Neighbour’s envy: India’s jute economy is faltering while Bangladesh’s is flourishing; here’s why

Lack of market, authorities procurement and diversification, poor infrastructure in addition to the sorry state of Indian jute mills is accountable, say specialists

“Simply 10 years in the past, this entire space was beneath jute, so far as the attention might see. Not anymore,” Narayan Ghosh mentioned whereas pointing at an unlimited stretch of farmland in Saguna village of West Bengal’s Nadia district.

“The vegetation was so dense and the vegetation so tall, over three metres, that the merchants who got here to purchase jute didn’t dare to enter the fields alone for worry of being misplaced,” Ghosh, a farmer who owns 0.5 hectares (ha) within the village, mentioned.

Ghosh’s phrases greatest seize the decline of India’s jute financial system. Manufacturing of the money crop has fallen by over 13 per cent prior to now decade —  1.77 million tonnes in 2021-22, from 2.03 million tonnes in 2011-12 — in accordance the third superior estimates launched by the Union Ministry of Agriculture and Farmers Welfare in Could 2022.

The identical is the case with land beneath jute. The common space beneath jute within the nation was 0.82 million ha between 2000-01 and 2009-10, based on a 2021 report by the Fee for Agricultural Prices and Costs (CACP). This declined to 0.73 million ha between 2010-11 and 2019-20.

In West Bengal — the nation’s largest jute-producing state, which additionally has 70 of India’s 93 jute mills — the realm beneath jute has diminished by 0.1 million ha between 2009-10 and 2020-21.

Jute may be extremely worthwhile. Its leaves are offered in markets as a vegetable even earlier than the crop is harvested. The internal stem can be utilized to fabricate paper whereas the outer layer produces the fibre. What, then, ails the jute financial system?

“There is no such thing as a marketplace for it,” Ghosh mentioned. Ten years in the past, he used to develop jute throughout his 0.5 ha, however regularly diminished and stopped cultivating the crop by 2011, shifting to horticulture crops.

“The jute value saved falling. From Rs 30,000-40,000 per tonne in late 2000s, it diminished to Rs 25,000 in 2010-11. This was barely sufficient to get well the enter value,” he mentioned. Different farmers within the village agreed that jute stopped fetching honest value and was even inflicting losses.

When the costs fell, the Jute Company of India (JCI) Ltd, a Authorities of India enterprise for procurement of uncooked jute from the growers on the minimal help value, barely intervened.

This mirrored in official procurement figures as effectively. Between 2007-08 and 2021-22, the amount procured by JCI decreased to 0.014 million tonnes, from 0.14 million tonnes.

The poor procurement figures got here regardless of the federal government being the biggest purchaser of jute baggage, which type the very best share of the overall jute merchandise manufactured within the nation.

There’s a particular regulation — the Jute Packaging Supplies (Obligatory Use in Packing Commodities) Act 1987 (JPMA) — that gives to be used of jute packaging materials for foodgrains. Beneath this Act, the federal government points orders every now and then for obligatory use of jute packaging.

Since 2017, the norms present that 100 per cent of foodgrains and 20 per cent of sugar ought to solely be packed in jute baggage. On account of this, jute sacks account for 75 per cent of the overall manufacturing of the jute trade.

Ninety per cent of the jute sacks are provided to the Meals Company of India and state procurement companies, based on a Union authorities press launch dated November 10, 2021, whereas the remaining are exported or offered instantly. It additionally says the federal government purchases jute sacks price Rs 8,000 crore yearly from mills.

Source: Food and Agriculture OrganizationThe Bangladesh story

Whereas India’s manufacturing and acreage declined, Bangladesh’s manufacturing and space beneath jute has elevated over time. India remains to be the biggest producer of jute however by way of acreage, Bangladesh is the biggest cultivator. It additionally accounts for practically 75 per cent of the worldwide jute exports, whereas India’s share is simply 7 per cent, based on the CACP report.

Paradoxically, even India imports jute merchandise (yarn, ground coverings and jute hessian) from Bangladesh, based on the Union Ministry of Commerce and Trade. In 2020- 21, India imported merchandise price Rs 1,123 crore from Bangladesh.

The CACP report mentioned imports from Bangladesh had adversely affected the home trade, on condition that the landed value of jute and its merchandise from the neighbouring nation was lower than the home charge.

Bangladesh has historically loved a comparative benefit in export of jute merchandise due to its low value of manufacturing pushed by decrease wages, beneficial energy tariffs, money subsidy for export and higher fibre high quality.

High quality, particularly, has been a sore level in India’s jute cultivation. Jute in India is marred by poor infrastructural services for retting, a course of carried out after harvesting of the crop.

Beneath retting, jute bundles are saved beneath water at a depth of about 30 cm. This course of provides the fibre its shine, color, and power. It ought to ideally be carried out in gradual shifting, clear waterbodies like rivers. However Indian farmers should not have entry to such assets.

Sajjan Mallick, who has 1 ha beneath jute in Saguna, mentioned there was no free flowing water physique in his village. He pointed to a small pond, the place lots of of farmers submerge their jute bundles in muddy water for days.

“Once we take them out, there’s a discolouration,” he mentioned. There’s one other larger pond at a distance, however with jute being a cumbersome crop, shifting bundles raises labour prices.

To beat such considerations, the Central Analysis Institute for Jute and Allied Fibres (CRIJAF) beneath the Indian Council of Agricultural Analysis has developed a mannequin retting tank with gradual shifting water. “We’ve got the know-how, but it surely wants promotion and adaptation,” Gouranga Kar, director, CRIJAF, mentioned.

Bangladesh additionally does effectively in exports as a result of it has three to 4 completely different sorts of subsidies. As an illustration, it provides 9-10 per cent export subsidy for food-grade packing baggage, which is far increased than India’s 1.5-3 per cent subsidy.

One more reason for the nation’s success is its capturing of the diversified jute merchandise market, for which there’s an enormous worldwide demand. India’s main jute exports, in distinction, are sacking and hessian baggage.

Moloy Chakraborty, the Jute Commissioner of India, identified that diversifying into different merchandise can open new avenues for the sector and scale back its dependence on the federal government. “Being environmental pleasant, jute has an enormous potential within the diversified items market, particularly in areas and nations which have banned plastic,” he mentioned.

Excessive-end trend manufacturers are additionally popping out with extra jute merchandise akin to sandals. With India’s excessive manufacturing, it must be able to seize this market. “Some 85 per cent of our jute is consumed domestically, whereas 15 per cent is exported. The scenario is reverse for Bangladesh,” Kar mentioned.

“Diversification is vital if India desires to make the jute market profitable. Demand for diversified merchandise needs to be created even domestically. This could be a huge enhance for a plastic-free India as effectively,” he added.

At the moment, 92 per cent of the overall home jute produced is used for packaging functions and simply eight per cent is for different merchandise, based on the Workplace of the Jute Commissioner.

Why, then, are jute mills not specializing in product diversification? JPMA ensures that the federal government purchases 70 per cent of the mills’ complete manufacturing, Rishav Kajaria, deputy chairman, Indian Jute Mills Affiliation (IJMA), mentioned.

This could put the mills on a robust footing to seize diversified markets for the remainder 30 per cent. Nonetheless, solely a handful of mills have the capability to diversify.

Sorry state of mills

Jute mills are marred by problems with equipment modernisation, mismanagement, labour scarcity and unrest and dependence on the federal government. Trade specialists Down To Earth spoke to mentioned of the 70 mills in West Bengal, solely round 60 are presently working.

At the very least 10 mills closed down between October 2021 and Could 2022, after a state authorities choice to cap pricing of uncooked jute on September 30, 2021. The choice was opposed by the trade and revoked on Could 19 this yr.

Specialists additionally mentioned the choice led to large losses. The Union authorities capped the value at which the jute mills can buy uncooked jute at Rs 6,500 per quintal (1 quintal equals 0.1 tonne) and it based mostly its purchases of jute baggage on this cover. However the precise value borne by mills to purchase uncooked jute was Rs 7,000-7,200 per quintal.

Of the ten mills that closed down, three haven’t managed to open once more, rendering round 60,000 employees unemployed.

Kajaria additionally mentioned one of many causes the enterprise had not been worthwhile was insufficient and arbitrary pricing of jute baggage by the federal government. This pricing is fastened on a formulation derived by the tariff fee, beneath the Union Ministry of Commerce and Trade.

At the moment, the luggage are priced on the premise of the provisional charges of 2016, which had been meant to final for simply six months, until the fee got here out with a brand new report. The report was lastly submitted to the Union Ministry of Textiles in April 2021 and is pending implementation.

Within the meantime, IJMA has been in a tussle with the Union textile ministry, demanding revision of costs. On the present costs, based on the affiliation, the trade is making a minimal lack of Rs 3,000 per tonne by supplying jute baggage to the federal government.

“Uncooked jute costs are growing however the prices haven’t been up to date,” Kajaria mentioned. “The trade is in survival mode proper now. Some 70 per cent of my market isn’t paying me pretty. We should not have a robust steadiness sheet to consider innovation,” he added.

“There are only a few mills that may take themselves out of a foul financial scenario,” Amlesh Mishra, president of Loomtex Engineering Personal Restricted in North 24 Parganas, West Bengal, mentioned. He has been working within the jute trade for the final 37 years.

Specialists mentioned of the functioning mills, solely 8-10 are in good monetary well being and may survive seasonal losses. The enterprise of one other 20 mills is simply common. The remainder of the mills are financially unsound.

On the Baranagar Jute Mill in Kolkata, as an example, employees complain that the operations have considerably diminished prior to now few years and so have the wages of the staff.

“I get work for hardly 12 days a month now,” Ashok Kumar Das, who has been working on the mill for the final 20 years, mentioned. Sushil Jaiswal, chief of the jute employees’ commerce union, who has additionally labored on the Baranagar mill prior to now, alleged that it’s being transformed right into a warehouse.

“The machines are being dismantled,” he mentioned. DP Bhatter, an official on the mill, agreed that they had been operating at solely 50 per cent capability, however blamed the pricing cap for the scenario.

However even the mills which might be doing effectively are marred by issues. Samir Kumar Chanda, director of Hukumchand Jute Mill, mentioned to be Asia’s largest jute mill, in North 24 Parganas, mentioned they had been no less than 2,000 labourers quick.

“It has grow to be troublesome to search out employees able to work in a jute mill.” The corporate has lately adopted a brand new coverage, beneath which its human assets supervisor goes to close by villages to search for folks interested by working in a jute mill and make them conscious of the incentives and wages the mill is giving.

All isn’t misplaced, Chanda mentioned. “Jute has a vivid future. We have to create a requirement for diversified merchandise and modernise,” he mentioned.

For modernisation of the jute mills, the Union authorities is implementing the Incentive Scheme for Acquisition of Plant & Equipment, beneath which capital subsidy is being supplied to switch the previous machines.

Nonetheless, mill officers mentioned the subsidy had been stopped since final two years. Chakroborty confirmed that the scheme had been stopped, however solely quickly, since a brand new model of the scheme for the entire of textile trade was within the works.

This was first printed within the 1-15 July, 2022 version of Down To Earth 

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