Govt sees 37% deficit in jute bags supply in Rabi season

The shortfall is much higher than the exemption allowed by Union Cabinet on October 11 last year

The jute industry is unlikely to meet the packaging demand for food grains for the Rabi agriculture season of 2012-13 even after a dilution of up to 10% on the mandatory jute packing order decided by the Cabinet Committee on Economic Affairs (CCEA).

It is feared that there would be a 37% shortfall in supply of jute bags for packing food grains in the Rabi agriculture season of 2012-13.

The shortfall is much higher than the exemption allowed by the Union Cabinet on October 11 last year. The CCEA had decided that 10% of the total production of food grains in the country be packed in plastic materials- high density polyethylene (HDPE) or polypropylene (PP) bags.

 

As per government estimates, while the total requirement of jute bags in the Rabi season between December 2012 and April 2013 is around 1.89 million bales, the jute industry will not be able to supply more than 1.22 million bales, creating a shortfall of 0.67 million bales or almost 37% of demand.

The Indian Jute Mills' Association (IJMA), the apex body of the industry, however, does not anticipate any deficit.

“The jute industry has submitted a detailed plan to the Union Textiles Ministry on supply position of jute bags. While the ministry is free to allow 10% dilution in favour of plastic bags, the jute industry is fully equipped to meet the balance 90% demand,” said Manish Poddar, IJMA chairman.

The projected deficit in availability of jute bags is expected to be met through packing in plastic (HDPE/PP) bags. Plastic materials are cheap and easily available. The price of a synthetic bag is only Rs 12 in comparison to Rs 28 for a jute bag.

Under Jute Packaging Materials Act (JPMA)-1987, sugar and food grains produced in the country will have to be, packed in jute bags produced during the year. However, on October 11 last year, the CCEA exempted 10% of packing of food grains in jute bags in favour of plastic materials for the current fiscal.

The decision was, taken as per provisions kept in JPMA-1987. The government accused the jute industry of short capacity and supply. Jute industry is, already accused of supplying poor and inferior quality of jute bags. Earlier, on November 16 2011, CCEA decided on a thorough review of the jute sector. The government is yet to conduct the review.

Almost 67% of jute goods produced comprises jute bags for packing sugar and food grains valued at around Rs 8,500 crore. Alongside, a 10% relaxation in food grains packing, the CCEA also de-reserved 40% sugar packing in plastic bags, replacing age-old jute bags.

Synthetic producers have also moved the Competition Commission of India (CCI), accusing the jute industry of manipulating, rigging and cartelizing on jute bag prices.