Financial Daily from THE HINDU group of publications
Saturday, Aug 07, 2004
Agri-Biz & Commodities
Shortage likely in raw jute supply
Kolkata , Aug. 6
THE raw jute position is currently in a precarious state. While on one hand crop production is almost down by 25-30 per cent, on the other hand, the Union Ministry of Textiles in yet to announce the minimum support price (MSP).
According to an official of the Jute Balers Association (JBA), the body of raw jute traders, floods and heavy rains have affected the crop in several parts of North Bengal. "More than the floods, the stagnant rain water has hampered the growth of the jute plants", he said.
As a result, not just the crop production is down by 25-30 per cent, the average length of the jute plants in this region has fallen to 4-4.5 feet from the average length of 9-9.5 feet because the farmers are being forced to go "immature cutting" of the plants. Prices of the shorter fibres are less than the longer ones.
According to the JBA estimates, the crop output for 2004-05 will be around 65 lakh bales (1 bale=180 kg) against 85.50 lakh bales in 2003-04. Carryover for the current year is 25.50 lakh bales.
The official said import of raw jute from Bangladesh would fall to three lakh bales against six lakh bales in 2003-04 because the crop position in the neighbouring country was even worse due to floods.
So, the total availability of raw jute, as per the JBA estimates, will be around 93.50 lakh bales. The average consumption by organised mills is estimated at approximately 88 lakh bales and another nine lakh bales are being consumed by the unorganised sector.
"Even these rough estimates, there is likely to a be shortage of raw jute to the extent of 3.50 lakh bales. There is another aspect. Last year, a number of mills were closed. This year the situation is different. Demand for raw jute from the organised sector is likely to be higher this year", the official said.
Meanwhile, the Ministry is yet to announce the MSP of raw jute. Generally, the announcement is made by the beginning of June. Sources said the delay has affected the operations of Jute Corporation of India (JCI), which is a major buyer of raw jute.
"We know that this year's average MSP will be approximately Rs 30 higher than that of last year's. However, until the official notification is being made we cannot start our operations", sources in JCI said.
During 2003-04, the average price of the TD-4 variety of raw jute, the most commonly used variety, was Rs 950 per quintal. While the year's high was Rs 1,035 per quintal, the low was at Rs 885 per quintal. The MSP of this variety was Rs 993 quintal.
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