Eyeing a Larger Market for Assam Jute

Jute production has increased significantly, more than twice as much as the national average, in Assam.

Jute production has increased significantly in Assam and is up more than twice as much as the national average. Jute growers in the state can rely on the central government’s mandated use of jute in the packaging of rice and sugar to get a fair price for their produce during hard times, but diversifying jute products remains the key challenge for long-term sustainability.

According to official data, the state’s jute production increased by more than 68% while it increased by only about 32% nationally. The National Jute Board (NJB), which supports scientific cultivation by providing jute growers with financial assistance through a variety of programs designed to boost output and productivity, is credited with the increase in production. The Jute Packaging Materials (Compulsory Use in Packaging Commodities) Act, 1987, and the special attention it received during implementation have both contributed to an increase in production.

For the packaging of sugar and food grains, the Act requires the use of 100% jute sacks. The central government purchases jute sacking bags worth Rs 9000 crore and the Jute Commissioner places the order to jute mills for production of these bags under Production-cum-Supply Order.

This amount and the quantity of jute sacks purchased increased by more than 16% over the previous five years, indicating a renewed emphasis on Act implementation. Official estimates indicate that the government purchases 70% of the world’s jute at a minimum support price, preventing jute growers from making a distressed sale.

The amount of the guaranteed market for jute growers can be seen in the 188 lakh bales of jute bags the government purchased for Rs 56,000 crores over the previous five years. According to data the central government submitted to the Lok Sabha, the Jute-ICARE (Improved Cultivation and Advanced Retting Exercise) program covered 1.63 lakh hectares of land and 3.64 lakh jute growers in 212 blocks over the course of the last eight years.

The government reports that the scheme’s distribution of 4.13 MT of certified jute seeds and agronomic tools increased productivity from 22/23 quintals per hectare to 26/28 hectares and increased jute growers’ income by about Rs 10,000 per hectare. From 6.57 lakh quintals in 2017–18 to 11.70 lakh in 2022–23, the state’s total production of raw jute increased.

Rising paddy purchases in Assam portend increased demand for sacks made of jute, which could result in further expansion of the state’s jute farming industry. 5.65 lakh MT of paddy was a record amount purchased by the state, and it continues to aim to purchase 10 lakh MT of paddy this year.

If the state meets its goal, the demand for jute sacking bags will increase, which has opened up opportunities for new businesses to engage in the manufacture, purchase, and distribution of jute bags. Jute’s MSP increased by Rs 250 to Rs 4750 per quintal for the fiscal year 2022–2023, guaranteeing a minimum profit margin of 50%.

The Commission for Agricultural Costs and Prices, Department of Agriculture and Farmers Welfare, Ministry of Agriculture and Farmers Welfare in its report titled ‘Prime Policy for Jute 2022-23 Season’, however, highlighted that “market prices of jute prevailed well above the MSP in all years, with the exception of 2017–18, when the average market price was just a little bit higher than the MSP.

Therefore, JCI purchased the most raw jute in the last five years—3.4 lakh bales—in order to guarantee MSP to farmers.” The Commission emphasized the need to educate jute growers on the advantages of high-quality fibers and notes that a large portion of jute produced in India is of low quality and that the share of good quality jute fiber is less than 35% compared to the target of 50%.

In order to change the situation, it will be essential for the federal and state governments to implement its recommendation to offer producers of high-quality fiber an appropriate price incentive in exchange for high returns. It also recommends “diversifying beyond traditional use of jute in packing” into manufacture of non-conventional products, which have high demand in the domestic and in the international market.

The paradox that Bangladesh accounts for nearly 75% of global jute exports while Bangladesh produces less jute overall is also highlighted in the report. Bangladesh produces less jute than India, which accounts for only 7% of global jute exports.

While formulating future policies the policy makers need to take into consideration another key observation of the Commission in its report that jute trade in domestic market is dominated by private players and majority of small and marginal jute growers are at the mercy of traders for determination of moisture by “a highly subjective hand and eye method of inspection.” By emphasizing quality and product variety, the state’s jute growers can target a larger market.

Reference: www.sentinelassam.com