 "Raw jute prices to firm up on higher consumption estimates")
Raw jute prices are likely to flare up on the back of higher estimates of domestic consumption of the fibre crop by the Jute Advisory Board (JAB). Higher prices would exert pressure on realisations of jute mill owners and hurt the interests of the jute industry in the long term.
Raw jute availability has been pegged at eight million bales (one bale is 180 kg) for this financial year by JAB -- much higher than the figure quoted by other stakeholders such as Indian Jute Mills Association (IJMA) and Jute Corporation of India (JCI).
Of this, domestic consumption of raw jute has been pegged at 0.2 million bales, 100 per cent higher than the previous financial year. Terming the domestic consumption figure "unrealistic", the jute industry feels JAB has over-estimated the figure. IJMA estimated the raw jute availability at 7.5 million bales and JCI pegged it even lower at 6.43 million bales.
"JAB has over-estimated the figure for domestic consumption, presuming that there would be zero carry over to the next financial year. But this is not practicable. Due to the over-estimation in figure, there is already a huge difference between price of TD5 variety of jute and the minimum support price (MSP). Prices are going to rise further. The jute industry will feel the burden of higher prices and on a long-term perspective, this is going to be a damaging thing for the industry,” said Manish Poddar, chairman, IJMA, and managing director, Budge Budge Company Ltd.
Prices of TD5 variety are hovering around Rs 47,000 per tonne compared to MSP of Rs 27,000 a tonne.
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"The price gap is unprecedented and it has never happened before. The government must act to arrest this uneven price gap,” said the owner of a large jute mill.
In 2014-15, TD5 grade jute was priced at Rs 33,300 per tonne against the MSP of Rs 24,000. For 2013-14, TD5 price stood at Rs 29,820 per tonne while the MSP was Rs 23,000 a tonne.
For September, the variation of TD5 grade jute price over MSP was 23 per cent on an average between 2011-12 and 2014-15 but it has reached 57 per cent for September this year. Also, market price has moved up Rs 2,000 per tonne within a month in September due to hoarding of raw jute.
Traders expect raw jute prices to spike further to Rs 60,000 per tonne. "If immediate action is not taken, not only the jute mills will incur losses, the government would also lose revenue due to hoarding of raw jute. Consequently, finished goods prices would escalate and the jute industry would lose its competitiveness in the world market,” said an industry source.
Raw jute availability has been pegged at eight million bales (one bale is 180 kg) for this financial year by JAB -- much higher than the figure quoted by other stakeholders such as Indian Jute Mills Association (IJMA) and Jute Corporation of India (JCI).
Of this, domestic consumption of raw jute has been pegged at 0.2 million bales, 100 per cent higher than the previous financial year. Terming the domestic consumption figure "unrealistic", the jute industry feels JAB has over-estimated the figure. IJMA estimated the raw jute availability at 7.5 million bales and JCI pegged it even lower at 6.43 million bales.
"JAB has over-estimated the figure for domestic consumption, presuming that there would be zero carry over to the next financial year. But this is not practicable. Due to the over-estimation in figure, there is already a huge difference between price of TD5 variety of jute and the minimum support price (MSP). Prices are going to rise further. The jute industry will feel the burden of higher prices and on a long-term perspective, this is going to be a damaging thing for the industry,” said Manish Poddar, chairman, IJMA, and managing director, Budge Budge Company Ltd.
Prices of TD5 variety are hovering around Rs 47,000 per tonne compared to MSP of Rs 27,000 a tonne.
ALSO READ: Jute Commissioner scraps import licenses
"The price gap is unprecedented and it has never happened before. The government must act to arrest this uneven price gap,” said the owner of a large jute mill.
In 2014-15, TD5 grade jute was priced at Rs 33,300 per tonne against the MSP of Rs 24,000. For 2013-14, TD5 price stood at Rs 29,820 per tonne while the MSP was Rs 23,000 a tonne.
For September, the variation of TD5 grade jute price over MSP was 23 per cent on an average between 2011-12 and 2014-15 but it has reached 57 per cent for September this year. Also, market price has moved up Rs 2,000 per tonne within a month in September due to hoarding of raw jute.
Traders expect raw jute prices to spike further to Rs 60,000 per tonne. "If immediate action is not taken, not only the jute mills will incur losses, the government would also lose revenue due to hoarding of raw jute. Consequently, finished goods prices would escalate and the jute industry would lose its competitiveness in the world market,” said an industry source.