The jute industry is a historically and culturally important industry in Bangladesh dating back to during the growth of the East India Company in the Indian subcontinent. Despite once being one of the country's biggest industries and major export items, the jute industry has declined since the 1970s. Exports have fallen as other countries grow jute independently, decreasing the demand for jute to be exported, and other products like plastics and hemp find more widespread use. As of 2018, Bangladesh produces 33 percent of the total worldwide production of jute.
History
Pre-colonial and colonial eras (before 1971)
Prior to the mid-nineteenth century, jute produced in Bengal was made into rope and clothing using local hand-looms. During the Napoleonic Wars (1803–1815), British supply of Russian flax ran short, and British mills considered jute as a potential alternative. However, manufacturing jute fabric in existing British industrial mills proved difficult, as jute was too coarse for the machines. The Balfour and Melville firms developed a process to weaken the fabric using water and whale fat. In 1838, Dundee mills received an order to manufacture sacks for sugar plantations in Dutch-controlled Java, so the mills produced jute burlap sacks using the Balfour and Melville methods. This generated demand and promoted Bengal-produced jute. Demand further increased following the Crimean War (1853–1856). In 1855, George Auckland, along with Bengali partner Shyamsunder Sen, established the first jute mill at Rishra, along the banks of the Hooghly River.
The Union blockade during the American Civil War restricted the supply of cotton from the Confederate States of America and made it necessary for British mills to find an alternative input. Jute was a good alternative, as it was relatively cheaper and could be sourced from a British colony. In 1873, the British Raj formed a commission led by H.C. Kerr to investigate the jute industry and jute cultivation in Bangladesh. They published a "Report on the Cultivation of, and Trade in, Jute in Bengal" in 1877. This report suggested that large-scale jute cultivation in the Bengal region could have begun in the 1840s.
In the later half of the 19th century, jute mills were opened around Kolkata, where worker numbers rapidly grew. By 1882, there were 18 mills, and by 1901, there were 51, with over ten thousand workers employed. The majority of the jute manufactured in the mills was exported to Australia, New Zealand, and the United States. The jute industry had become the second largest industry in British India after the cotton industry, and Kolkata became the centre of the jute trade. The majority of the factories were located outside Kolkata and were owned by foreigners.
In the 1920s, jute prices rose dramatically, leading to increased production. Jute prices fell in the 1930s despite the Indian Jute Mills Association attempting to slow the price decline by reducing work hours. The British Raj formed the Bengal Jute Inquiry Committee to create reports on the state of the jute industry in Bangladesh during the Great Depression. The Committee published two reports: one in 1934, and another in 1939. The reports studied the cycle of lower production and higher prices one year and higher production and lower prices the next. It was recommended in 1940 that the government restrict the production of jute.
During World War II, jute production increased, and by the end of the war, there were 111 jute mills in the region. Jute production took place in East Bengal, while all 108 jute mills were located in West Bengal. After the Partition of India, where West Bengal went to India and East Bengal to Pakistan, jute production faced difficulties: East Bengal was left with no jute mills available. From 1947 to 1948, there was free trade between India and Pakistan, until India declared Pakistan a foreign country and imposed border control. Pakistan then began to develop its own jute mills in East Bengal. India and Pakistan attempted to continue the jute trade between East and West Bengal, despite both attempting to become self-sufficient in the production and processing of jute. India focused on domestic cultivation, while Pakistan focused on processing by encouraging domestic entrepreneurs to establish jute mills in East Bengal.