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The jute commissioner’s recommendation for the use of plastic bags to pack foodgrains for 10 months is set to affect the sector. It is, however, expected to help the food ministry, which can liquidate an inventory of 200,000 bales of plastic bags valued at Rs 202.7 crore with it.
The ministry had purchased the bags as a cushion against possible non–supply of jute bags for packing foodgrains in the rabi season of 2013-14. Every month, 10 per cent of the stock would be liquidated.
“The mills are suffering due to the repeated dilution of the mandatory Jute Packaging Materials Act (JPMA), 1987. These have lost Rs 2,000 crore a year because of this. Around 50 per cent of the mills are running at 70 per cent of their capacities,” said Sanjay Kajaria, managing director, Hastings Jute Mill and former chairman of Indian Jute Mills’ Association (IJMA).
Of the total projected demand of 2.5 million bales to pack foodgrains, the Centre had allowed dilution of up to 50 per cent. Even though the food ministry was okay with the dilution plan, the textiles ministry opposed it. “Plastic bags can only be used during emergencies, when there are no bags or short supply of jute bags. At present, there is no such situation and the jute industry has sufficient capacity to cater to the whole demand. There are also quality complaints against the plastic materials purchased,” P R Meena, deputy secretary at the textiles ministry had said, opposing the suggestion to use plastic bags.
The food ministry is accused of allegedly overestimating packaging demands for the rabi season of 2013-14 and had purchased 0.7 million bales of plastic bags worth around Rs 700 crore at the rate of Rs 10,000 a bale.
Recently, the food ministry prepared a note for the Cabinet Committee on Economic Affairs, saying the market value of the bags were very small compared to their purchase cost as they are one-year old. The JPMA prohibits use of old bags of any variety. Only the jute bags manufactured during the year can be used for packing foodgrains. The food ministry had sought exemption under Section 16 of JPMA to use the left-over 200,000 bales of plastic bags.
According to the Jute Commissioner, the jute industry is passing through a critical phase as there is a 12 per cent fall in demand of jute bags, compared to the previous year. The industry has the capacity to manufacture and supply 3.3 million bales.Between April 2013 and February 2014, the government had placed orders for supply of 2.46 million bales. In 2012, the order was 2.8 million bales.
According to the food ministry’s assessment, the jute industry’s capacity to produce and supply is 2.5 million to three million bales, while the requirement varies between three million and four million bales.
