Jute production set to dip as demand takes a plunge

Jute industry on tenderhooks over low demand and tripartite agreement

Raw jute production for 2012-13 is pegged at around 92 lakh bales, much below than last years’ production of 99 lakh bales. However, in spite of low production, prices are likely to remain subdued, over high carry over stock and low demand.

At present, the carry over stock in jute mills is close to 40 lakh bales, which along with current year’s production of 92 lakh 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 around Rs 2,500, per quintal, against around Rs 2,300, per quintal, in November end. Prices have been more or less stable due to lower demand from sugar mills, mill owners said.  

 

Notably, this year, for the first time, the government had diluted packaging norms under the mandatory Jute Packaging Materials Act (JPMA) of 1987, by 60%.

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

“We are getting absolutely no orders from sugar mills. Efforts are been made to offset losses by increasing 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 TD-5 grade from Rs. 1,675 per quintal, to Rs. 2,200 per quintal for the 2012-2013 season, an increase of nearly  31.34% over last year’s  MSP

New Tripartite Agreement

Even as the jute mills are struggling to generate demand, termination of the tripartite agreement, signed between the government of West Bengal, mill owners and workers, in February 2013, pose the threat of another stalemate in the industry.

Representatives of around 20 jute mill workers associations recently met in Kolkata to deliberate on a fresh charter of demand. The next meeting, scheduled in January,  is expected to spell out the new demands of the workers. There could be a demands for minimum wages of Rs 10,000 per month and reinforcement of JPMA Act, among other things, said sources Centre of Indian Trade Unions (CITU).

In December 2009, the jute mill workers in 52 jute mills in West Bengal had gone on an indefinite strike, in support of their demands which included stoppage of the unfair labour practices, payment of statutory dues, clearance of arrears of dearness allowances, regularization of contract workers and deduction of Provident Fund and ESI contribution on actual wages. Subsequently, on February 14  2010, the  tripartite agreement was singed to end the deadlock.