Jute Farmers in Bangladesh : a study on institutional influences

Abstract: Jute is an important cash crop in Bangladesh that provides livelihoods for millions of workers. In recent years, jute received growing attention and faced a higher global demand, due to its positive environmental attributes and its ability to replace plastics in many products. Hence, the industry has the possibility to grow. Unfortunately, a strong limitation to the development of the industry is the fact that jute farmers in Bangladesh often cannot support themselves by selling jute. Instead, they face immense economic constraints. To identify challenges that jute farmers face and to identify opportunities for the improvement of jute farmers’ livelihoods, the cultural, governmental, and organisational environment of jute farmers in Bangladesh is studied. The theories used for this thesis are New Institutional Economics, Agency Theory, and Power Distribution. This study further applies the research philosophy of interpretivism while following an inductive approach of qualitative nature. Furthermore, a multiple case study design is used, and semi-structured interviews are conducted. The empirical background of this study is the jute industry in Faridpur, Bangladesh in which the interviewees chosen for this thesis are active in. Findings of this study include cultural challenges, caused by a low level of education, which results in difficult, but firmly held beliefs that limit the modernisation of the jute industry. Further, a form of pride to produce jute can be found, which is identified as a positive cultural influence on the viability of the jute industry. Additional findings suggest a lack of governmental support for farmers, but no active challenges caused by the government. Lastly, organisational challenges occur due to an inefficient and unfair supply chain construct, that leaves farmers as the weakest supply chain actors. Here, powerful traders pose a challenge, as they use their knowledge and power to lower the prices that farmers receive for their jute. A crucial opportunity to improve farmers’ livelihoods is education, to challenge and change cultural norms and to decrease knowledge asymmetry. Furthermore, the government needs to become more active in directly supporting farmers through policies and regulations that are not only published, but also applied. Organisational solutions consist of a supply chain model that enables farmers to sell directly to upstream supply chain actors, e.g., jute mills, instead of jute traders, as well as a farmer cooperative. Both solutions would help farmers receive higher prices for their jute and decrease power asymmetry. Lastly, agricultural innovation is seen as necessary to develop jute farmers’ livelihoods and the jute industry.