Jute industry in dock for selling in open market

It's mandatory for govt procuring agencies to pack entire foodgrains and sugar in jute bags

The Jute Commissioner has leveled serious charges and pulled up the jute industry for faltering on commitments by diverting jute bags to the open markets to secure higher prices. The bags were meant for supplying to government procurement agencies to pack food grains in 2012-13.

The industry has been accused of making misleading statements on the decision taken by the Cabinet Committee on Economic Affairs (CCEA).

On November 28, CCEA decided to de-reserve the Jute Packaging Materials Act (JPMA), 1987 and allowed use of plastic bags, replacing jute bags for packing 80% sugar and 10% food grains produced in the country in 2013-14.

As per the Act, it is mandatory for the government procuring agencies to pack the entire food grains and sugar in jute bags.

In a letter to the Union textiles ministry, the Jute commissioner Subrata Gupta held that in 2012-13, the jute mills preferred to sell in the open market and were thus unable to supply to the government indented quantities meant for packing of food grains.

To cope up with the situation, the government was compelled to dilute the reservation order. In 2012-13, the CCEA decided to use 60 pe rcent plastic bags for packing sugar and 10% for packing food grains.

Gupta said there are number of precedents to prove that the jute industry is incapable of supplies. Therefore, the government has decided to use plastic bags.

In Kharif 2012-13, almost 350,000 bales (one bale is 180 kg) and during Rabi 2013-14, 861,000 bales of non-jute materials were used for packing food grains. According to the Jute Commissioner’s office between November 2012 and April 2013, the percentage of month-end jute bag supply backlog ranged from 3-45%.

The jute industry, however, has brushed off the allegations.

"The jute industry has not faltered on its supply commitments. We are capable of supplying as per the demand raised by the government procuring agencies”, said Sanjay Kajaria, managing director, Hastings jute mill.

Raghav Gupta, chairman of Indian Jute Mills' Association (IJMA) could not be reached for comments.

The Central food ministry had overestimated demand and purchased around  700,000 bales of HDPE (high density polyethylene)/ PP (polypropylene) bags in Rabi 2012-13.

Almost 500,000 bales have remained unused, blocking around Rs 200 crore. The Food ministry had now decided to re-use the bags in Rabi 2014-15. On January 15, the government had asked the food ministry to withdraw the decision and fix responsibility on reason for overestimating the demand to allow purchase of plastic bags.

For 2013-14, while the percent of dilution in case of food grains remains the same, the Cabinet has allowed use of 80% plastic bags for packing sugar. A sugar panel headed by the C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council (PMEAC) had already recommended on freeing sugar packaging from the control of the jute industry.