Following the Punjab government’s refusal to place orders for gunny bags for the rabi wheat procurement drive citing a financial crunch, the Centre has given 1.5 lakh bales of the bags to the state from leftover stock from the kharif paddy procurement drive.
However, Punjab needs to place orders for gunny bags of another 2 lakh bales within 10 days to get jute bags prior to the commencement of the wheat procurement drive for 2015-16 from April 1.
Sources told FE the Food Corporation of India (FCI) has asked the Punjab government to take loan from banks to buy jute bags and the interest cost incurred would be borne by the government.
“Punjab contributes more than 40% of wheat procured by government agencies in key producing states. Any further delay in placing orders for the bags would delay the procurement drive,” a senior FCI official said.
For procuring jute bags, requisite orders are usually placed with the Directorate General of Supplies and Disposals (DGS&D), a body under the commerce ministry.
As most jute gunny bags are sourced from West Bengal, the order has to be placed in advance to get supplies on time. Punjab is the largest purchaser of jute bags in each rabi and kharif season.
FE had earlier reported that the state had asked FCI to buy jute bags for it or else asked for advance payment of Rs 1,500 crore for the bags.
Official sources said that in November and December 2014, the Punjab government did not place orders for jute bags despite projected requirement of 50,000 and 1.5 lakh bales, respectively. “For the time being we have managed to supply gunny bags to Punjab, but the state government must place orders by February 15 to get supply by April,” an official said.
Punjab needs more than 3.5 lakh bales of gunny bags for carrying out wheat procurement operations for the next rabi marketing season.
The state contributed 11.6 million tonne of wheat to the central pool in the 2014 -15 season out of the government’s nationwide purchase of 28.02 million tonne from farmers.
Under the Jute Packaging Act, 1987, the use of jute bags is mandatory for packing foodgrains and other material beyond 25 kg a pack. FCI and state government agencies procure the bags through DGS&D after assessing the requirement before each marketing season. Indents are thus issued and DGS&D conveys the requirement to the jute commissioner, who places orders with jute mills.