Crisis in jute sector, 6 Bengal mills shut

At least six jute mills have shut operations in West Bengal in the last few months. About two weeks ago, Hari Kusum Maheshwari, CEO of Northbrook Jute Mill, was beaten to death by agitating workers. The management wanted to reduce the working hours by either a five-hour day or three-day week. However, the owners wanted to run the mill at least five days a week. Following the incident, in less than a week, about six jute mills closed or suspended their operations.

They are: Bevelry, Hanuman, Ackland, Victoria, New Central and Northbrook. These mills together used to produce 400 tonnes of jute bags per day. About 50 mills, which are operating now, are working with reduced capacity. Earlier, these mills used to produce about 6,000 tonnes per day but now it is only 4,000 per day.

According to a January 2013 report by the National Skill Development Corporation, the jute sector is the second highest employment generating industry in West Bengal, providing jobs to nearly 214,714 people. Between November and April this year, eight jute mills suspended their operations, but later opened after political intervention. The reason behind the present crisis in the jute sector is the poor demand for jute bags. This has prompted mills to go for massive production cut.

The problems started in 2012-13, when the then UPA government tweaked JPMA (Jute Packaging Materials Act). Under the Act, foodgrain and sugar packaging should be done only in jute bags. What further aggravated the situation was the government's inflated projection of foodgrain production in 2013-14, according to Raghav Gupta, chairman, IJMA.

Last year, the government decided to purchase seven lakh bales of plastic bags instead of jute bags. However, the government used only five lakh bales of plastic bags. The rest it wanted to use this year. With enough plastic bags, orders for jute companies dwindled, upsetting the calculations of mills.