Industry irked as JCI pays more than market prices

At a time when the jute industry has upped its ante against futures trading in raw jute at the Multi-Commodity Exchange (MCX), the fledgling public sector undertaking (PSU), Jute Corporation of India (JCI) is procuring the crop from the farmers at prices over Rs 50-Rs100 per quintal above the market rates.

Though the system , in a way is benefitting the the farmers, as JCI is on a commercial purchase spree quoting procurement rates higher than the market, the move has come in for severe protest from the jute industry. they have asked the Ministry of Textiles (MoT) to stop the practice immediately. The industry says the practice will encourage ' fatka and dabba trade'.

JCI is already languishing with huge unsold raw jute stocks of around 4.5 lakh quintals accumulated since 2006-07.

The industry has urged the ministry to probe into the matter.

A JCI official, however, said, " Our organisation was created in the early 70s to help the farmers. The recent procurement process might be discreet and internal, but we are precisely doing our job, though the industry might feel sore about it."

An industry representative protests, "JCI's operations aren't transparent and would help the 'fatkawala' or manipulator of raw jute prices to reap maximum benefits. An approximate 40 lakh farm families would be adversely affected because of this practice".

The technique adopted by JCI in 'discreetly' instructing its direct purchase centres (DPCs) to procure the crop at prices higher than the market rates might have been prompted by the recent movement at the MCX over futures trading where there has already been an artificial hike in prices of jute. This, the industry feels, would result in creating a volatile market as it prevailed in 2005-06.

The price of Tossa Desi ( TD) -5, the most sought after variety of the crop, is currently ruling at JBA rates of Rs 1,730 /quintal at the Kolkata landed prices, Rs 1,780/quintal for TD-4 grades and Rs 1,680/quintal for the TD-6 specie.

JCI in the North and South Bengal markets are flatly purchasing the crop at prices which are safely Rs 50 - Rs 100/quintal higher than the going rates.

The current minimum support price ( MSP) for the crop fixed by the government is around Rs 1,050 per quintal for the TD-5 grades and a subsequent Rs 50/quintal higher for the TD-4 and lower for the TD-6 grades. JCI has also been accused of selling its commercially purchased Norther and Semi-Northern raw jute 'covertly'to selected mill management without going in for an open declaration, as is the practice. The matter is currently being probed into by the MoT.

Interestingly, though JCI's basic objective is to carry out MSP operations, commercial purchase operations during the last two years have been more than the former.

In 2005-06, JCI procured around 2.5 lakh quintals of the crop under commercial purchase operation and a meagre 10,000 under MSP. During 2006-07, commercial purchase was around 8.4 lakh quintals as against a paltry 22,000 under MSP.