EXPLAINER Text and Context

The recent woes of the jute industry in West Bengal

Workers carrying raw materials to a mill in North 24 Parganas.

Workers carrying raw materials to a mill in North 24 Parganas. | Photo Credit: FILE PHOTO

The story so far: Member of Parliament (MP) from Barrackpore constituency in West Bengal, Arjun Singh, met Textile Minister Piyush Goyal on Saturday to apprise him about issues concerning jute farmers, workers and the overall jute industry. Mr. Singh later said in a tweet that the meeting was very positive and expressed hope that the issues would be resolved soon. The Barrackpore MP had earlier written to West Bengal Chief Minister Mamata Banerjee, seeking her intervention into the “arbitrary decision” of capping the price for procuring raw jute from the mills. He was referring to the Office of the Jute Commissioner (JCO)’s September 30 notification mandating that no entity would be allowed to purchase or sell raw jute at a price exceeding ₹6,500 per quintal.

Mr. Singh had also written to Chief Ministers of other jute producing States as Assam, Tripura, Odisha and Bihar, seeking their intervention.

The West Bengal BJP vice president, in a letter, mentioned that the operations of 20 jute mills in his constituency, with lakhs of people dependent on them, were adversely affected with many forced to shut down and many others on the verge of closure.

A mill executive on the condition of anonymity told The Hindu, “We have been held hostage it seems.” He said that of approximately 60 mills operating in the State, 15 had shut down because of the crisis.

What is the problem?

In simple words, mills are procuring raw jute at prices higher than what they are selling them at after processing. Let’s understand the mechanism first. Mills do not acquire their raw material directly from the farmers. There are two reasons for the same. First, because the farmers are far-off from the mills locations and the procurement process is cumbersome. 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. The procurement now flows through middlemen or traders. As a standard practice, the middlemen charge mills for their services, which involves procuring jute from farmers, grading, bailing and then bringing the bales to the mills.

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 season. However, as the executive stated, this reached his mill at ₹7,200 per quintal, that is, ₹700 more than the ₹6,500 per quintal cap for the final product. Though the Union government has come up with several schemes to prevent de-hoarding, the executive believes the mechanism requires a certain “systematic regulation”.

What happened to supply?

What made the situation particularly worrisome recently was the occurrence of Cyclone Amphan in May 2020 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. Additionally, as the Commission for Agricultural Costs and Prices (CACP) stated in its report, this led to production of a lower quality of jute fibre in 2020-21 as water-logging in large fields resulted in farmers harvesting the crop prematurely.

Acreage issues were accompanied by hoarding at all levels – right from the farmers to the traders.

Where is jute used?

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. The share of jute used for sacks, therefore, increased from 67.9% for the TE (TE: Triennium Ending or three years ending) 2010-11 to 78.3% in TE 2020-21. On the other hand, 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% during the same period.

As per the Food and Agriculture Organisation (FAO), 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%. This can be attributed to the fact that 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. What also does not bode well for India is that jute acreage competes with crops as paddy, maize, groundnut, and sesame. The increased availability of synthetic substitutes is further bothering the demand for jute domestically.

Further, as the CACP report stated, 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.

What is at stake?

As the jute sector provides direct employment to 3.70 lakh workers in the country and supports the livelihood of around 40 lakh farm families, closure of the mills is a direct blow to workers and indirectly, to the farmers whose production is used in the mills. West Bengal, Bihar and Assam account for almost 99% of India’s total production.

THE GIST
Mills are procuring raw jute at prices higher than what they are selling them at after processing. A September 30, 2021, notification mandated that no entity would be allowed to purchase or sell raw jute at a price exceeding ₹6,500 per quintal
The cyclone Amphan in May 2020 and the subsequent rains in major jute producing States aggravated the crisis.
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


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Printable version | Jun 9, 2022 9:04:12 am | https://www.thehindu.com/specials/text-and-context/the-recent-woes-of-the-jute-industry-in-west-bengal/article65373299.ece