The Centre has spent an additional Rs 2,000 crore to procure jute bags during the recently concluded season. This has, however, not prevented the closure of nine jute mills (involving more than 50,000 workers) of the total 72 in West Bengal.
The Centre annually purchase 10-12 lakh tonne of jute bags valued at Rs 5,500 crore to pack food grain and sugar. But this year, prices have crossed Rs 8,500 a quintal as of date, and raw jute scarcity has led owners to shut their mills.
The second wave of Covid-19 has aggravated the situation, with the Centre ordering mills to run with 50% of the workforce.
The Indian Jute Mills Association (IJMA) committed to supplying jute bags equivalent of 7.3 lakh bales to the government between April and June. But millers fear they will be unable to do so because of the lower workforce. This may also lead to closure of more jute mills since without economies of scale, they may not remain viable for operation, an IJMA member said, on the condition of anonymity.
Deputy jute commissioner Koushik Chakraborty said the textile ministry and the department of food and public distribution will shortly meet to find a way out to make up for the shortage. The IJMA will also be consulted.
The JPM Act of 1987 has a provision of diluting up to 30% of the total jute bag requirement with HDPE bags in case of a shortfall. To increase the percentage of dilution, the textile ministry requires approval from the cabinet committee on economic affairs. “But it is a lengthy process. We would ask the food and the public distribution department to do their storage with old sacks,” Chakraborty said.
According millers under IJMA, the rise in raw jute price could have been checked had the jute commissioner intervened in August last year. But the commissioner’s de-hoarding drive came late and reduced holding raw jute stock in the mills from the equivalent of two months to one month. This forcibly inflicted losses on jute mills as fibre prices are continuously on the rise, an IJMA statement said.
Almost 60,000 hectares of jute crop was destroyed, forcing jute mills to stop production for three months. The commissioner issued notices to jute mills to fulfil their bag supply commitments with the government, but 30 jute mills ultimately defaulted.
Chakraborty said the commissioner has already issued show cause notices to those who have wilfully defaulted.