A price ceiling on raw jute has presented a fresh challenge for jute mills that have sought government (both central and state) intervention to address the issue amid the prevailing high prices of similar grade of jute crop in Bangladesh.

Owing to the Covid pandemic and cyclone Amphan, in 2020-21, raw jute production had fallen to 58 lakh bales. Bengal constitutes a major part of the jute production in India. This led to high volatility in raw jute prices for the season ending June 2021. Farmers who got better prices from the sale of crops in the previous year stepped up output for the 2021-22 jute season.

According to Indian Jute Mills Association estimated raw jute production in 2021-22 jute year is 85 lakh bales. But it is still less than 100 lakh bales required for production of jute bags to package foodgrains.

Higher new crop supply in July 2021 led to raw jute prices falling sharply. But farmers were reluctant to part with the crop at low prices. The office of the Jute Commissioner issued a notification with an upward ceiling of Rs 6,500 per quintal in September.

While the price is higher than the MSP of Rs 4,500 per quintal, it is still below the prevailing price in Bangladesh of around Rs 7,000 per quintal for comparative grade of raw jute.

“With over 60 per cent of the crop still held at the micro level, the price ceiling limits fixed will prove to be counterproductive. The jute growers will become wary of committing to cultivation, thereby negating the objective of promoting jute to meet the goals of eco-friendly packaging of food grains,” IJMA said in a letter to textile minister Piyush Goyal.

The industry body has also written to Bengal chief minister Mamata Banerjee requesting to take up the matter of price ceiling with the Centre.

IJMA also sought government intervention towards utilising Jute Corporation of India to procure jute from farmers and supply the industry under linkage of jute bag supply order.