The Calcutta High Court on Wednesday directed the Jute Commissioner to take necessary measures to ensure that raw jute is made available at the notified price or to “review and re-fix” the rate, taking into consideration the freight, transportation, handling, and storage charges.
The Jute Commissioner, had, in a notification dated September 30, 2021, fixed the price of jute at ₹6,500 a quintal for 2021-22 till June 30, 2022.
However, mills have not been able to procure at these rates as market prices are ruling far higher at around ₹7,000–7,200 a quintal despite an estimated higher production of raw jute this year.
“The Jute Commissioner is directed to adopt stringent measures to implement the notified rate, but despite all efforts, if it appears that the notified rate cannot be adhered to, then the Jute Commissioner shall review and re-fix the rate, taking into consideration the relevant factors as mentioned in the Control Order, 2016,” the Calcutta High Court said in its order dated May 11.
The price cap of ₹6,500 a quintal fixed by the Jute Commissioner is not only causing the closure of jute mills across the country but has also led to more than 50 per cent of the demand for food grain packaging during the ongoing Rabi Marketing Season (RMS) 2022-23 being met through polypropylene bags.
According to Raghav Gupta, Chairman, Indian Jute Mills Association, the raw jute price is ruling at around ₹7,000 a quintal at present but the pricing of jute bags is based on the notified price of ₹6,500 a quintal.
“Mills are incurring losses due to this and as many as 11 mills are currently closed down. The High Court order has come just today. we need to wait and watch (the implication),” Gupta told BusinessLine.
West Bengal is estimated to produce close to 85-90 lakh bales of raw jute in 2021-22, compared to 55-58 lakh bales in 2020-21. The higher production is on the back of favourable weather conditions and an increase in sowing area due to the highly remunerative prices the golden fibre fetched last year. There is no carryover stock from last year due to a lower crop, so the market prices have been ruling much higher.
The Jute Commissioner, being the statutory authority, is liable to take all necessary steps to ensure that raw jute is available at the notified rate. The Jute Commissioner ought to appreciate that fixing a rate which is not feasible serves no purpose. As the jute mills are legally bound to supply the jute bags to the government for which they are reimbursed at the notified rate, they have no other alternative but to sell the finished products at a loss, the High Court observed.