Jute Industry

In News

• West Bengal is experiencing a crisis that has led to the closure of several Jute Mills.

What is the issue?

• Closure of jute mills: With lakhs of people dependent on them, were adversely affected with many forced to shut down and many others on the verge of closure.
  • Approximately 60 mills operating in the State, 15 had shut down because of the crisis.
• The government has a fixed Minimum Support Price (MSP) for raw jute procurement from farmers, which is 4,750 per quintal for the 2022-23 seasons.
  • However, this reaches the mill at Rs. 7,200 per quintal, that is, Rs. 700 more than the Rs. 6,500 per quintal cap for the final product.

Where is jute used? / Significance

• Packaging purposes: Bulk of the final jute produced is used for packaging purposes. The provisions of the Jute Packaging Material (Compulsory use in Packing Commodities) Act, 1987 or the JPM Act mandate that 100% production of foodgrains and 20% sugar production must be packaged in jute bags.
• Jute used for manufacturing other products such as furnishing materials, fashion accessories, floor coverings or varied applications in paper and textile industries has declined from 15.5% to 9.7%.

Challenges/ Major issues around Jute industry

• High prices: mills are procuring raw jute at prices higher than what they are selling them at after processing.
• Mills do not acquire their raw material directly from the farmers: because the farmers are far-off from the mills locations and the procurement process is cumbersome.
  • Also, Mills would have to go to multiple farmers to acquire the requisite quantity as no single farmer produces enough to fulfil the requirements of the entire mill.
• Flows through middlemen or traders: the middlemen charge mills for their services, which involves procuring jute from farmers, grading, bailing and then bringing the bales to the mills.
• Cyclone Amphan and the subsequent rains in major jute producing States: These events led to lower acreage, which in turn led to lower production and yield compared to previous years.
• Lower quality of jute fibre: as water-logging in large fields resulted in farmers harvesting the crop prematurely.
• Hoarding: Acreage issues were accompanied by hoarding at all levels right from the farmers to the traders.
• India lags behind Bangladesh in producing superior quality jute fibre due to infrastructural constraints related to retting, farm mechanisation, lack of availability of certified seeds and varieties suitable for the country’s agro-climate.
• The increased availability of synthetic substitutes is further bothering the demand for jute domestically.
• Bangladesh provides cash subsidies for varied semi-finished and finished jute products: Hence, the competitiveness emerges as a challenge for India to explore export options in order to compensate for the domestic scenario.
• High cost of production: Equipment for production are all worn out, outmoded in design. Many mills are uneconomic. Products are made costlier.
• Shortage of Power Supply: Load-shedding creates a problem of under-utilisation of capacity.

Way forward/ Suggestions 

• Though the Union government has come up with several schemes to prevent de-hoarding, the executive believes the mechanism requires a certain systematic regulation.
• Modernization and Rationalisation: Modernization and rationalisation of Jute mills have been undertaken.
• Nationalisation of ‘sick’ Jute mills: The National Jute Manufacturers Corporation Limited (NJMC) under the Ministry of Textiles has taken over the management of sick Jute mills. 

Source: TH