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Amidst a steep rise in raw jute prices, the government has issued an order capping the maximum stock that traders, balers, and millers can hold, while industry stakeholders believe that the move will boost the supply of the commodity in the short term but may not be effective to stabilise the market in the long run.
The order, issued by the Office of Jute Commissioner under the Ministry of Textiles, allowed balers with presses to hold a maximum of 2,000 quintals of raw jute, other stockists to 300 quintals, and mills to no more than 45 days of consumption at current production rates.
The order comes in the wake of jute prices breaching the ₹9,000 per quintal mark, with mills struggling to procure the raw material and facing thin arrivals.
"The stock control order may be a deterrent against hoarding at the market level, but it is unwarranted for millers. If a raw jute stock limit is imposed at the early season, we may face difficulties in the rest of the year in ramping up production for jute bags and meeting the government sector's requirements. We do not support stock restrictions on jute mills so early in the season," Indian Jute Mills Association chairman Raghavendra Gupta told PTI.
Traditionally, mills enter the season with 10 lakh bales of stock, but this year they are beginning the critical September–October festival packaging period with historically low reserves, according to millers.
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Gupta said millers are in "a vulnerable position with a low stock of the raw material".
"On average, millers now have a stock of 25 days, which is roughly 5 lakh bales. Since raw jute was being hoarded at the ‘mokam’ (marketplace in villages) level, there was hardly any arrival at mills," he said, claiming that import restrictions through land port from Bangladesh and a decline in production have been adding to the woes.
Jute Balers’ Association committee member Jai Bagra dismissed the allegation of hoarding.
He said raw jute production is down by 10-15% this year, and carryover to the current season was estimated to be "not over 18 lakh bales".
The carryover was to the tune of 30 lakh bales in the last year, he said.
"Less production, coupled with less carryover and restrictions on raw jute import from Bangladesh, are reasons why the prices are skyrocketing. There is no hoarding as no one will be able to hoard the commodity when traders are paying through the nose," Bagra told PTI.
He said the stock control order might cool off the market to some extent in the short run.
"But the move may not be effective in taming prices in the long run, as crop (raw jute) is expected to be less this year. In the 2024-25 jute year (July-June), the raw material availability was to the tune of 95 to 98 lakh bales, including imports. Moreover, the government's order for jute bags is likely to be steady this year, and demand for raw materials from millers will remain steady." Former IJMA president Sanjay Kajaria said the new stock control order is aimed at curbing hoarding and speculative trading, but he felt that it might have "limited impact".
Read more: Nepal protests: Forensics show live ammunition used, only 1 out of 34 bodies had rubber bullet
"Mills are already at low stock levels and cannot build reserves. The restrictions will hit traders, but the real shortage remains unaddressed," he told PTI.
An industry veteran on condition of anonymity said, "Earlier this month, the Jute Commissioner fixed the price of Government B-Twill (GBT) bags (gunny bags for food grains packaging) at ₹1,28,600 per metric tonne until further orders. Mills argued that this makes operations unviable as they are forced to buy raw jute at soaring open-market prices while supplying bags at capped rates, without any provision for reimbursement." Industry stakeholders, however, agreed that the bullish raw jute prices are a fillip to farmers as they have been fetching remunerative returns, more than the minimum support price of raw jute (TD-3 grade) fixed at ₹5,650 per quintal for the 2025-26 season.
"As raw jute prices are soaring, farmers are fetching record prices for their produce," Gupta said.
A miller, on condition of anonymity, said, "For the past two years, farmers sold raw jute below the minimum support price (MSP), with the Jute Corporation of India (JCI) intervening only marginally. Farmers, for the first time in years, are receiving remunerative prices above MSP, but fear that aggressive interventions could reverse their gains.”
The order, issued by the Office of Jute Commissioner under the Ministry of Textiles, allowed balers with presses to hold a maximum of 2,000 quintals of raw jute, other stockists to 300 quintals, and mills to no more than 45 days of consumption at current production rates.
The order comes in the wake of jute prices breaching the ₹9,000 per quintal mark, with mills struggling to procure the raw material and facing thin arrivals.
"The stock control order may be a deterrent against hoarding at the market level, but it is unwarranted for millers. If a raw jute stock limit is imposed at the early season, we may face difficulties in the rest of the year in ramping up production for jute bags and meeting the government sector's requirements. We do not support stock restrictions on jute mills so early in the season," Indian Jute Mills Association chairman Raghavendra Gupta told PTI.
Traditionally, mills enter the season with 10 lakh bales of stock, but this year they are beginning the critical September–October festival packaging period with historically low reserves, according to millers.
Read more: World will face consequences by imposing sanctions on Russian oil, says Hardeep Puri
Gupta said millers are in "a vulnerable position with a low stock of the raw material".
"On average, millers now have a stock of 25 days, which is roughly 5 lakh bales. Since raw jute was being hoarded at the ‘mokam’ (marketplace in villages) level, there was hardly any arrival at mills," he said, claiming that import restrictions through land port from Bangladesh and a decline in production have been adding to the woes.
Jute Balers’ Association committee member Jai Bagra dismissed the allegation of hoarding.
He said raw jute production is down by 10-15% this year, and carryover to the current season was estimated to be "not over 18 lakh bales".
The carryover was to the tune of 30 lakh bales in the last year, he said.
"Less production, coupled with less carryover and restrictions on raw jute import from Bangladesh, are reasons why the prices are skyrocketing. There is no hoarding as no one will be able to hoard the commodity when traders are paying through the nose," Bagra told PTI.
He said the stock control order might cool off the market to some extent in the short run.
"But the move may not be effective in taming prices in the long run, as crop (raw jute) is expected to be less this year. In the 2024-25 jute year (July-June), the raw material availability was to the tune of 95 to 98 lakh bales, including imports. Moreover, the government's order for jute bags is likely to be steady this year, and demand for raw materials from millers will remain steady." Former IJMA president Sanjay Kajaria said the new stock control order is aimed at curbing hoarding and speculative trading, but he felt that it might have "limited impact".
Read more: Nepal protests: Forensics show live ammunition used, only 1 out of 34 bodies had rubber bullet
"Mills are already at low stock levels and cannot build reserves. The restrictions will hit traders, but the real shortage remains unaddressed," he told PTI.
An industry veteran on condition of anonymity said, "Earlier this month, the Jute Commissioner fixed the price of Government B-Twill (GBT) bags (gunny bags for food grains packaging) at ₹1,28,600 per metric tonne until further orders. Mills argued that this makes operations unviable as they are forced to buy raw jute at soaring open-market prices while supplying bags at capped rates, without any provision for reimbursement." Industry stakeholders, however, agreed that the bullish raw jute prices are a fillip to farmers as they have been fetching remunerative returns, more than the minimum support price of raw jute (TD-3 grade) fixed at ₹5,650 per quintal for the 2025-26 season.
"As raw jute prices are soaring, farmers are fetching record prices for their produce," Gupta said.
A miller, on condition of anonymity, said, "For the past two years, farmers sold raw jute below the minimum support price (MSP), with the Jute Corporation of India (JCI) intervening only marginally. Farmers, for the first time in years, are receiving remunerative prices above MSP, but fear that aggressive interventions could reverse their gains.”
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