Bangladesh’s earnings from jute and jute goods slowed in July-May period of the just-out fiscal year as the sanction on Iran and price cuts bite exporters, industry insiders said Sunday.

Exports to Iran, one of major destinations of Bangladeshi raw jute and jute goods, have almost halved during the period as the country has been facing difficulties in clearing import payments in U.S. Dollar since the UN sanction, the Export Promotion Bureau (EPB) data showed.

The country's exports of jute and jute goods amounted to $ 889.45 million during July-May period of 2011-12 fiscal, down from $ 1.0 billion in the corresponding period of a year ago, according to the EPB.

Exporters also attributed sluggish demand for jute to the political turmoil in the Middle East, economic gloom in Europe and fears of global recession.

"Direct and indirect pressure from the U.S. and the EU on Bangladesh for not doing business with Iran is also seen as a reason for the sluggish shipment of jute, the second biggest foreign exchange earner after apparel.

"Export of jute and jute goods to Iran has been increasing gradually till last the fiscal year of 2010-11, but in the current year, export of such products have drastically fallen due to the international pressure," a managing director of a leading Jute mill told the FE preferring anonymity.

He also said what ever goods the local millers have delivered could not yet realize payment as the world leaders have black listed most of the banks with whom local banks would so far collect export payments.

"Our exports are facing headwinds in almost all export destinations. Export earnings in terms of value and volume have declined, which has given rise to stockpiling," marketing director for Bangladesh Jute Mills Corporation (BJMC) Shamsul Haque said.

Growth of export earnings from jute and jute goods fell by over13 percent in fiscal 2011-12 from around 36 percent in the previous year, according to Export Promotion Bureau (EPB) data.

The BJMC official said economic sanctions on Iran and Syria hurt jute exports in those countries, as buyers are unable to pay for a shortage of international currencies.

The earthquake in Turkey and floods in Thailand came as blows to the sector as well, leading to a fall in demand and price cuts, he said.

Buyers are offering $ 100-105 for per hundred jute sacks, which was $ 120 in the previous year. Prices of other jute goods, such as yarn, sacks and bags also fell, he added.

"Demand for carpet and carpet backing cloth has fallen since it is not an essential item, like food," said the BJMC official.

According to EPB data, growth of raw jute exports declined by 26.51 percent in the fiscal year just gone by against 53 percent growth of a year ago.

Growth of export earnings from jute yarn and twine dropped to 7.62 percent from 54 percent, while jute bags and sacks by almost half, EPB data showed.

"Buyers have reduced their purchase volumes to meet short term demand because of uncertainty for jute and jute goods in the international market," said Mahmudul Huq, deputy managing director of Janata Jute Mills Ltd, a leading jute yarn and jute goods exporter.

Industry people said that India consumes most of its production locally as it ensures the compliance of its packaging act.

"If we could ensure implementation of the law, we would not have to sit on stocks of unsold jute goods," said a BJMC high official.

Industry people also said any kind of setback in the sector will have a negative impact on thousands of poor farmers of the country.