COMMITTEE ON COMMODITY PROBLEMS
REPORT OF THE THIRTY-FIRST SESSION OF THE INTERGOVERNMENTAL GROUP ON JUTE, KENAF AND ALLIED FIBRES
Rome, 26-28 November 1997
II. ECONOMIC AND POLICY ISSUES
III. INTERGOVERNMENTAL ACTION ON JUTE, KENAF AND ALLIED FIBRES
IV. OTHER MATTERS
V. APPENDIX A - LIST OF DOCUMENTS
VI. APPENDIX B - STATISTICAL TABLES
1. The Thirty-first Session of the Intergovernmental Group on Jute, Kenaf and Allied Fibres was held from 26-28 November 1997 at FAO Headquarters, Rome. It was attended by delegates from the following members: Bangladesh, Belgium, Brazil, China, Colombia, Costa Rica, Ecuador, Egypt, European Community, Germany, India, Indonesia, Italy, Japan, Kenya, Lithuania, Mali, Mexico, Morocco, Myanmar, Netherlands, Pakistan, Philippines, Portugal, South Africa, Sri Lanka, Sudan, Thailand, Turkey and the United States of America. In addition, observers from the following countries and international organizations attended: Russian Federation, International Trade Centre UNCTAD/WTO, International Jute Organisation and the FAO European Cooperative Research Network on Flax and other Bast Plants. The list of participants, including observers, was circulated as document CCP: JU/97 Inf.2.
2. The Session was opened by Mr H. de Haen, Assistant Director-General, Economic and Social Department, who welcomed delegates on behalf of the Director-General of FAO.
3. The Group elected Mr Ajay Prasad of India as Chairman, Mr J. Schraven of Germany as First Vice-Chairman and Mr A.K.M. Rezaur Rahman of Bangladesh as Second Vice-Chairman.
4. The Group adopted the Agenda CCP: JU 97/1. The list of background documents for the Session is given in Appendix A.
5. The Group evaluated the market situation and outlook for jute, kenaf and allied fibres on the basis of documents CCP: JU 97/2 and CCP: JU 97/CRS1. Delegations provided revisions to estimates of production, mill consumption, trade and stocks for 1996/97 and forecasts for 1997/98. On the basis of this information, the Group concluded that, following the sharp recovery in world production of jute, kenaf and allied fibres in 1996/97, global output was expected to remain at a relatively high level in 1997/98. Prices had fallen significantly since the beginning of the 1997/98 season, and both mill consumption and exports of jute fibre and products were expected to increase. Nevertheless, stocks of fibre in producing countries were forecast to continue to accumulate during the 1997/98 season, offering little prospect of a recovery in prices in the short term. The depressed prices might lead to reduced plantings and lower production in 1998/99. The Group's revised estimates for 1996/97 and forecasts for 1997/98 are given in Appendix B.
6. The Group drew attention to the fact that relatively small changes in import demand or export availabilities could have substantial effects on international prices, and noted that imports into certain countries, such as China and Côte d'Ivoire, had increased substantially in 1996/97. The Secretariat was requested to intensify its monitoring of developments in these and other quickly changing markets.
7. The Group discussed the objectives and value of informal indicative price arrangements for jute and kenaf. Several delegations expressed reservations about the utility of such arrangements. In their view indicative prices did not contribute to stability or growth of the market, and could even give an erroneous impression of supply and demand conditions. The Group agreed that a better evaluation of prospective consumption levels and import requirements was needed to assist producing countries in planning production and export strategies. The Group concluded that such information would be of greater value than the establishment of indicative prices based solely, or largely, on supply considerations. It stressed, however, that this information could be obtained only with the assistance of member countries.
8. The Group, therefore, urged that all members make greater efforts to respond to the Secretariat's requests for statistics on consumption and import requirements which would be supplemented by Secretariat forecasts in order to provide a more complete assessment of market requirements. In view of the high priority attached by the Group to this matter, the Secretariat was requested to follow-up to obtain the necessary information.
9. In the interim, until adequate information was generated, the Group agreed to establish indicative prices for jute fibre for the 1997/98 season as follows:
Bangladesh jute - US $450 + - $30 per metric tonne sight, for BWD grade fibre, f.o.b. Chittagong/Chalna.
10. With regard to Thai kenaf, the Group decided not to establish indicative prices for this fibre, which was no longer being exported from Thailand. However, the establishment of such prices might be reconsidered in the future if the need were to arise.
11. The Group reviewed the longer term prospects for demand and supply of jute, kenaf and allied fibres to 2005 on the basis of document CCP: JU 97/3. The Group considered the document to be a useful basis for further analysis of the long-term prospects for these fibres. However, it felt that projected demand may have been under-estimated in the document, which foresaw further contractions in markets in both developing and developed countries. In particular, there were prospects for a rapid expansion in the demand for fibre for diversified products, such as geotextiles and paper pulp as well as in car components, fine yarns and lightweight packaging. It was also pointed out that the environmental friendliness of jute should enhance the appeal of these products, although price competitiveness remained an essential factor. The Group recommended that these prospects be taken into account, and that information on the projected demand for the various individual products be given when the document is revised. The Group also requested that details of the methodology used be included, and it warned of the dangers of relying too heavily on historical trends. The Group recommended that member countries should provide information to the Secretariat on their perceptions of the future prospects for jute products. The Group considered that longer term market prospects should be reviewed regularly with a view to providing indicators which could be useful to policy makers and market operators.
12. The Group welcomed document CCP: JU 97/4 as a basis for its review of the status of the world jute spinning industry and its prospects. It noted that the growth in exports of yarn from the jute producing countries which had occurred over the past 20 years had been the result of the progressive closure of spinning operations in Europe under the pressure of increasing costs. As spinning in Europe had now virtually ceased, the locational shift of the jute spinning industry to the jute producing countries was a welcome development, particularly in view of several new diversified uses for jute and a consistent demand for jute yarn on a competitive basis. The Group noted the recent development of a range of new fine yarns suitable for use in textile applications when blended with other fibres, and it looked forward to significant expansion in this market in future years.
13. The Group reviewed this item on the basis of document CCP: JU 97/4 together with its supplement, CCP: JU 97/CRS.2 containing a list of research projects on new diversified uses of jute and kenaf and allied fibres. It stressed the value of this information and recommended that the Secretariat establish a system for the regular collection and dissemination of information on these activities, as this would lead to the more effective use of limited research resources and perhaps assist in mobilising additional funding for research. The Group thanked the representative of the Agrotechnological Institute (ATO-DLO) of the Netherlands for his presentation on IJO-sponsored research into the production of various diversified jute products.
14. The FAO information system on jute was discussed on the basis of document CCP: JU 97/6. The Group stressed the value of the information system, and suggested several ways in which its usefulness might be enhanced. The Group requested that separate data on kenaf be made available if possible, as this fibre was becoming an increasingly important crop in a number of countries. Some delegates stressed the value of continuing to collect information from a wide range of sources including trade associations and market operators, and that the questionnaire be reformulated so as to make the data collection as comprehensive as possible. The Group urged that the Secretariat also continue its efforts to develop and use electronic systems for the fast and efficient collection and dissemination of information. It was further recommended that information on events in the jute world be disseminated through the FAO Website.
15. Representatives of the International Jute Organisation and the International Trade Centre, UNCTAD/WTO informed the Group about their activities in the field of jute, kenaf and allied fibres. The Group expressed appreciation for the work undertaken by these bodies. It urged that cooperation between these two organisations and the FAO Secretariat should continue in order to maximise the effectiveness of their activities on jute, while avoiding duplication of efforts.
16. On the basis of document CCP: JU 97/7, the Group considered the consequences of several conclusions of the 61st Session of the CCP, the 113th Session of Council and the 29th Session of Conference which had a bearing on its activities. The Group noted that, following a recommendation by the CCP, FAO's Conference had endorsed a Programme of Work and Budget for 1998-99 which made provision for a joint session of the Intergovernmental Groups on Jute, Kenaf and Allied Fibres and on Hard Fibres. The Group acknowledged the need to achieve efficiencies in the intergovernmental group (IGG) system, and it noted also the benefits that might be gained through joint action regarding problems common to both groups of natural fibres. However, it urged that cost savings should not be pursued to the point that the effectiveness of the Group was impaired, and it emphasised that adequate time at the joint session must be devoted specifically to jute. The Group felt that the joint session might best be held in Rome, to facilitate attendance by as many members as possible. The Group recommended that its Bureau should consult with the Bureau of the IGG on Hard Fibres and with the Secretariat during forthcoming months to consider the organizational means by which the joint session might best be conducted and the substantive items for the agenda. The date and place of the session would, as normal, be decided by the Director-General in consultation with the Chairmen of the two Groups.
17. The Group was informed that the CCP would, at its 62nd Session early in 1999, further consider the role and functioning of the IGGs and that it would have before it recommendations from the joint session of the Intergovernmental Groups on Jute, Kenaf and Allied Fibres and on Hard Fibres on these matters.
18. The Group noted that priority areas of work identified by the CCP at its 61st session included links between trade, environment and sustainable agricultural development as well as the impact of developments in biotechnology on trade. The Group requested that its members provide the Secretariat with prioritised suggestions for research which might be conducted with respect to jute in these or any other areas.
19. The Group noted that an Informal Seminar on New Uses for Jute, Kenaf and Allied Fibres had been held during the Session. The Seminar had provided a useful opportunity for exchanging information between producing and consuming countries on the development of new uses for fibres. The Group warmly thanked the following for their contributions to the Seminar: (i) Mr A. Prasad, National Programme Manager, UNDP-National Jute Development Programme, New Delhi, India, who informed the Group on results of the UNDP project in India on diversifying the uses of jute; (ii) Dr R. Mandal, Senior Officer (Industry), International Jute Organisation (IJO), Dhaka, Bangladesh, who indicated the achievements of the IJO in diversifying the uses of jute, kenaf and allied fibres; (iii) Professor R. Kozlowski, Coordinator, FAO European Cooperative Research Network on Flax and other Bast Plants, Poznan, Poland, who provided information on development of diversified uses for flax and allied bast fibres; and (iv) Dr J. van Dam, Programme Director, Agrotechnological Institute (ATO-DLO), Wageningen, Netherlands who briefed the Group on the status of research at his institute into diversifying the uses of natural fibres. The Group requested the Secretariat to arrange further such informal seminars to coincide with its Sessions in future.
20. The Group agreed that its 32nd Session, which is planned to be held jointly with the 30th Session of the Intergovernmental Group on Hard Fibres, should be held prior to the 62nd Session of the Committee on Commodity Problems, the exact time and place to be determined by the Director-General, in consultation with the Chairmen of the two Groups.
CCP: JU 97/1 Provisional Agenda
CCP: JU 97/2 Jute, kenaf and allied fibres: summary note on developments in 1997/98 and outlook for 1998/99
CCP: JU 97/3 Commodity projections to 2005: jute, kenaf and allied fibres
CCP: JU 97/4 The world jute spinning industry and its prospects
CCP: JU 97/5 Research projects in development of diversified products from jute, kenaf and allied fibres
CCP: JU 97/6 Strengthening of the FAO jute information system
CCP: JU 97/7 Matters relating to recent decisions of the Committee on Commodity Problems
CCP: JU 97/Inf.1 European Community - Declaration of Competence and Voting Rights
CCP: JU 97/Inf.2 List of Delegates and Observers
CCP: JU 97/CRS.1 Provisional worksheet for 1996/97 and 1997/98
CCP: JU 97/CRS.1 Provisional worksheet for 1996/97 and 1997/98 (revised)
CCP: JU 97/CRS.2 Implications of the Uruguay Round for trade in jute and competing products
CCP: JU 97/CRS.3 Research projects in development of diversified products from jute, kenaf and allied fibres
Table 1 - Estimated supplies, domestic requirements, exports and imports in major producing countries, 1996/97
Table 2 - Forecast of supplies, domestic requirements, exports and imports in major producing countries, 1997/98
Table 3 - Estimated imports of jute, kenaf and allied fibres in 1994/95, 1995/96, 1996/97 and forecast for 1997/98
Table 4 - Estimated imports of jute products in 1994, 1995, 1996 and forecast for 1997
1 The delegate of the United States of America stated that her delegation was attending this part of the meeting only as an observer in keeping with the usual United States practice which was based on domestic legal considerations. The delegate of Germany expressed a reservation regarding the usefulness of the informal arrangements.