Raw jute purchase by JCI to fuel price hike

Prices have already touched an unprecedented high of Rs 54,000 a tonne, twice the level of Rs 27000 a year ago

Commercial purchases of raw jute by government-controlled Jute Corporation of India (JCI) is set to escalate prices further.

Raw jute prices have already touched an unprecedented high of Rs 54,000 a tonne, twice the level of Rs 27,000 per tonne in the year-ago period. Mill owners and traders feel commercial intervention by JCI would spike raw jute prices to the level of Rs 60000 a tonne.

"In a market where there is anticipated crop shortfall, JCI is intervening in commercial purchase. This is bound to have a bearing on raw jute prices and prices would rise further. JCI is currently acting as the hoarder of raw jute. We are going to submit a representation to the textiles ministry on commercial purchase by JCI", said Manish Poddar, chairman of Indian Jute Mills Association (IJMA).

 

JCI has taken up commercial procurement of raw jute in select regions of Assam and Bethuadahar (West Bengal). It has purchased 500 tonne in Assam and 100 tonne in West Bengal, at a base price of Rs 50000 per tonne.

Though JCI got the approval of the Textiles ministry to take up commercial operations in May 2015, it was meant to stabilise prices. The objective of such endeavour was to supply jute to the industry at a reasonable price when the market prices are going up, unreasonably benefiting only the middlemen.

However, in the current season when the actual raw jute size is pegged at six million bales (one bale is 180 kg), meaning a deficit of 3-3.5 million bales in normal crop size, any commercial purchase by JCI would only turn to be counter-productive.

"There are precedents that JCI's intervention through commercial operations has rendered prices volatile. This has happened in 2006-07 and 2010-11. The situation reached to such a grave point that the Ministry of Textiles had to intervene for disposal of the commercially procured jute of JCI through one time B Twill linkage", said a leading jute mill owner.

In the current year, the minimum support price (MSP) of raw jute is pegged at Rs 27000 per tonne while prices are double the MSP at Rs 54,000 per tonne. B-Twill sacking bags prices have touched an all-time high of Rs 77,000 a tonne while Hessian has moved beyond Rs 1,00,000 per tonne. Prices have been buoyant despite the Jute Commissioner's move to fix stock holding limits of raw jute for jute mills.