Raw jute worth Rs 4,000 crore locked up in secondary markets

Cash crunch triggered by scrapping of high-value currency notes has piled up woes for the ailing jute industry

An acute cash crunch triggered by the scrapping of high-value currency notes has accentuated the woes of the ailing jute sector. Raw jute supplies to the market are tapering with only 40-45 per cent of the stock reaching for trade. Concerns over the supply of the balance stock are mounting as there is paucity of cash to pay off the farmers, sellers and stockists in the secondary and upcountry markets where raw jute has accumulated. 

In value terms, Rs 4,000 crore of raw jute is held up in the rural and secondary markets for want of the required payment arrangement.

“Disposal of stock of raw jute is almost at halt for non-payment of value either in terms of cash or through bank for the past three weeks. The Jute Corporation of India is unable to continue the purchase of raw jute for the past few weeks in the absence of the facility for payment to the farmers, transporters and labourers,” said a jute mill owner, who did not want to be identified.

Despite a bumper crop size of nine million bales (one bale is 180 kg), farmers are in distress as adequate action has not been initiated for disposal of raw jute stock. Three government organisations namely the Jute Commissioner’s Office, National Jute Board (NJB) and Jute Corporation of India (JCI) are functioning to control the jute sector right from the producer (farmer) level to end user (jute goods manufacturing) level.

Raghavendra Gupta, chairman of Indian Jute Mills Association, was not immediately available for comments. Raw jute has traditionally been a cash crop. Fragmented land holders in the jute sector make their ends meet and arrange cultivation of contemporary crops, making utilisation of their return from this cash crop. 

Since the start of the demonetisation process, the availability of raw jute in the market is almost at halt since the farmers/sellers are not getting their payments against stock either in cash or through bank.

About four million farmer families, 370,000 people in the industrial/tertiary sector and hundreds of thousands of marginal farmers/traders working in 700 jute markets in India are thriving on the production and business of this eco-friendly and bio-degradable fibre. Jute is one of the main agricultural cash crops of the eastern and northeastern part of India. 

Earlier, the jute sector had suggested that JCI needs to take up commercial procurement of raw jute on a massive scale. To mitigate the suffering of the jute growers, the industry has suggested awareness camps may be started at the rural jute growing sector for training up the farmers to be accustomed to the new system of payment and bank operations through JCI and NJB.

Moreover, a greater number of bank units may be opened at the village level facilitating the farmers to avail bank operations at their doorstep suitably.