December jute mills stir disrupts sackings supply

Surge in demand due to record grains procurement.

Sacking continues to be a key jute product constituting 65 per cent of the country’s total jute goods production

Kolkata, The 18-day long strike during December has led to disruption in supply of jute sacking to the Union Government. The problem has been compounded by a sudden surge in the Government demand for the sackings.

The surge has been caused by record procurement of foodgrains during the current season that ends this month.

Demand-supply

Food production has increased from 140 million tonnes (mt) in 1987-88 to 229.85 mt in 2008-09 at a compounded annual growth rate of 2 per cent while during the same period the requirement of jute sackings grew by four per cent and actual offtake by five per cent, according to Mr Sanjay Kajaria, Chairman of Indian Jute Mills Association (IJMA).

“In August last year orders were placed for 2,50,000 bales (of 180 kg), jumped to 3,30,000 bales next month (September ), which was more than the industry’s assessed sacking supply capacity of 2,25,000 bales a month. Moreover there are various logistical issues, which further brought down the actual availability to 1,75,000 to 2,00,000 bales. The higher demand coupled with shortfall in supply thus resulted in crisis in August, which was further aggravated in September. This disruption set in motion a chain of successive supply failures never allowing the industry to recover,” Mr Kajaria said.

Sacking continues to be a key jute product constituting 65 per cent of the country’s total jute goods production. The strikes in the jute mills in December resulted in production loss equivalent to 1,50,000 to 1,75,000 lakh bales for B Twill Bags. This along with backlog further worsened the situation, he pointed out.

Industry, Mr Kajaria said, was already taking positive steps to stop recurrence of strikes and had asked Ernst and Young to prepare a report highlighting the underlying key issues and suggesting necessary measures. A committee appointed by the Union Labour Ministry was working in this regard.

There has been virtually no expansion of the sacking capacity in the last three years. “As foodgrain production is going up, so is the demand for sacking and the industry, therefore, should be allowed to expand capacity to meet the burgeoning demand and be able to meet the sudden rise in orders placed by various agencies,” he said.

NON-JUTE BAGS

The industry is also likely to suffer due to Centre’s Standing Advisory Committee’s decision on use of non-jute bags, up to 25 per cent, for packaging foodgrains procured for buffer stocks.

“The production of sugar has more than doubled, while sacking needed to pack has actually fallen due to lack of demand from sugar industry. This shows that dilution is hurting more than intended. Many sugar companies are blatantly using synthetic bags for packaging,” he observed.

source: thehindubusinessline