Jute industry takes on Corporation

The jute industry has decided to fight tooth and nail the commercial purchase operations likely to be undertaken by the Jute Corporation of India (JCI), the country's largest raw jute procurement agency, during 2007-08.

Jute industry representatives are already lobbying with the textile and agriculture ministry to stop state-owned JCI from commercial purchase. According to them, if JCI enters the market, it would spell disaster for the industry as speculative traders would make the market volatile.

The role of the JCI Chairman and Managing Director R C Tewari is allegedly under the scanner on the issue of commercial purchase operations, with the textile ministry yet to initiate action against him. There are in-house complaints allegedly made against Tewari before the textile ministry. The ministry is still probing the veracity of the charges.

Meanwhile, to stop the JCI from carrying out commercial purchase operations, industry representatives have argued that it would be a repeat of the past mistakes of 2005-06 and 2006-07. During this period, speculation was high because of JCI's commercial purchase, with the government compelled to step in to curb speculation.

The JCI officials, however, are confident that the move would only benefit the farmers as prices would shoot up from the minimum support rates. Currently, the minimum support rates are around Rs 1000 a quintal, which is almost equal to the commercial purchase rates.

A JCI official said, "Once the corporation enters the market commercially, there would be a quantum jump in prices and the farmers would get better remunerative prices."

The government is behind us on this aspect and we are confident of farmers benefiting from it."

During the current year, the carry-over stock of raw jute is around 24 lakh bales. Good sowing coupled with favourable weather conditions are likely to increase the crop size, expected to be over 100 lakh bales. The figure is comfortably higher than those projected by the government and industry.

"Under such conditions, it would be entirely unwise on the part of the government to allow JCI to undertake commercial operations. With the JCI's entry, the market will quite naturally fluctuate heavily, paving the way for the 'middlemen' to maximise profits from forcing the farmers to go in for distress selling," an industry representative said.

After the new crop arrives, the season will get into full swing from August-end in north Bengal, Assam and Bihar. According to the industry, if the market remains undisturbed till the first week of September, there is every possibility of JCI procuring the crop at the minimum support level of Rs 1000.

The industry has also decided to oppose linking the commercial purchase operations to B-twill orders. This they feel would increase the prices of B-Twill bags and create a shortage in the raw jute market.