the full potential of jute.
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"There was a time when jute products were limited to grocery bags and home decor items for city dwellers. Now, there are jute jackets, fancy bags, and what not. Almost every house uses jute table mats. Over the years, people's perception of jute has experienced a positive change," said Esrat Jahan Chowdhury, the owner of Tulika Eco Ltd, a local jute good manufacturing company.
Esrat recently won the 'best new product' award under the artisan resources category at the NY NOW Winter Trade Show in New York City for her beautiful jute bags made in Bangladesh.
The Trade Facilitation Office of Canada, SME Foundation, and USAID supported 14 Bangladeshi jute product and handicraft businesses, including Tulika Eco, to attend the trade fair in the US, where more than 900 brands from more than 100 nations displayed their goods. The NY NOW show finalist list included three other Bangladeshi exhibitors.
For Bangladesh to be able to fully realise the potential of jute export, it is ventures like Tulika Eco that need to be encouraged and promoted. Unfortunately, there are a number of loopholes in the ecosystem that hold them back. In a conversation with The Business Standard, Esrat talked about her venture and different prospects of Bangladesh's jute industry.
For Tulika and others like her, the key raw material for their products is jute fabrics. These are made at an industrial level by a few big companies. As the market is dominated by them, the bulk price of these fabrics is not suitable for SMEs (small and medium enterprises). Esrat also mentioned a lack of consistency in the fabric's quality, which in turn affects product quality.
"If we get a re-order of a particular product, it is nearly impossible to replicate it because of the unpredictability in fabric texture. Also, the price of fabrics fluctuates because of the fluctuation in jute's price, making it harder for us to close the deal at the previous price rate," she said.
Esrat believes for businesses that focus on export, the price should be subsidised by the government and a strict policy on pricing should be formulated. Moreover, like the RMG sector, industrial zones should be made for jute where manufacturing services will be easy to avail.
"We need an EPZ (Export Processing Zone) for jute products from where we can get different services at subsidised rates. This will encourage new entrepreneurs to enter the industry," she added.
The beginnings of an entrepreneur
After finishing her master's in political science from Cumilla Victoria Government College, Esrat did an MBA in Finance from Southeast University. She began her professional life as a banker. However, she always dreamt of being an entrepreneur.
"I always felt with the amount of dedication and effort I put into my office work, I would get a far better return if it were my own business," she said.
In 2016, she left her full-time job to pursue her passion of entrepreneurship. Through primary research, she got to know that jute and jute-based products have a good market abroad, and not many brands were working with them at that point. She continued with her research and finally started Tulika in 2017.
Scarce information, arduous paperwork and unseen challenges
The start, by any means, was not easy for Esrat. Back then, information about businesses in the jute sector was very scarce. In fact, it is still scarce.
From getting the trade licence to VAT registration, Esrat did everything on her own. Soon after she was done with the paperwork, she started buying memberships to international e-commerce platforms like Amazon, Alibaba etc.
In fact, her first international order was through Alibaba. "The first few orders were not profitable. In fact, I made a loss. But the good thing was I got to learn about the entire export process first-hand," she said.
Esrat also shared her hardship with managing finance for the business. Initially, she did not receive any advance money from the bank (for export-oriented businesses, international clients need to send some advance money via local banks) as they had little faith in her enterprise. She had to sell her jewellery so she could keep moving with the orders.
In the early days of her business, Esrat made her products at another workshop as she did not have her own set-up. Now, Tulika has an operational unit at the capital's middle Badda, where around 50 female workers are employed.
Tulika is mostly an export-oriented business but the factory has a display corner which offers retail products. Some products are available for online purchase as well.
The enterprise participates in different fairs and exhibitions around the country and overseas. Esrat said she will soon open an outlet in the Netherlands in collaboration with one of her Dutch clients.
Apart from jute items, Esrat's organisation also makes macramé (a type of design made from knotting threads or thick threads) products. Tulika has enlisted a few artisans from remote areas of the country who make these products.
All the jute items are designed by Esrat and made in her factory. She completed a diploma degree in designing from Shanto-Mariam University of Creative Technology to improve her creative side.
During our conversation, she also mentioned there are no modern training facilities available in the jute sector. "The world has evolved, and so has people's taste. But unfortunately, our training has not been upgraded," she said.
Esrat said this lack of adapting to current trends is one of the main reasons why our jute market is lagging behind. "As the world moves towards eco-friendly and sustainable products, jute can be the real change maker. With the potential that our jute products hold, we can say jute is our very own gold mine."
