Jute mills may suspend exports for three months amid supply backlog

Industry has managed to supply only 680.000 bales of the 1.24 mn bales of jute bags that the govt intends to procure this year

Reeling under a supply backlog of 50 per cent, the jute industry has asked mills to stop exports for three months and also suspend supplies to National Agricultural Cooperative Marketing Federation (Nafed) and local vendors.

In the current year, the government has decided to procure 1.24 million bales of jute bags (one bale is 180 kg). Till February-end, the industry has managed to supply 680.000 bales.

“The supply crisis has been engendered by diversion of jute bags to Nafed, food agencies in Tamil Nadu and to local suppliers. The mills are fetching a premium of five to eight per cent through this hijacking of bags meant to cater to government requirement,” an industry source said.

It is illegal to sell jute bags at prices exceeding those fixed by the Office of the Jute Commissioner under the Tariff Commission’s formula, government rules point out.

The government has till now has not initiated any action due to lack of any formal complaint against double pricing.

The double pricing of jute sacking bags is visible in the rates shelled out by two government-controlled agencies -- Food Corporation of India (FCI) and Nafed. FCI procures jute bags at Rs 82,000 per tonne. For the same quality of bags, Nafed shells out Rs 86,000.

Amid the supply backlog, a clutch of jute mills have reduced their sacking capacity, triggering an artificial crunch. The Office of the Jute Commissioner has sent showcause notices to the errant mill owners.

For the current year, the government has cut short orders for jute bags, fearing that the industry may not be able to keep to their supply commitments. The supply conundrum has stoked panic in Punjab, Haryana and Uttar Pradesh, the biggest indenters of jute sacking bags.

The Office of the Jute Commissioner noted that the jute mills have substantial backlog in supply of B-Twill bags to the governments in Uttar Pradesh and Haryana, flagging fears that the procurement operations in these states may suffer adversely with consequent issues. Jute Commissioner Moloy Chandan Chakraborty wrote to all jute mills asking them to accord top priority in clearing the backlog.