Sugar industry resents order on jute

As if falling sugar prices and high sugarcane rates were not enough, the sugar industry will pay close to Rs 1,000 crore to the jute industry over the next one year, thanks to the government's decision earlier this month to make it mandatory for the industry to package its produce in jute bags.

In its meeting on August 2, the Union Cabinet had approved compulsory packing for all food grain and sugar in jute bags for the year 2007-08 (July-June). However, small consumer packs of 25 kg and below, and export packing have been exempted from compulsory packaging.

The sugar industry is learnt to have spent about Rs 936 crore in the October-July (2006-07) period to purchase jute bags for packing 26 million tonnes out of the 28 million tonnes sugar produced. Another 2 million tonnes went to exports and branded sugar. In the next production season, which is slated to start in October, the demand for these jute bags is expected to be still higher as a bumper crop is ready for harvest in the sugarcane fields of Uttar Pradesh and Maharashtra, the main centres of sugar production in the country.

"Though we find it convenient to pack sugar in 100 kg jute bags, there is no need to make it compulsory. Why should we be at the receiving end because of another industry," said S L Jain, director general of the Indian Sugar Mills' Association.

The sugar industry has for long subsidised the country's jute producers in this way, while sectors like cement and fertilisers have been able to get rid of the mandatory jute packing order. Last year, a parliamentary standing committee had recommended doing away with the mandatory jute bag usage for food grain and sugar. However, the recommendation was not accepted.

The decision comes at a time when the sugar industry is going through its worst-ever crisis with a 45 per cent year-on-year increase in production and a 30 per cent drop in prices. All Uttar Pradesh-based sugar mills reported huge losses for the April-June quarter. "Usage of jute for packing sugar should not be mandatory as using plastic bag would mean a significant cost saving for the industry that is already suffering a huge loss owing to a record production and crash in prices. Packing one quintal sugar in a 100 kg jute bag costs around Rs 36, whereas if we pack the same quantity in two plastic bags of 50 kg, it would cost only Rs 21," said Sanjay Tapriya, director (finance), Simbhaoli Sugars. Moreover, jute being hygroscopic, gains more moisture than a plastic bag. Given that the sugar deteriorates on exposure to moisture, jute bags are certainly not the best option, added Tapriya.