Following fertilisers and cement, the sugar industry is the latest to add to the woes of the domestic jute sector. Sugar manufacturers are believed to be lobbying with the Union government for dilution of the mandatory jute packaging of sugar by 25 per cent.
At present, the statutory reservations in the case of sugar packaging stipulates that 100 per cent of the packaging would have to be done in A-Twill jute bags. The sugar lobby is believed to have requested the Central government to dilute the reservation to 75 per cent.
According to industry sources, the sugar industry uses 2,14,000 tonne of jute every year for packaging purposes. If the centre yields to the request of the sugar lobby, then the jute industry stands to lose over 50,000 tonne in terms of market. The industry has asked the West Bengal government to take up the matter with the Centre, sources said.
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The demand by the sugar industry comes in the wake of the Mahajan Committee report which recommends that sugar manufacturers should be allowed to pack non-levy sugar in poly-woven sacks instead of A-Twill bags. On the basis of this recommendation, the sugar industry presented its case for dilution of the statutory reservation on packaging at the standing advisory committee meeting (SAC) held in Delhi on May 15.
Sugar producers contend that the cost of packaging in jute bags is almost 100 per cent more than poly sacks.
They further allege that sugar manufacturers are often faced with erratic supplies of A-Twill bags from jute mills. Admitting that the cost of jute packaging is higher than other mediums, jute circles point out that jute goods have to be priced higher to offset the high cost of production.
To prevent the high cost of production from being passed on to the consumer, operations need to be rationalised on two fronts in the jute sector.
First, the industry would have to increase its yield per acre which at present is very low. Second, the industry needs to reduce its labour cost. Sources said, in the jute industry 98 per cent of the wages are linked to attendance and only two per cent is linked to productivity.
The industry is already reeling under the impact of the possibility of the statutory reservations being diluted in the fertiliser and cement sectors. With the sugar sector joining the fray, jute producers feel that the very existence of the industry is under threat.
Sugar, fertilisers and cement consume 85 per cent of the total production of the jute bag industry.
In a letter to the state government, the industry represented by the Indian Jute Mills Association (IJMA) has requested that the present levels of reservations be continued except for cement where the industry is willing to accept a dilution of 25 per cent.
At present, 50 per cent of the cement output is stipulated to be packaged in jute. In compensation, the industry has suggested that for fertilisers the reservation should be restored to 100 per cent from the existing 50 per cent.