Jute mills warned after faltering on supplies for kharif marketing season

The jute industry struggled to meet its supply commitments for packing food grains in June and July. Of the total order of 0.54 million bales (one bale is 180 kg) for the two months in the kharif marketing season (KMS), the industry has managed to meet barely 42 per cent of the indented quantity.

The Office of the Jute Commissioner has told mills their performance was highly unsatisfactory. For the entire KMS between June and September 2019, the overall packaging requirement for food grains has been pegged at 1.84 million bales. 

Kousik Chakraborty, deputy jute commissioner, has instructed mills to step up production of jute bags on the government account.

“If the jute industry does not gear up their production capacity immediately, there is likely to be a substantial shortfall in supply of jute bags and consequent dilution”, said Chakraborty in a letter to Manish Poddar, chairman of Indian Jute Mills Association (IJMA).

Under the Jute Packaging Materials Act, state agencies in their procurement operations have to compulsorily go for 100 per cent reservation in jute bags for packing food grains. But the textiles ministry can opt for diluting the mandatory order if jute sacking bags are in short supply.

Since the state procurement agencies have projected large packaging requirement for KMS 2019-20, the Jute Commissioner's office has asked the mills to submit monthly supply commitments of jute bags which the industry can supply in the upcoming months of KMS.

The textiles ministry had recently convened a video conferencing to discuss details of gunny bags for KMS 2019-20 and details of left over gunny bags. According to the minutes of the video conference reviewed by Business Standard, IJMA claimed the industry is producing 10,000-11,000 bales per day. Officials of IJMA also informed that due to late placement of indents by states like Punjab and also owing to the limited capacity of the jute mills, there were some delays in supplies.

The average consumption of raw jute during the three years  (2017-18,  2018-19 and  2019-20)  of  the  composite  mill  sector has  been estimated by Jute Advisory Board to be 6.9 million bales per annum (or 1.24 million tonnes). In view of the  likely  availability  of 10.14 million  bales, there is unlikely  to  be  any shortage of raw jute. The assessed capacity  for  sacking this year of the jute industry after considering 83 per cent  capacity utilization  (Tariff  Commission Formula 2001) comes to 4.26 million bales or 1.42 million tonnes including the capacity of shuttle less looms. 

The capacity to produce, however, is also impacted by availability of raw jute in time and labour both of which have been under stress of late.