Once a major cash crop of the eastern Tarai, and proud symbol of the dawn of industrialisation in the country, jute is now fighting for its life.

Even as jute farmers switch to other crops due to low returns, fancy plastic bags and sacks are flooding the Nepali market.

The government has dropped the jute industry from its priority list even though global demand for ecological packaging has strengthened its export potential.

The golden fibre doesn't look like it has a future in Nepal, say insiders.

Akbar Hussain, a jute farmer of Dhanpalthan Rural Municipality, Morang, complains that they don't get a fair price for their crops.

“There’s also a scarcity of labourers,” said Hussain, who has been growing jute for decades. "Most farmers in my village have switched to other crops because of the hassles."

According to him, the price of jute last year was Rs11,000 per quintal. This year, the price has dropped to Rs9,000 per quintal.

Although the government has banned the use of plastic, demand for jute has not increased.

The Ministry of Forests and Environment slapped a complete ban on plastic bags below 40 microns by publishing a notice in the Nepal Gazette on September 15, 2021. This was not the first time the government had banned plastic.

Jute fibre is obtained from the stalks of the jute plant. After harvesting, the stalks are gathered into bundles and soaked in water for about a month.

The fibres are then separated from the stem in long strands washed in clear, running water and dried in the sun.

After being gathered and packaged, the dried fibres are taken to the mills where they are woven into fabric, ropes and gunny sacks.

According to the Directorate of Agriculture Development in Koshi province, the jute acreage was 40,000 hectares in Morang alone until 20 years ago. Now, it has shrunk to 5,070 hectares.

In Sunsari and Jhapa, jute farms covered 20,000 hectares and 10,000 hectares, respectively. Now the farms occupy 1,300 hectares and 550 hectares, respectively.

Till two decades ago, Nepal used to produce 80,000 tonnes of jute annually. Production now has plunged to 10,000 tonnes, according to the directorate.

Jute expert Mohan Chandra Ghimire said Nepal was once a jute exporter. Now, it has become a net importer. The country imports jute and jute products from India and Bangladesh.

Nepali jute factories have been importing 80 percent of their raw jute from India and Bangladesh and exporting 95 percent of their output to India.

There are a dozen jute mills in the Sunsari Morang Industrial Corridor, but only half of them are functioning.

“Only 20 percent of the raw materials used by these jute mills are produced domestically. The rest are imported,” said Raj Kumar Golchha, president of the Nepal Jute Mills Association.

According to the Trade and Export Promotion Centre, in the last fiscal year, around Rs8 billion worth of jute products were exported to India. The products were made using jute fibres imported from India and Bangladesh.

Government officials say that they are launching schemes to revive the jute industry which is close to collapse.

The Agriculture Knowledge Centre in Morang provided Rs20,000 each to 30 farmers to dig ponds to submerge jute during the fibre-making process.

Till three decades ago, Nepal was a major jute exporter to Europe. The crop was one of the major sources of foreign exchange.

Insiders say the industry started to disintegrate after the government became indifferent towards its growth.

The government gives a 3 percent cash subsidy to exporters of jute goods. But, according to industrialists, the anti-dumping duty India has been imposing since 2017 has hurt exporters of jute products.

India levies an anti-dumping duty of 3-4 percent on rope, 4-5 percent on sacks and 0-2 percent on hessian jute fabric.

India imposed an anti-dumping duties ranging from $6.30 to $351.72 per tonne on jute and jute products from Nepal for five years from January 2017 as the southern neighbour pursued a drastic policy to protect its jute industry.

In January 2023, India extended the anti-dumping duty on imports of certain jute products from Nepal for another five years.

These taxes were applied at the recommendation of the Indian Commerce Ministry's investigation arm, the Directorate General of Trade Remedies.

The directorate, in its probe in September last year, concluded that there was continued dumping of these products from Nepal and Bangladesh, and the imports were likely to enter the Indian market at dumped prices in the event of a cessation of the existing duty, according to Indian newspaper Business Standard.

The directorate had recommended continued imposition of the anti-dumping duty on the imports to remove injury to domestic industry.

The duty is applicable to products like jute yarn/twine, sacking bags and hessian fabric.