Financial and Economic Profitability of Jute in Bangladesh: A Comparative Assessment

Abstract

The study was aimed to analyze the financial and economic profitability of jute and its main alternative crop Aus including an assessment of comparative advantage using Policy Analysis Matrix. Both primary and secondary data were used considering the period from July 2010 through June 2011. It is found that jute production was more profitable financially in the study period than Aus in the selected areas of Bangladesh. Economic profitability showed that the government protective policies affect positively and negatively to the producer incentives in case of jute and Aus crops, respectively. Relative divergences reflect that the jute producer obtained higher price than the world prices and the Aus producer obtained lower price than the world prices. Relative divergences between private and social prices of tradable inputs illustrated that domestic producer bought the imported inputs at less prices than the world price for producing jute and Aus crops. Net policy divergences or net transfer of these crops showed that the productions were more profitable socially than privately. The study revealed that Bangladesh had a comparative advantage for import substitutions for these crops. Hence, government should continue the existing policy support for these crops in a market economy condition.