Robust demand for jute bags to stay: Manish Poddar

Interview with Chairman, Indian Jute Mills Association

The government’s wrong planning has caused serious shortage in the availability of jute bags used for packing wheat and sugar, says Manish Poddar, chairman of the Indian Jute Mills Association, the country’s premier jute industry body, in an interview with Dilip Kumar Jha. Edited excerpts:

How is the annual jute requirement strategy formulated?
The ministry of food conducts a pre-season meeting where it would arrive at the the projection of jute requirement for the FCI (Food Corporation of India) and all state agencies. The requirement estimate is then passed on to the jute industry for them to prepare bags accordingly. For this season, the industry was informed that the jute bag requirement would be nine lakh bales (one bale = 170 kg). Of this, the need of Madhya Pradesh was estimated at 1.44 lakh bales, and this was proposed to be met indirectly through DGS&D (Directorate General of Supplies and Disposals) in private tenders. Thus, the net requirement was estimated at 7.5 lakh bales.

Where have we gone wrong?
The problem is wrong planning and bunching up of orders. The net requirement of jute bags shot up incessantly by 67 per cent to 12.5 lakh bales. Madhya Pradesh’s own requirement has now gone up to 3.19 lakh bales due to a failure of their private tender. Other states, too, have jacked up their requirements.

What is the supply situation now?
The jute industry has already supplied 9.5 lakh bales up to May 7, and committed to supply another two lakh bales by the end of this month.

Where does the problem exist now?
States like Punjab and Haryana have only between five and 10 per cent bales of jute left to be despatched. However, the problem still persists in Madhya Pradesh and Uttar Pradesh. UP has to suffer due to abnormal increase in MP’s requirement. The entire mess in MP has caused a problem for all other states.

How was the order scenario?
Orders remained deserted in November last year. Between October 2011 and January 2012, the total orders recorded was at five lakh bales, as against the industry’s production capacity of 2.5 lakh bales per month.

Is import feasible?
Import of bags is not feasible, as there will not be so much available from Bangladesh.

How have prices been this year?
The price of jute bags sold to the different government agencies is fixed under a formula given by the Tariff Commission.

Output forecast for the next season?
The output of raw jute for the next season appears really good. As far as demand is concerned, we expect it would be robust for jute bags.