Cabinet Announces 6% Hike in Jute MSP

Syllabus: GS3/Economy and Agriculture

Context

• The Union Cabinet approved a minimum support price for raw jute by 6% for marketing season 2025-26. 

About

• Jute Corporation of India (JCI) will continue as its nodal agency to undertake price support operations.
• The losses incurred, if any, in such operations, will be fully reimbursed by the Union government.
• MSP: It is a form of market intervention by the Government to insure agricultural producers against any sharp fall in farm prices.
  • The prices are announced by the Government at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP). 
• Crops Covered under MSP
  • Kharif Crops (total 14) like paddy, jowar, bajra, maize, ragi, tur/arhar, moong, urad, groundnut, soyabean, sunflower, sesamum, niger seed, cotton;
  • Rabi Crops (total 06) like wheat, barley, gram, masur/lentil, rapeseed and mustard,and safflower;
  • Commercial Crops (total 02) like jute and copra.

Jute Production In India

• It is also called the golden fibre, in view of being a natural, renewable, biodegradable and eco-friendly product. 
• India is the largest producer of jute followed by Bangladesh and China.
  • However, in terms of acreage and trade, Bangladesh takes the lead accounting for three-fourth of the global jute exports in comparison to India’s 7%.
  • Most of the Jute is consumed domestically due to its vast domestic market demand, with an average domestic consumption of 90% of total production.
• The jute sector provides direct employment to about 4 lakh workers in the country and supports the livelihood of around 40 lakh farm families.
• West Bengal, Bihar and Assam account for almost 99% of India’s total production.

Challenges for Jute Industry in India

• Competition from Synthetic Fibers: Jute faces stiff competition from synthetic fibers like polypropylene and polyester, which are often considered more versatile and cost-effective. 
• Lack of Innovation and Product Diversification: The industry is facing challenges in terms of limited product innovation and diversification. 
• Quality Issues: Under retting, jute bundles are kept under water at a depth of about 30 cm. This process gives the fiber its shine, color, and strength.
  • It should ideally be done in slow moving, clean water bodies like rivers. But Indian farmers do not have access to such resources. 
• Problems of Jute mills in India: Jute mills are marred by issues of Machinery modernisation, Mismanagement, Labour shortage, and Unrest and dependence on the government. 
• Price Fluctuations: Jute prices are volatile, influenced by climate conditions and supply-demand imbalances, which affects the stability of the industry.

Government Steps for Jute Production

• Continuation of Jute Packaging Material (Compulsory Use in Packing Commodities) Act, 1987.
  • The Government has kept reservations 100% for food grains and 20% for sugar, to be packed in jute packaging material. 
• Minimum Support Price (MSP) for Raw Jute.
• The Government has approved an Umbrella scheme namely National Jute Development Program (NJDP) for implementation during 2021-22 to 2025-26 for overall development and promotion of the Jute Sector. 

NJDP covers following schemes:

• Improved Cultivation and Advanced Retting Exercise (Jute ICARE): To   introduce a package of scientific methods of jute cultivation and retting exercises.
• Jute Resource cum Production Centre (JRCPC): To spread jute diversification programmes by providing training to new artisans.
• Jute Raw Material Bank (JRMB): To supply jute raw material to jute artisans, MSMEs for production of JDPs at Mill Gate price.
• Jute Design Resource Centre (JDRC): For designing and development of market worthy innovative jute diversified products and helping existing and new JDP manufacturers and exporters.
• Production Linked Incentive (PLI) Scheme: To support Jute Mills and MSME JDP units for manufacturing and exporting JDPs and making them cost competitive in the international markets. 
• Market Development Promotion activities (Domestic & Exports): Development  of  Jute  Mark  Logo  for Certification  of  Quality  Jute  Diversified  products and Launching publicity  campaign  to  popularize  jute.

Source: IE