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The price cap of ₹6,500 a quintal fixed by the Jute Commissioner is not only causing the closure of jute mills across the country but has also led to more than 50 per cent of the demand for foodgrain packaging during the ongoing Rabi Marketing Season (RMS) 2022-23 being met through polypropylene bags.
According to senior officials in the jute industry, as many as 15 jute mills have shut down in West Bengal alone, which accounts for nearly 80 per cent of the jute acreage and 83 per cent of the country’s total production. The plight is similar in some of the other jute growing areas including Bihar, Assam and Andhra Pradesh. The unavailability of raw material at the ceiling fixed and the closure of mills has affected supply of new jute bags.
According to a notification from the Department of Food and Public Distribution dated March 7, against the total estimated requirement of around 23 lakh bales, the Indian Jute Mills Association (IJMA) has committed to supply only 10 lakh bales in rabi marketing season 2022-23 during January-May 2022.
“Therefore state governments and FCI are requested to consider alternative sources of packaging material and send their proposal to this Department at the earliest,” the notification said.
The remaining 13 lakh bales of the requirement is likely to be met through man-made polypropylene, a senior industry official told BusinessLine. The jute industry had supplied close to 12 lakh bales of packaging material for foodgrains during the previous season while the remaining 8 lakh bales was met through plastics.
“Everywhere mills are closing down as they are incurring a huge loss as market prices are ruling around ₹7,200 a quintal and we have been asked to sell at around ₹6,500 a quintal due to the price ceiling,” a senior official at a jute mill said on conditions of anonymity.
Artificial curtailment
The Calcutta High Court had recently directed the Jute Commissioner to take necessary steps to ensure that raw jute is available to mills at ₹6,500 a quintal and also act against those selling it at a higher rate.
The Jute Commissioner, had, in a notification dated September 30, 2021, fixed the price of jute at ₹6,500 a quintal for 2021-22 till June 30, 2022.
However, mills have not been able to procure at these rates as market prices are ruling far higher at around ₹7,200-7,300 despite an estimated higher production of raw jute this year.
West Bengal is estimated to produce close to 85-90 lakh bales of raw jute in 2021-22, against 55-58 lakh bales in 2020-21. The higher production is on the back of favourable weather conditions and increase in sowing area due to the highly remunerative prices the golden fibre fetched last year.
“There is no carryover stock from last year due to lower crop so the market prices are ruling much higher. This kind of artificial curtailment (of prices) may not work well for the industry at a time when the demand from food grain sector is good,” said Raghav Gupta, Chairman, IJMA.
When contacted, Moloy Chandan Chakrabortty, Jute Commissioner, refused to comment since the matter is sub judice.
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