On Wednesday, Calcutta High Court directed the Jute Commissioner to take the necessary steps to ensure that raw jute is available at the notified price, or to "review and re-fix" the rate, taking into account freight, transportation, handling, and storage charges.
In a notification dated September 30, 2021, the Jute Commissioner set the price of jute at $6,500 per quintal for 2021-22 until June 30, 2022.
However, mills have been unable to procure at these rates because market prices are far higher at around 7,000–7,200 per quintal, despite an estimated increase in raw jute production this year.
"The Jute Commissioner is directed to adopt stringent measures to implement the notified rate, but 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 a May 11 order.
The Jute Commissioner's price cap of 6,500 per quintal has not only caused the closure of jute mills across the country, but has also resulted in polypropylene bags meeting more than half of the demand for food grain packaging during the ongoing Rabi Marketing Season (RMS) 2022-23.
According to Raghav Gupta, Chairman of the Indian Jute Mills Association, the raw jute price is currently around 7,000 per quintal, but jute bag pricing is based on the notified price of 6,500 per quintal.
"Mills are losing money as a result of this, and 11 mills are currently closed." The order from the High Court was issued just today. "We will have to wait and see (the implication)," Gupta told.
West Bengal is expected to produce approximately 85-90 lakh bales of raw jute in 2021-22, up from 55-58 lakh bales in 2020-21. The increased output is due to favourable weather conditions and an increase in sowing area as a result of the highly lucrative prices the golden fibre fetched last year. Due to a lower crop, there is no carryover stock from last year, so market prices have been much higher.
As the statutory authority, the Jute Commissioner is responsible for taking all necessary steps to ensure that raw jute is available at the notified rate.
The Jute Commissioner should understand that setting a rate that is not feasible serves no purpose. The High Court observed that because jute mills are legally required to supply jute bags to the government for which they are reimbursed at the notified rate, they have no choice but to sell the finished products at a loss.
