Industry blames Jute Corp for 89% drop in exports

In a representation made to the textiles ministry, the jute industry has blamed the state-run Jute Corporation of India (JCI) for rigging raw jute prices through commercial purchases, resulting in a massive decline of 89 per cent in exports of jute products over the last four years.

The industry asked the ministry to allow JCI to undertake commercial purchases only in consultation with it.

According to the representation, JCI's early entry into the market fuelled raw jute prices to rise from Rs 889.20 a quintal in August 2003 to Rs 1,514.33 in July 2007, leading to speculative trading and hoarding by traders.

This, according to the industry, resulted in the fall in exports as the country could not compete with prices quoted by nations such as Bangladesh, China and Pakistan.

During the last four years, exports of hessian, sacking and carpet backing cloth (CBC) came down from 310,000 tonnes in 2003 to 164,000 tonnes in 2007.

During the period, hessian exports fell from 157,000 tonnes to 56,000 tonnes, sacking fell from 33,000 tonnes to 25.6 tonnes and CBC dropped to nil from 600 tonnes. Shipment of other categories declined from 114,000 tonnes to 82,000 tonnes.

When contacted, JCI chairman R C Tewary refused to comment.

In the representation, the jute industry said that JCI should not be allowed to conduct commercial purchase operations in the current year on its own as it would again perk up prices and facilitate the speculators on maximising gains through the futures markets.

According to the industry, linking of JCI's commercially procured raw jute with the B Twill quota is resulting in the increase in prices of B Twill bags, the most used commodity in the jute sector for packaging.

The high prices of B Twill products have turned out to be an additional burden for Food Corporation of India (FCI), the biggest packer and other state procurement agencies.

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TROUBLED TIMES

Raw jute prices rose from Rs 889.20 a quintal in August 2003 to Rs 1,514.33 in July 2007

Exports of hessian, sacking and carpet backing cloth (CBC) came down from 310,000 tonnes in 2003 to 164,000 tonnes in 2007

During the period, hessian exports fell from 157,000 tonnes to 56,000 tonnes, sacking fell from 33,000 tonnes to 25.6 tonnes and CBC dropped to nil from 600 tonnes. Shipment of other categories declined from 114,000 tonnes to 82,000 tonnes