West Bengal jute mills are sitting on huge stocks, even after operating as only a third of capacity. According to rules, it is compulsory that 90 per cent of packaging of foodgrain be done in jute bags but the Punjab government is refraining from purchasing jute bags used for foodgrain packing. Punjab which is the largest buyer of jute bags from West Bengal mills. In addition, orders from the sugar sector have dried up due to which the jute sector in West Bengal is faced with crisis.

In November, the Punjab government had placed orders for procurement of 384,000 bales of gunny bags with mills in West Bengal. However, later the state expressed inability to buy, signaling high prices. Usually, the Punjab government procures half its requirement of 150,000 bales by the end of December. Recently, the state requested the Food Corporation of India to purchase the bags on its behalf. However, so far, no purchase has been made for foodgrain packaging in Punjab.

So far, Haryana has procured 180,000 bales and Madhya Pradesh 200,000 bales of bags. While, Uttar Pradesh, third largest consumer of jute bags have so far not procured.

Sanjay Kajaria, former chairman of the Indian Jute Mills Association said that they expect the Uttar Pradesh government to procure jute bags soon, though there are some delays.

As a result of poor demand, the work hours in jute mills are being curtailed, leading to labour unrest. In the recent past, in 10 of 50 mills, periodic work suspension was declared due to lack of demand, said Kajaria.

After dilution of the Jute Packaging Materials Act, which reduced the minimum mandatory packaging for sugar in jute bags from 100 to 20 percent recently, the demand from sugar mills, too, has dried up.

The stock of jute goods in mills in West Bengal at the end of November was 113,000 tonnes, against 85,000 tonnes in November 2013. In 2013-14, production of jute goods was 300,000 tonnes, against 430,000 tonnes in the previous year, a fall of 30 percent.