Market price

Jute mills reduced their production due to a mismatch between the market price and the imposed ceiling price

Even though raw jute production is estimated to increase by nearly 55% this year, jute mills are reducing their production due to the mismatch between market prices for raw jute and the ceiling price imposed on it.

The Office of the Jute Commissioner had, in September this year, imposed a ceiling price of ₹6,500 per quintal on the raw jute trade to ensure supply of raw material to mills at a fair price. The price of B twill bags is also based on this ceiling price as market prices currently hover around ₹7,100-7,200 per quintal. This made the production of jute bags impossible and resulted in a huge loss for the factories.

According to Indian Jute Mills’ Association (IJMA) Chairman Raghav Gupta, raw jute production in the state is estimated at nearly 85-90 lakh bales in 2021-22, up from 55-58 lakh bales in 2020- 21. The increase in production is due to favorable weather conditions and an increase in the area planted due to the very lucrative prices that golden fiber obtained last year. Last year’s carryover stock is close to three lakh bales.

Read also :

“The prospect for this (new) crop is good but then we have a small carryover from last season, so the full availability of raw jute to the industry in the 2021-22 season is not in the picture. a very comfortable position,” Gupta said.
Activity area .

Prices had reached ₹9,000 per quintal towards the end of the last crop year (i.e. June this year). However, when the new crop started to arrive, prices started to fall and reached around ₹5,500 per quintal. Farmers were reluctant to sell at these prices and therefore kept the produce. This drove up the prices.

“When the jute commissioner saw prices rising on September 30, he placed an order and capped it at ₹6,500 per cwt. The JC office sets the price of B-twill bags based on this price, regardless of the price at which it is traded in the market. This has resulted in a loss situation for the whole industry and as a result they are cutting production,” he said.

It should be noted that the Agricultural Costs and Prices Commission (CACP) in its “Jute Price Policy: 2021-22 season” recommended a raw jute MSP (TDN3, equivalent of DT5) for the 2021-22 season for be set at ₹4,500 per quintal. This is a 6.5% increase from the MSP of ₹4,225 per cwt for the last season.

Dilution

The jute sector is also likely to suffer due to the dilution of nearly 4.9 lakh bales of orders for jute bags in favor of plastic materials for packaging food grains in November-December of the season. In progress. This was done because the millers were unable to supply this amount of packing material.

The plan for January-May 2022 is still not available. The monthly production is close to 2.25 lakh bales against the rabi requirement of almost 3 lakh bales.

Read also :

The government had recently approved reservation standards for the mandatory use of hessian sacks in packaging for the 2021-22 hessian year. The standards stipulate that 100 percent food grains and 20 percent sugar must be packed in jute bags.

However, dilution has been recommended by the Standing Advisory Committee on Packaging, as the industry struggles to increase production. According to Manish Poddar, former president of IJMA, the industry is likely to face tough times and may struggle to survive.