The extension of mandatory jute packaging norms, which requires all foodgrains and 20 per cent of sugar to be compulsorily packed in jute bags, is likely to augur well for the industry, particularly in a year when production of raw jute is higher. The government on Wednesday approved the extension of mandatory packaging norms for Jute Year 2022-23 (July 1, 2022 to June 30, 2023) providing for 100 per cent reservation for foodgrains and 20 per cent reservation for sugar to be compulsorily packed in jute bags.

According to industry insiders, while the exact details are still awaited, the extension is likely to help ensure good demand and stabilise prices. The total jute market is estimated to be close to ₹10,000-12,000 crore and government purchases for sacking or packaging food grains accounts for nearly ₹7,000-8,000 crore.    

“We have not yet received official communication or seen the notification. But we have heard about the extension and it is a welcome move. There is ample raw jute in the system so no ad-hoc dilution will be required. Had there been dilution then mills would have had to cut back on production (of jute bags) leading to a price drop. This move (extension in jute packaging norms) will help keep prices stable,” Raghav Gupta, Chairman of Indian Jute Mills Association told businessline.

Higher production

It is to be noted that raw jute production has been robust this year (2022-23) and this has helped bring down prices which is currently ruling at around ₹5,800-6,000 a quintal as against ₹6,800-7,000 a quintal the same period last year.

Production of raw jute is estimated to be close to 95 lakh bales in 2022-23, up by around six-to-seven per cent as compared to 90 lakh bales in 2021-22. The carryover stock is estimated to be at 19 lakh bales against around five lakh bales last year. Hence, the raw jute’s total availability is estimated to be close to 114 lakh bales, as against 95 lakh bales last year.

The easy availability of the fibre at the current prices has enabled all mills to run their operations smoothly and meet the demand for packaging and other industries. This was in stark comparison to the situation over the past two years when the poor availability of fibre had impacted operations at mills, with at least five-to-ten mills remaining closed at any point in time. 

The country’s jute cultivation is primarily concentrated in three States — West Bengal, Bihar and Assam. Bengal accounts for nearly 80 per cent of the area under jute and 83 per cent of its production, followed by Assam with a production share of nearly 8 per cent, with Bihar making up the rest.

Over the last two years, the highly remunerative prices of raw jute encouraged farmers to go in for higher sowing covering close to 8 lakh hectares this year. “The crop is good and supply commitment is also good so we should be able to supply whatever the government wants,” said Sanjay Kajaria, a jute mill owner in West Bengal.