Jute output set to dip as demand takes a plunge

The jute industry, concentrated in West Bengal, is facing a number of problems, ranging from low demand and low production to the forthcoming termination of an agreement between key players in the industry.

Raw jute production in 2012-13 is pegged at 9.2 million bales, much below last year's production of 9.9 million bales. However, in spite of the low production, prices are likely to remain subdued, owing to high carry-over stock and low demand.

“At present, the carry-over stock in jute mills is close to four million bales, which, along with the current year’s production of 9.2 million bales, would be sufficient to meet the whole year’s demand,” said Manish Poddar, chairman, Indian Jute Mills' Association.

Currently, raw jute prices (TD5 variety) are hovering at about Rs 2,500 a quintal, against Rs 2,300 a quintal at the end of November. The prices have been more or less stable due to the low demand from sugar mills, say mill owners.

This year, for the first time, the government had diluted packaging norms under the mandatory Jute Packaging Materials Act (JPMA) of 1987.

The Act mandated sugar mills to use only jute bags for packing sugar. However, with jute mills often failing to meet the demand from sugar mills on time, and the availability of cheaper substitutes of packaging material in the plastics industry, the packaging norms were diluted in favour of sugar mills.

“We are getting absolutely no orders from sugar mills. Our efforts are on to offset the losses by increasing the share of exports and supplying jute bags for food grain packaging,” said Poddar.

The government had increased the minimum support price (MSP) of raw jute of the TD-5 grade from Rs 1,675 a quintal to Rs 2,200 a quintal for the 2012-2013 season, an increase of about 31.34 per cent over last year’s MSP.

New tripartite agreement
Even as jute mills are struggling to generate demand, the termination of the tripartite agreement, signed between the government of West Bengal and mill owners and workers in February, poses a threat of another stalemate in the industry.

Representatives of about 20 jute mill workers’ associations recently met in Kolkata to deliberate on a fresh charter of demand. The next meeting, scheduled for January, is expected to spell the new demands of the workers.

The demands may include minimum wages of Rs 10,000 a month and reinforcement of the JPMA Act, said Citu sources.