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MSP for raw jute to be increased by Rs 10

Agencies - Kolkata

With a view to negate the adverse impact of dilution of the Jute Packaging and Mandatory Act on farmers, the government is likely to increase the minimum support price for TD-5 grade of raw jute (ex-Assam) for the season 2003-04 by Rs 10 to Rs 860 per quintal. “It is felt that till the time raw jute prices firm up against the dilution in compulsory packaging norms, jute farmers will need further support from the government,” a note from the Union ministry of textiles to ministry of agriculture said. “A nominal increase in MSP of jute of Rs 10 per quintal as suggested by the Commission for Agricultural Cost and Price (CACP) seems justified,” it said. However, the ‘nominal’ increase in MSP was likely to have serious political repercussions in West Bengal where panchayat elections are due in May, trade union sources said. “This is just an attempt to discourage farmers to cultivate jute because there is likely to be severe decline in demand for raw jute from mills during the year due to dilution of JPMA,” the sources said.

The dilution was likely to bring down demand from mills as supplies to sugar industry and FCI for packaging of foodgrains were likely to come down to nine lakh tonne from 15 lakh tonne. This would have a serious impact on farmers in the long run, industry sources said. The note said in 2002-03 due to a bumper crop of about 110 lakh bales and dilution in compulsory packaging norms, a large quantity of raw jute was sold by farmers to JCI at the MSP as the market price had dipped sharply.

The note said as on December 31, 2002, the total jute arrival in the market was 66.54 lakh bales. Out of this, JCI procured 11.90 lakh bales at MSP which was about 18 per cent of the total market arrival while in the last few years, the share of JCI was not more than four per cent of total arrivals, it said. “With competition from synthetic material, the jute industry is losing its competitiveness both in the domestic and international markets. Our ability to provide financial support to exports is limited from the point of view of WTO regulations and resources constraints,” the note said.