Stock holding limit failed to halt raw jute price rise

The unprecedent jump in prices is largely on account of hoarding by about a fifth of mill owners, say industry sources

The jute commissioner’s move to fix stock holding limits on raw jute for mills has failed to rein in prices. Raw jute prices have breached the Rs 50,000-per-tonne mark and are poised to shoot up by at least five per cent in the coming days.

Any further rise in prices is expected to jeopardise sustainability and might trigger closure of more mills, leading to further unemployment.

Raw jute prices have seen an unprecedented rise mainly on the back of hoarding by some mill owners. Industry sources said 80 per cent of this year’s crop was hoarded by 20 per cent of mills. Raw jute price was pegged at Rs 50,500 a tonne in December, 49 per cent higher than the level of Rs 33,750 a tonne in the year-ago period.

“Fixing of stock holding limits has not helped cooling of prices. Lack of drives to stop hoarding has failed to stem the unusual rise in prices,” said a jute mill owner.

The jute commissioner’s office had admitted to hoarding, rigging and manipulation of prices by a few mills, but is yet to undertake a drive against hoarding. The West Bengal government has requested the jute commissioner’s office to act, and it favours action against hoarders. According to the jute commissioner’s office, raw jute prices have risen 30.5 per cent in the past few months.   

Jute commissioner Subrata Gupta recently issued an order to cap raw jute stock to two months of consumption requirement. He, however, had provided relief to mills that had stocked jute for export.

Untimely rains this year saw raw jute production drop around 40 per cent to around six million bales (one bale is 180 kg). Taking advantage of the situation, some mills and traders hoarded almost 50 per cent of the crop, creating a scarcity in the market. The hoarding was done on speculation that next year there would be a shortage of the  crop and no carry over to control the situation.