India’s jute industry suffers a potential loss of Rs 1,500 crore amid raw material crisis

The jute sector has suffered a notional loss of Rs 1,500 crore due to dilution of 4.81 lakh bales of hessian bag orders in favour of plastic materials for foodgrain packaging during the ongoing season, as per India’s domestic jute industry observers.

“In November and December, there was a dilution of 4.8 lakh bales of jute bags as millers were not able to supply that quantity of packaging material. This resulted in an estimated loss of Rs 1,500 crore,” an industry source told PTI.

The Narendra Modi government had, in November 2021, approved reservation norms for mandatory use of hessian sacks in packaging for the jute year 2021-22. The norms provide for 100 per cent reservation of foodgrains and 20 per cent of sugar to be mandatorily packed in jute bags.

It  seems the ceiling price of raw jute is the major bottleneck to increase production of the packaging material. The prevailing market price of raw jute is around Rs 7,200 per quintal, while the Jute Commissioner’s Office had imposed a ceiling price of Rs 6,500 per quintal for sourcing the raw material for mills.

The total annual purchase of jute bags by the Centre and the state agencies is around Rs 12,000 crore. Currently, the running price of one bale of gunny bags (1 bale is equal to 500 jute bags) is around Rs 31,000.

Indian Jute Mills Association revised its supply commitment from 16.25 lakh bales to 13.5 lakh bales for Rabi marketing season 2022-23.

The Jute Commissioner’s Office, however, has allayed fear of any crisis and pointed out that there is no shortfall in the production. During the 2022-23 season, millers can supply up to 28.5 lakh bales, while the total annual jute bag requirement of the government will be around 45.88 lakh bales, of which 26.8 lakh bales are meant for rice and 19.08 lakh bales for wheat.

According to an expert committee, the raw jute production is pegged at 85-90 lakh bales during the year. Jute mills are expected to consume 70 lakh bales, while industrial consumption would be around 10 lakh bales and exports are likely to be two lakh bales.

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