Demand for jute bags takes a sharp hit as govt orders dry up

The jute industry which was already going through a bad phase has taken a further hit due to the State not honouring its sourcing commitments this production season. The Minister of State for Textile (independent charge) Santosh Gangwar, will be holding talks with Punjab Chief Minister Prakash Singh Badal to find out the state’s failure to place any orders for jute bags in June and July despite prior commitments.

Raghavendra Gupta from the Indian Jute Manufacturers Association (IJMA) pointed out that Punjab sourced only 2 lakh bales of jute bags in May despite committing to source 7 lakh between May and October in the meeting convened by the Food Ministry for finalising the Kharif procurement plan for food bags.

The jute industry, predominantly in West Bengal, is in a state of panic after the recent killing of HK Maheshwari, CEO, North Brook Jute Mill, by workers, following disagreement over reducing the working days of the mill.

It’s a difficult situation. Mills are forced to lay off workers as there is not enough demand. The jute industry employs about 4,00,000 workers whose livelihood is threatened by the drying up of orders. It is creating unrest and leading to mob violence.

Demand for jute bags has taken a sharp hit since the June Packaging Material Act (JPMA), which mandates the use of the material for packaging of sugar and foodgrains by the UPA Government over the last two years. States are now increasingly using plastic bags to pack agricultural produce, especially sugar.

According to the IJMA, the jute industry lost Rs1,000 crore of business in 2013-14, as the sugar industry was allowed to pack 80 percent of its requirement in non-jute products. Orders completely dried up from the Government in the last six months, as there was an over-estimation of demand for bags by the Food Ministry in 2012-13, which led to a huge carryover of stocks the following year.

Around 115 lakh bales of raw jute are expected to be available in the country in the jute year 2014-15, and due to the installed production capacity, jute bags of about 18 lakh tonnes can be supplied under the JPM Act.

The Government procures about 40 percent of production of jute mills. Of which, Punjab is an important State for the jute industry as half of the procurement of jute bags done by the Food Corporation of India is on behalf of the State.