Raw jute prices come down to below MSP due to low capacity utilisation of mills

By: |
May 30, 2020 10:00 AM

Although the jute mills were exempted from lockdown by notifications of the Union home ministry, West Bengal had enforced complete shutdown of jute mills until April 19.

Although the jute mills were exempted from lockdown by notifications of the Union home ministry, West Bengal had enforced complete shutdown of jute mills until April 19.

Prices of the carry-over stock of raw jute have fallen below the minimum support price of `4,225 per quintal with the jute mills being shut down till April 19 for lockdown in the wake of Covid-19. There have been reports of normal sowing this season across all the jute-growing districts but the carry-over of raw jute at the end of the jute crop year has been estimated at 22 lakh bales.

With most jute mills operating at only 50% capacity currently, there are fears that there may be oversupply of raw jute, which may impact in dragging down the prices. This will adversely impact livelihood of the 40-odd lakh jute farmers across the districts of Dinajpur, Nadia, Murshidabad and parts of Malda, Ragahavendra Gupta, chairman of Indian Jute Mills Association (IJMA), said.

Although the jute mills were exempted from lockdown by notifications of the Union home ministry, West Bengal had enforced complete shutdown of jute mills until April 19 and allowed operations with only 20% workforce from April 20 onwards. Only recently, it has allowed operation with 50% workforce, which has also kept the jute mills’ production low.

Although the jute industry is geared up to operate with staggered shift and social distancing and IJMA had also hired PriceWaterhouseCoopers to create standard operating procedures for running jute mills in complete safety under Covid -19 circumstance, the state has been maintaining reservations in regards to operation of jute mills.

The jute mills made preparations of supplying a record 34 lakh bales against kharif marketing season’s and rabi marketing season’s requirement of 39.20 lakh bales during the jute year 2019-20. But the pandemic resulted in loss of 8 lakh bales of production.

The final supply of jute bags under the reserved market for foodgrain packaging has been estimated to be 26.25 lakh bales by the end of June. But there has been no offtake for sugar packaging, which has been in complete violation of notification for mandatory reservation of 20% under the provisions of Jute Packaging Material Act -1987.

Jute industry’s loss has been plastic industry’s gain and the continuous dilution under the provisions of the Jute Packaging Act has taken place during the lockdown. More than 3.5 lakh bales of order for jute have been diverted to plastic bag or polypropylene/ high-density polyethylene (PP/HDPE) industry.

Further dilution may happen as restrictions continued to be imposed on the jute industry. This will hit the sector tremendously pushing some of the jute mills to permanent sickness, a jute mill owner in the condition of anonymity said. According to Sanjay Kajaria, former IJMA chairman, said, the jute sector is a regulated sector so the government needs to take care of the losses, including wage loss of workers, that may happen for the lockdown.

The Union home ministry had directed all the jute mills to pay full wages to workers even if operations were shut for the lockdown. While IJMA sought the Supreme Court’s intervention to quash the home ministry’s order, the SC early this week directed to continue the earlier order that the home ministry won’t take any coercive action against the jute mills until further hearing.

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