The Jute Corporation of India (JCI), the government body for jute procurement and implementation of minimum support price (MSP) operations, may come to rescue the jute mill owners, struggling to cope up the increased demand for gunny bags ahead of a good rabi (winter) crop.
According to sources in the industry, JCI may opt for back-to-back purchase of raw jute.
It might also supply 10,000 quintals of the commodity to a private mill, sources in the jute industry said, after a gap of almost three years.
Under back-to-back operations, JCI would purchase jute from farmers at MSP prices, close to Rs 1,400 per quintal for the TD-5 variety, and sell it to the jute mills at about Rs 1,650 per quintal.
Transport cost was to be borne by JCI. The corporation is also in talks with other private mill owners for a similar arrangement, sources said. Also, last year's carry over stock of 25 lakh bales was likely to be utilised this year.
This year, the total jute production was pegged at 85 lakh bales. However, with jute acreage lower by almost 25 per cent this year, prices were likely to increase further next year.
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At present, jute prices were between Rs 1,300-1,500 per quintal, and almost 60 per cent of the crop had been purchased by mills.
Earlier, Hrishikesh Shroff, president of Gunny Trades Association, said that in September alone the Food Corporation of India (FCI), along with the food grain procurement agencies of Punjab and Haryana, had placed orders 300,000 bales of B Twill jute bags, against about 150,000 bales on average every month.
For the period between June to October this year, demand for jute bags by the procurement agencies was 11 lakh bales.
In 2007-08, for the entire year, government procurement was 15.92 lakh bales.