MSP of jute may be raised by Rs 195/qntl

The minimum support price of raw jute (Assam TD5 variety) in the jute year 2008-09 is likely to be raised to Rs 1,250 a quintal, up by Rs 195 over the last year's support price of Rs 1,055 per quintal. This will be the highest ever increase in the MSP of raw jute prices so far.

The increase in MSP means the landed raw jute price in Kolkata will be close to Rs 1,700 a quintal, according to Sanjay Kajaria, chairman, Indian Jute Mills Association (IJMA).

The high prices are likely to boost the inflow of cheaper raw jute from Bangladesh.

"The onerous burden on jute mills will slow down mills' purchases, which will not only have a dampening effect on raw jute market but also adversely affect the jute growers. The Jute Corporation of India (JCI), with its inadequate infrastructure, will be unable to cope with the problem," said Kajaria. JCI has procured about 1.26 million quintals of raw jute, against 800,000 quintals last year.

Recently, IJMA had expressed concerns over the total removal of import duties on raw jute and finished products, even as the jute mill owners stand to gain from the decision.

"It will become increasingly difficult for the jute industry to sustain with such kind of prices amid the unrest among the mill workers seeking bonus," said Ghanshyam Sarda of the Sarda Group of jute mills.

During April-December 2007 and April-December 2006, raw jute imports increased by 79 per cent from 84,287 tonnes to 1,51, 027 tonnes.