Jute Commissioner restricts stock limit for mills to curb raw jute prices

Jute mills will now require to hold raw jute stocks only up to a specified limit, that the office of the jute commissioner has fixed, to keep prices under control so that the Centre’s subsidy payout remains under check. The Centre has to bear 100% subsidy for procuring jute bags required for stocking foodgrains. Increase in raw jute prices effects in increase of jute bag prices and therefore the Centre’s subsidy burden escalates.

The Jute Commissioner’s (JC) office has issued an order wherein it has specified the stock limit for each and every jute mill of the country’s 72 operational jute mills at present. The JC has asked the jute mills to file weekly stock returns instead of monthly stock returns to prevent brisk buying, often imbalancing the demand supply situation, thereby escalating raw jute prices.

Deputy Jute Commissioner Koushik Chakraborty told Fe that raw jute price came below Rs 6,000 per quintal after the JC’s office conducted raids and seized hoarded stocks from a section of jute traders. But prices have again started increasing and have gone beyond Rs 6,000 per quintal, prompting the JC to take curbing measures. Raw jute average prices as on January 21, has shot up to Rs 6,150 per quintal and this has happened since a handful of jute mills have indulged in brisk buying.

“To prevent over stocking we have brought in the order, valid up to July this year or until further orders, which ever is earlier,” Chakraborty said, adding that stock limit for each jute mill is in varying quantity because of various factors taken into consideration such as production capacity of a jute mill, raw jute stock of a jute mill during the six months period last year, stock during the six months period preceding the date of the order and such others enumerated in the Jute & Jute Textile Control Order (JJTCO)- 2016.

The order says, if a “jute mill is already holding raw jute above the specified limit, the jute mill is directed to totally suspend new purchases or execute new contract till the time it’s stock comes down to the specified limit”. Violation of this order would attract imprisonment or fine under clause 11 of the JJTCO- 2016. However, the order shall not be applicable on raw jute purchases from the Jute Corporation of India.

Although there was no official statement available from the Indian Jute Mills Association (IJMA) , Sanjay Kajaria, joint managing director of Hastings Jute Mill, said the order was a welcome move since it was necessary to curb raw jute prices to keep the mills running.