Labour disputes, strikes in mills upset gunny bag procurement by govt agencies, sugar factories.
The one-and-a-half-century jute industry, ever unconcerned about challenges emerging from alternative materials, has made it a habit to fall back on the government to keep competition at bay. And, so far, it has found obliging governments. What has helped the antediluvian industry win official sympathy is its making a case on about five million families engaged in raw jute cultivation being denied their livelihood if jute packaging material had to compete with synthetic substitutes.
Lip sympathy apart, it is not known how helpful the industry has been in promoting jute growing on scientific lines in eastern states, as processors of some other cash crops have been doing in many parts of the country. Labour disputes in jute mills are legion. Strikes on many occasions in the past have lasted over months, upsetting gunny bag procurement programmes of government agencies and sugar factories. The last strike, in February 2010, took two months to be resolved. But, for jute mill owners, any criticism slips like water off a duck’s back. At any cost, they will deny a level playing field to producers of synthetic materials.
Being a natural fibre, jute recommends itself for its ecofriendliness and biodegradability. There is no questioning that food crops like wheat and rice are ideally packed in jute bags. The same, however, cannot be said about ready for consumption sugar. Bulk consumers of sugar like soft drinks makers, pharmaceutical units and confectioners find the presence of traces of batching oil used in softening jute and loose fibres in the sweetener highly annoying. Incidentally, in international trade, the accepted practice is to pack sugar in high density polyethylene (HDPE) bags. Since bulk consumers here will not accept delivery of the sweetener packed straight in jute bags, sugar factories barred by law from using HDPE bags are putting alkathene liners in jute bags, incurring extra cost in the process.
Indian Sugar Mills Association (Isma) Director General Abinash Verma says the “mission of the industry is to deliver sugar in the market without contamination and at least cost. But as long as the Jute Packaging Materials Act (JPMA) will be hanging over our head like the Damocles sword, neither will be possible. The specifications of 50-kg jute bags are such that besides allowing sugar leakages through gaps between woven yarns, the packed material runs the risk of fungal infection and bacterial contamination. As for cost, a 50-kg HDPE bag comes at Rs 15 against Rs 35 for an identical capacity jute bag.” JPMA requires mandatory packing of 100 per cent production of sugar in jute bags. In one more instance of political considerations overshadowing economic reasoning, the government has repeatedly overruled the recommendation of the Standing Advisory Committee that sugar factories be allowed to pack 25 per cent of their production in non-jute bags.
At the time of pronouncement of JPMA in 1987, foodgrain, sugar, fertiliser and cement were brought within the ambit of exclusive use of jute packing material. However, it did not take the makers of cement and fertilisers a long time to get them exempted from JPMA, arguing successfully that HDPE and not jute provides the ideal shield to keep the two commodities in good order during handling and in all kinds of weather. Besides technical factors, what helped cement and fertiliser producers win the day was their lobbying power. That left sugar and foodgrains within the scope of JPMA. But while sugar factories remain at the mercy of jute mills for bag prices, the government buys bags at rates fixed by it.
Isma says despite cement and fertilisers escaping the JPMA net, jute mills have not stopped “arbitrary fixing of jute bag prices. The price behaviour of bags used for packing sugar since April 2010 and particularly at the height of cane crushing in the current season will illustrate how jute mills are using their monopoly power in moving the market.” Verma says by making sugar factories do with jute bags, the sweetener consumers are penalised in two ways: first, they are made to pay up to an extra 40 paise for a kg of sugar and second, they don’t get as clean sugar had it been packed in HDPE bags. What particularly defies logic is that even people below the poverty line, who buy subsidised levy sugar, are not spared the extra cost.
Isma wonders whether jute still needs crutches from sugar. Hasn’t the country’s food production risen to a record 235.88 million tonnes in 2010-11, up 20 per cent from 2000-01, creating so much more demand for jute bags from the food sector? However, raw jute production has remained well within 11 million bales, requiring the country to import both the raw material and jute bags. Isma is raising the issue that to the extent sugar factories are using jute packing material of foreign origin, it is subsidising an offshore industry. But what will make the domestic jute industry sit up is Isma’s decision to find out if mandatory packing of sugar in jute bags is not in breach of the Competition Act of 2002.