fibre policy sub groups report dir mg d 20100608 3

7/28/2019 Fibre Policy Sub Groups Report Dir Mg d 20100608 3

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SECTION III:JUTE FIBRE


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TABLE OF CONTENTS

SUMMARY JUTE FIBRE .................................................................................................................. 200

3.1 INTRODUCTION ............................................................................................................................ 203

INDUSTRY AT A GLANCE ............................................................................................................ 204

3.2 AGRICULTURE ............................................................................................................................. 205

CONSUMPTION OF RAW JUTE ................................................................................................... 208

RETTING OF JUTE FIBER ............................................................................................................ 209

3.3 INDUSTRY ..................................................................................................................................... 210

PRODUCTION, MARKET AND SALES ......................................................................................... 210

FINANCIAL HEALTH OF THE MILLS ........................................................................................... 213

3.4 ISSUES ........................................................................................................................................... 216

AGRICULTURE ............................................................................................................................. 216

INDUSTRY ..................................................................................................................................... 219

TECHNOLOGY .............................................................................................................................. 222

3.5 RECOMMENDATIONS .................................................................................................................. 228

AGRICULTURE ............................................................................................................................. 228

INDUSTRY ..................................................................................................................................... 233

3.6 ROAD MAP .................................................................................................................................... 238

3.7 ACTION POINTS ........................................................................................................................... 241

AGRICULTURE ............................................................................................................................. 241

INDUSTRY ..................................................................................................................................... 243

3.8 POLICY STATEMENT ................................................................................................................... 246

PREAMBLE .................................................................................................................................... 246

VISION ........................................................................................................................................... 246

OBJECTIVES ................................................................................................................................. 247

THRUST AREAS ........................................................................................................................... 247

ANNEXURE JUTE FIBRE ................................................................................................................ 249

ACKNOWLEDGEMENT................................................................................................................. 250

MEMBERS OF SUB-GROUP (JUTE) FOR NATIONAL FIBRE POLICY ...................................... 251


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SUMMARYJUTE FIBRE

I. Jute fibres inherent characteristics of strength, versatility, being eco-friendly, etc can directly cater to

technical and industrial requirements through its appropriate functional end uses. The Indian jute

industry had been at the forefront of industrialization of the Indian economy. The first jute mill In India

was established in the year 1855. Today the Jute Industry is one of the major industries in the eastern

region, particularly in West Bengal. It supports nearly 40 lakh farm families, provides direct

employment to about 2.6 lakh industrial workers besides livelihood to another 1.4 lakh persons in the

tertiary sector and allied activities. The production process in the jute industry goes through a variety

of activities, which include cultivation of raw jute, processing of jute fibers, spinning, weaving,

bleaching, dyeing, finishing and marketing of jute products. The jute industry produces goods worth

Rs 6500 crore p.a. and contributes to export earnings to the tune of nearly Rs. 1200 crores p.a. The

jute industry is labour intensive, thus requiring such a large number of people in the value chain. The

industry at present faces stiff competition from its cheaper substitutes and is plagued with many

problems ranging from obsolete technology, labour unrest, etc.

II. The following issues concerning the industry emerged:

Jute is a natural and eco friendly vegetable bast fibre extracted from plants whose stems are

used as renewable energy resource and for other diversified uses. Its products are re-usable,

sustainable and bio-degradable and deserve policy support towards environmental

commitments.

The jute sector is subjected to demand constraint

The current demand for jute is mainly dominated by domestic consumption and comprises

approximately 87% of the total production of jute goods in quantity terms.

A consistent rate of domestic consumption of jute goods in India could reflect the industrys

satisfaction with an assured demand from their large consumers in the protected market.

Traditional products like Sacking and Hessian constitute the bulk of the product-mix (over

80%) which creates low value addition and are manufactured with age old machinery.

In an unprotected market the traditional products would suffer from poor price

competitiveness compared to alternative products. The Export Market expansion will also

depend on the ability reduce cost to attain price competitiveness.

Despite Indias potential for positioning jute goods in export market, jute goods confined

mostly towards domestic consumption and the export remained almost stagnant.

Raw jute production has remained stagnant and acreage has also declined.


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Jute growers have been unable to obtain remunerative returns for raw jute.

Fluctuations in raw jute prices around the year.

Surplus production of raw jute as compared to demand for raw jute can deflate prices of raw

jute thus leading jute growers to distress selling.

The gaps between production of raw jute and production and consumption of finished jute or

jute goods creates a vicious cycle between jute growers and jute mills further leading to a

demand inconsistency and uncertainty for jute.

Shortage of certified seeds in proximity of jute growing areas.

Non-determination of Jute grades through scientific grading systems and absence of proper

jute quality mapping leads to price variation in accordance with the decisions of the buyers.

Lack of or minimal availability of appropriate storage and warehousing facilities affect the

consistent availability and quality of jute.

Jute mills in India are characterized with high conversion costs.

Jute industry in general suffers from technological obsolescence, as there have been only

lukewarm response in adoption of new technology developed by international machinery

manufacturers and GOI sponsored projects.

Poor industrial practices like in the field of Material Handling, Training & labour, Maintenance,Quality Management, Energy Management, IT application & ERP etc caused the industry

dearly in terms of profitability and cost competitiveness.

Assured market of over 50% of jute products through the JPM Act and cost plus administered

pricing of over one third of total production acted as dampener in the real time modernization

efforts of the industry.

Jute mills have not been able to generate desired level of profitable returns.

Shortage in availability of skilled labour.

Lack of compliance of welfare measures for growers and workers.

Lack of collaborations within and between the institutions, jute growers, traders, jute mills,

entrepreneurs of JDP.

Compatibility of Jute fibres for blending with other fibres.

III. The policy aims at sustained growth and improved competitiveness of jute fibre, by taking appropriate

measures:

to create demand for jute fibre and its products;

to produce good quality fibre and products to meet the domestic and international demand;


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to create more value addition by shifting the focus to product diversification with help from

Intensive R&D and market research

to make an concerted effort by all concerned e.g., the industry, R&D institutions, machinery

manufacturers etc which is to be supported and facilitated by the Government for rapid

development of upgraded technology and their adoption in large scale.

to ensure remunerative prices to the jute farmers in the country;

to increasingly contribute to sustainable employment and the economic growth of the nation;

to compete with confidence for an increasing share of the global market;

to develop transparent information mechanism regarding jute, across the value-chain;

to encourage self-initiatives from stakeholders for overall development and self-sufficiency of

the jute sector;

to position jute as a positive prospering eco-friendly commodity with potential for diverse

applications and make it the preferred choice of all the users.

IV. The Policy envisages a road map for the jute industry for short term (5 years hence), medium term (10

years hence) and long term (15 years hence) as shown in chapter 3.7.


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INDUSTRY AT A GLANCE

There are 78 composite jute mills in the country, of which 61 are located in West Bengal.

These mills have 48 thousand looms with 7.5 lakh spindles.

The total production of jute goods was 16.34 lakh tonnes in 2008-09, out of which 2.80 lakh

tonnes was accounted for by Hessian, 10.71 lakh tonnes by Sacking, 1.76 lakh tonnes by

Yarns and twines, 0.05 lakh tonnes by Carpet Backing Cloth (CBC), and 1.02 lakh tonnes by

other diversified products.

The value of the total production of jute goods is approximately Rs. 6000 crores. The product

mix of the jute industry is highly distorted in favour of low-valued jute sacks (nearly 66% of the

total).

The jute industry provides direct employment to about 2.6 lakh workers.

1900 Small and Medium Sector enterprises providing employment to around 1.35 lakh

artisans / workers are engaged in production of diversified jute products.

In addition, around 1.4 lakh people are engaged in the tertiary sector and allied activities,

supporting the jute economy.

The jute industry also contributes to exports to tune of nearly Rs 1200 crores per annum.

The Jute sector contributes Rs. 110 crores to the National exchequer by way of Income Tax,

Fringe Benefit Tax and Cess.


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3.2AGRICULTURE

3.2.1. Jute is a rotational crop which is grown once a year between March / April and July / August (90 110

days). There are different grades of jute viz. TD 1 to TD 8 (Tossa variety) and W1 to W8 (White

variety) and four grades of Mesta M1 to M4. Tossa Deshi (TD) jute is the most commonly used by

industry .TD 4 and TD 5 constitute of almost 60% of the total jute production. West Bengal contributes

65% of raw jute acreage.

3.2.2. The present production level of raw jute in the country averaged at about 95 lakh bales comprising

about 85 lakh bales of jute and about 10 lakh bales of Mesta. (1 bale=180 KG). The production has

risen from 17 lakh bales in 1947, a 6.7 fold increase.

Exhibit 3.2.1: Production ( in Lakh Bales)

Pre-plan 1st Plan 8th Plan 9th Plan 10th Plan

1947-48 1951-56 1992-97 1997-2002 2002-07

Jute 1671.3 3928.8 8169.4 9618.8 10041.9

Mesta 0.0 853.3 1116.7 1098.4 924.5

Total Raw Jute 1671.3 4782.1 9286.1 10717.2 10966.4

Exhibit 3.2.2: Production of Jute in last ten years

Years Crop Size In Lakh Bales

(@180 Kg / bale)

Years Crop Size In Lakh Bales

(@180 Kg / bale)

1998-99 83.00 2004-05 75.00

1999-00 78.00 2005-06 85.00

2000-01 90.0 2006-07 100.00

2001-02 105.0 2007-08 99.00

2002-03 110.0 2008-09 82.00

2003-04 90.00 2009-10 (Estimated) 94.00


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Exhibit 3.2.3: Crop size over last 10 years

60

70

80

90

100

110

120

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

(Es

timated)

Crop

sizein

lakh

bales

3.2.3. Growth in raw jute production has remained flat in the last 10 years.

3.2.4. Area under cultivation : The present area of cultivation under raw jute is 9.6 lakh ha comprising 8.1

lakh ha of jute and about 1.5 lakh ha of mesta i.e., about 3.5 fold increase since independence. In the

last 10 years the area under cultivation has witnessed a decline.

Exhibit 3.2.4: Area under Cultivation (in 000 hectare)

Years Area under cultivation

(000 hectare)

1998-99 1025

1999-00 1036

2000-01 1018

2001-02 1049

2002-03 1021

2003-04 959

2004-05 913

2005-06 931

2006-07 949

2007-08 971

2008-09 926


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3.2.5. In the last 10 years the area under cultivation has witnessed a decline. Further increase in area is

unlikely because of present day crisis in jute trade vis--vis fluctuating prices of jute fibre over the

years and high cost of basic inputs for raw jute cultivation. The area would at best remain static or

even shrink or may be pushed to marginal lands.

Exhibit 3.2.5: Area Under Cultivation & Yield Per Hectare

Pre-plan

1947-48

1st Plan

1951-56

8th Plan

1992-97

9th Plan

1997-2002

10th Plan

2002-07

AREA ( '000ha) 263.9 843.3 963.5 1046.6 957.0

YIELD (kg/ha) 1140 1021 1735 1843 2063

Exhibit 3.2.6: Acreage and Yield

1

1.2

1.4

1.6

1.8

2

2.2

2.4

900

920

940

960

980

1000

1020

1040

1060

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

Yield(Ton/hectare)

Acrea

ge('000hectare)

Area Yield


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CONSUMPTION OF RAW JUTE

3.2.6. Consumption of raw jute has always remained lower than production. Supply has always outstripped

demand with the exception of last jute season 2009.

Exhibit 3.2.7:

3.2.7. The variation in jute crop prices is quite high, with lower prices at the start of the jute season and

higher prices at the end of the season

Exhibit 3.2.8: Trend in Jute Prices (Rs/Quintal Average Wholesale Prices of TD5)

Months 2004 2005 2006 2007 2008 2009

January 719.7 915.5 1220.4 977.4 930.9 1500.9

February 631.2 930.8 1232.4 974.3 964.8 1484.9

March 644.2 916.5 1234.2 1241.0 996.2 1453.8

April 690.5 966.0 1277.1 1044.4 1071.6 1405.4

May 575.0 999.0 2087.8 1179.4 1156.2 1561.2

June 723.0 1340.7 1414.7 1266.6 1297.1 1432.4

July 755.7 1125.3 1165.3 1079.2 1387.7 1811.4

August 869.0 985.5 1003.0 1015.7 1266.7 1444.1

September 840.7 1335.0 1046.4 1286.5 1181.6 1581.1

October 815.4 1124.3 1123.0 946.0 1136.5 1780.5


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Exhibit 3.2.8: Trend in Jute Prices (Rs/Quintal Average Wholesale Prices of TD5)

Months 2004 2005 2006 2007 2008 2009

November 861.5 1211.0 1012.3 1051.1 1156.0 1816.2

December 989.8 1232.8 1068.4 1022.4 1346.9 1805.5

Source: Department of Agriculture and Cooperation, Ministry of Agriculture and D&B

RETTING OF JUTE FIBER

3.2.8. Retting is a microbial process by which the jute plant is immersed in water and the fibre is loosened

from the woody core (stick) of the jute plant. It has been found that jute stems ret most rapidly at 34

C. At this temperature it takes generally 8 12 days for complete retting. Early cut plants are retted

quicker than the late cut plants.

Deficiencies in traditional retting:

3.2.9. The traditional method of retting, in which the stems are immersed or steeped in ponds, ditches and

rivers, allows the grower very little control. The quality of the fibre is dependent largely on the care

given to retting. At present, one of the major problems faced by the jute farmers is availability of clean

flowing water, and as a result are forced to use stagnant water in ditches and ponds. The same water

is used for repeated retting. This practices result in fibre of inferior colour and strength. Further

excessive iron content in water imparts a dark colour to the fibre which reduces its value.

Improved Retting Techniques:

3.2.10. Improved retting methods are being developed on the basis of research carried out at various jute

research institutes of India. Ribbon retting, Low Cost retting and bio-technical retting are the

alternative methodologies to the conventional retting which can overcome the problem of scarcity of

water, enhance the rate of retting by suitable bio-technical intervention. These methodologies are

being developed by R & D and other institutes, but the same are yet to be widely accepted by the

farmers.


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3.3INDUSTRY

PRODUCTION, MARKET AND SALES

3.3.1. The jute industry has grown marginally at a CAGR of 0.1% in volume since 1999, but it has grown in

value terms largely because the costs have increased over the years. Sacking and Hessian has been

the mainstay of the Jute industry constituting around 82% of total production of jute goods.

3.3.2. The production and product mix of the main jute products in last 10 years were as follows:

Exhibit 3.3.1: Production & Product Mix of Jute Goods

Sacking Hessian Yarn Others Total

'000MT

% to

total

'000MT

% to

total

'000MT

% to

total

'000MT

% to

total

'000MT

1999-2000 909.2 57.2% 344.5 21.7% 183.1 11.5% 153.4 9.6% 1590.2

2000-01 952.9 58.7% 337.9 20.8% 188.7 11.6% 144.5 8.9% 1624.0

2001-02 1034.3 64.6% 275.2 17.2% 169.9 10.6% 121.4 7.6% 1600.8

2002-03 1000.0 61.7% 338.3 20.9% 182.0 11.2% 101.5 6.3% 1621.8

2003-04 979.3 62.3% 305.2 19.4% 197.7 12.6% 89.1 5.7% 1571.3

2004-05 992.3 61.5% 310.3 19.2% 212.7 13.2% 97.8 6.1% 1613.1

2005-06 1007.5 63.7% 320.0 20.2% 167.3 10.6% 87.3 5.5% 1582.1

2006-07 874.7 64.5% 250.3 18.5% 161.9 11.9% 69.4 5.1% 1356.3

2007-08 1143.0 64.4% 350.3 19.7% 188.5 10.6% 94.2 5.3% 1776.0

2008-09 1071.4 65.6% 279.8 17.1% 176.2 10.8% 106.3 6.5% 1633.7


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Exhibit 3.3.2: Production of Jute Goods

3.3.3. Others include production of Jute Diversified Products in the composite jute mills and exclude the

production of yarn / twine mills and production of JDPs by the decentralized sector enterprises.

3.3.4. Domestic consumption of jute goods contributes to around 87% of the production.

Exhibit 3.3.3: Total Production/Internal Consumption of Jute Goods (Unit 000 MT)

Period

(Apr-Mar) Hessian Sacking CBC Others TotalInternal

consumption

InternalConsumptionas % of Total

production

2002 2003 338.3 1000 5.4 278.1 1,621.80 1375.7 84.8

2003 2004 305.2 979.3 4.7 282.1 1,571.30 1342.9 85.5

2004 2005 310.3 992 4 306.8 1613.1 1424.1 88.3

2005-2006 320 1007.5 6.2 248.5 1582.2 1377.8 87.1

2006-2007 250.3 874.7 2.9 228.4 1356.3 1216.2 89.7

2007-2008 350.3 1143 6 276.7 1776 1543.3 86.9

2008-2009 297.8 1071.4 4.5 160 1633.7 1435.6 87.9

3.3.5. Exports have been in the range of around Rs.1050 crores to Rs.1190 crores.

0.0

500.0

1000.0

1500.0

2000.0

'000 MT

1999-

2000

2001-

02

2003-

04

2005-

06

2007-

08

Sacking Hessian Yarn Others


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Exhibit 3.3.4: Export of Jute Goods (Unit- Qnty.000 MT, Value Rs. In Cr.)

(Apr-Mar) > 2004-2005 2005-06 2006-07 2007-08 2008-09

ITEM Qnty Value Qnty Value Qnty Value Qnty Value Qnty Value

Hessian 153.7 424.98 171.6 493.35 122.2 376.12 67.8 299.83 53 195.41

Sacking 31.2 77.72 33.2 99.64 31.6 103.25 30 91.38 53.2 161.68

CBC 1.5 6.25 0.9 4.46 0.1 0.65 - - - -

Yarn 120.4 336.58 69.1 239.46 78.3 273.15 92.1 285.18 82.9 251.63

JDP - 253.75 - 312.59 - 256.48 - 402.55 - 388.37

Others 15 47.62 11 36.74 10.6 45.51 14.4 64.63 10.7 68.99

TOTAL 321.8 1146.9 285.8 1186.24 242.8 1055.16 204.3 1143.57 199.8 1066.1

% changeover lastyear

3% 9% -11% 3% -15% -11% -16% 8% -2.2% -6.8%

3.3.6. Sacking is the key product in the domestic market and yarn and hessian are key products in export

market. However the share of sacking in exports has been going up while the share of Hessian and

yarn has been coming down.

3.3.7. Indias share in global exports of jute goods is around 25%. The share of Indian exports in World trade

has been coming down over the years:

Exhibit 3.3.5: Global Export (Unit000 MT)

Year World India

2004 748.1 321.8

2005 800.3 285.8

2006 774.1 242.8

2007 823.7 204.3

3.3.8. The jute industry is generally unable to consume the full quantity of raw jute produced and during

many years there is huge carryover of raw jute from one season to the next.


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Exhibit 3.3.6: Closing Stock / Total Crop Production

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Closing Stock(Lakh Bales) 34 33 14 8 23 22 8

Total Jute &Mesta Crop(Lakh Bales) 110 90 75 85 100 99 82

FINANCIAL HEALTH OF THE MILLS

Sales:

3.3.9. An analysis of sales over the last five years indicated a mixed trend. A summarized position showing

sales is given in table below:-

Exhibit 3.3.7: (Rs. In crore)

Particulars

2003-04 2004-05 2005-06 2006-07 2007-08

Nos Amount Nos Amount Nos Amount Nos Amount Nos Amount

Sales 39 4454.61 39 4973.14 39 5425.60 39 3632.20 39 4444.97

Changeoverpreviousyear

11.64% 9.10% -33.05% 22.38%

3.3.10. It may be seen from the above Table that sales during the years 2004-05 and 2005-06 registered

increasing trend in comparison to the sales for the year 2003-04. In fact, the sales during 2005-06

were the highest and were Rs.5425.60 crore. However, due to strike in jute industry in the year 2006-

07 ( from 5th

January, 2007 to 8th

March, 2007), sales declined by 33.05% in the year 2006-07.

During the subsequent year i.e. 2007-08, there was an increase of about 22% in comparison to

previous year. However, the sales of Rs.4444.97 crore for the year 2007-08 was still lower than the

sales for the year 2003-04 and the sales reported for the year 2005-06. The increase in the year

2007-08 indicates that there is potential for growth in sale of jute in the coming years.


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Return on Capital Employed (ROCE) :

3.3.11. Return on Capital Employed is the ratio of Profit to the Capital Employed. Capital Employed refers to

long term funds supplied by the creditors and owner of the company. It is the summation of Net Fixed

Assets and Net Working Capital of the Company. Higher the ratio, more efficient use of the Capital

Employed is indicated.

An analysis Return on Capital Employed (ROCE) of 37 Jute Mills brings out the position as follows:-

Exhibit 3.3.8: ( No. of Mills)

ROCE(%) 2003-04 2004-05 2005-06 2006-07 2007-08

Less than 20% 1 2 5 4 5

-20%to less than-10% 4 4 1 2 0

-10% to less than 0% 3 9 5 6 5

0% to less than 5% 11 11 9 12 10

5% to less than 9% 4 5 3 3 3

9% to less than12% 2 1 6 2 2

12% to less than 15% 3 2 3 3 2

15% to less than20% 1 1 0 1 4

More than 20% 8 2 5 4 6

Total 37 17 37 37 37

3.3.12. From the above it may be seen that 22 to 29 mills out of 37 had earned positive return during 2003-04

to 2007-08. Overall Return on Capital Employed of the Jute Mills during 2003-04 to 2006-07 ranged

from 1.12% to 8.11%. the Strike which took place in January 2007 to March 2007 had impacted the

trend in the year 2006-07.

3.3.13. Though the average ROCE is 3.81% during the year 2007-08, 14 mills have registered ROCE of 10%

and above and overall 17 mills have ROCE of more than 5%. Ten mills have registered negative

ROCE. Remaining Mills are marginally surviving. It may also be seen that normally Return of 12% is

considered as a fair return. From the table 12 it may be seen that, 12 mills earned a return of 12%

during the year 2007-08.


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Profit Before Tax ( PBT)

3.3.14. An analysis of Profit Before Tax indicated a mix of profit making mills and loss making ones. Out of

39 mills the profit making mills which were25 in the year 2003-04 increased to 32 mills in the year

2007-08. During the same period there was steady decline in the numbers of the mills reported

losses. As against 14 mills which reported loss in the year 2003-04, only 7 mills have reported losses

in the year 2007-08.


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3.4ISSUES

AGRICULTURE

3.4.1. The area, production and yield have been subjected to various fluctuations due to varying climatic

conditions, lack of adequate availability of certified and HYV seeds, lack of awareness of HYV seeds

developed, low incidence of mechanised farming, poor farm realisation, increase in preference for

alternate crops, shortage of farm labour and limited demand for jute products and price fluctuations of

raw jute.

Lack of adequate availability of certified and HYV seeds :

3.4.2. Earlier jute seed was harvested from a patch of un-harvested fiber crop. But changes such as growing

of jute seeds as a sole crop and shifting of jute seed production to Maharashtra and Andhra Pradesh

(non- jute growing areas) occurred through intervention of various stakeholders and adoption of

government policies to strengthen the seeds sector.

3.4.3. The present level of requirement of jute seed in the country is near about 5000 MT. The present

certified jute seed production can cater to the need of nearly 30-35 per cent of the total jute area. The

rest of the demand is met through Truthfully Labeled (TL) seeds and local seeds. The seed production

process starts with the development of breeder seeds in the laboratories of CRIJAF under controlled

conditions. The breeder seeds then are taken by the National Seeds Corporation or the Private Seed

Producers and converted to foundation seeds and finally into certified seeds, which are then sold to

the farmers through different dealer network of NSC and private producers.

3.4.4. Due to non availability of adequate quantity of certified seeds large quantities of spurious seeds are in

use. Also, most of the seeds requirement of Bangladesh is routed from India across the porous Indo

Bangladesh borders.

3.4.5. There have still not been any major breakthroughs such as cotton seeds e.g. BT Cotton (Bacillus

Thuringiensis Cotton), which has helped increase cotton yield multi-folds. Monsanto, a seed company

based in the US, introduced the BT Cotton seed in 2002, which has almost doubled the yield between

2002 and 2008.

3.4.6. Lack of awareness of HYV seeds developed: New varieties of seeds are being developed by

CRIJAF from time to time, but except for JRO 524, none of the other seeds have been accepted

extensively. JRO 524 constitutes 60% of the total seeds production. JRO 524 was developed in 1977

and since then has been the key seed of the jute sector.


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3.4.7. Low incidence of mechanised farming: There are different technologies and dosages of fertilizers

that have been developed and prescribed by CRIJAF to increase yield and reduce wastage but few

farmers have adopted the technologies and prescribed dosage norms. Farmers are still using age old

broadcasting method, which consumes about 1520% more seeds than the desired seed rate of 6

kg/ha. Small size of land holding (0.20.3 ha) limits the adoption of mechanized equipments by

farmers. Due to low adoption of the new techniques currently there is a wide gap between the

potential yield i.e., 2.7 tons/hectare and the actual yield i.e., 2.1 tons/hectare.

3.4.8. Poor farm realisation: Jute crop changes multiple hands before it is actually sold to the jute mills.

Month-wise transaction of raw jute is as follows.

Exhibit 3.4.1:

Months % of raw jute traded

August 20

September 17

October 23

November 17

December May 23

Total 100

Exhibit 3.4.2:

Different tiers in raw jutemarket

Raw jute traded

Village / doorstep 37%

Primary Market / Haats 56%

Secondary Market 7%

3.4.9. Farmers have to sell large portion of their jute crop to middlemen. By October most of the produce

shifts hands from farmers to middlemen as out of the 710 markets, 500 markets do not have the

necessary marketing infrastructure.


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3.4.10. Due to the non existence of growers groups and absence of facilities in most markets, farmers are

deprived of the proper price for their produce. The loss for the farmer impacts his portfolio decision in

the next growing season and affects the availability of right quality and quantity of jute.

3.4.11. Further variation in jute crop prices is quite high, with lower prices at the start of the jute season and

higher prices at the end of the season.

Exhibit 3.4.3: Monthly Average Price of Raw Jute (TD-5 Ex-W.B)

3.4.12. Apart from the sale of raw jute, farmers revenue base is also dependent on the sale of jute sticks,

which also have a good commercial value. It is not just being used for fuel in villages but also for

fencing of houses. Yield of jute stick is 5 ton/ha.

Increase in preference for alternate crops

3.4.13. The higher realization in other crops like till, resulting from increase in MSP and market prices has

motivated many farmers to shift from jute to till / other crops.

Shortage of farm labour

3.4.14. Jute is a labor intensive crop with a contribution of 45% of energy requirement and 80% of the total

cost requirement. Sowing, weeding, fertilizer application and fiber extraction (retting) are all labor

intensive processes. A new four row seed drill has been developed, which can sow one hectare of

land in five hours. Also mechanical weeders have been developed, which together with the

advantages of line sowing reduces the number of man-days for weeding from 135 in broadcast field to

87. Different retting technologies have been developed to reduce the retting time, labor requirement

and improve the quality of raw jute. But none of the technologies so far have been successful on a

large scale. Farmers are still largely using the broad casting method for sowing and traditional retting

methods.


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Ineffective price stabilization mechanism

3.4.15. Multiple factors affect the prices of raw jute prices. Agro climatic conditions in jute growing areas,

inadequate availability of quality input e.g., seeds, fertilizers, etc., futures market/speculators, size of

the carryover stock effect market sentiments and cause fluctuations in price.

3.4.16. The year 2004 has also seen the advent of trading of raw jute on the commodity stock exchange i.e.,

NCDEX. Initiation of raw jute trade on the commodity stock exchange and advent of JCI in

commercial operations that year have been perceived to have triggered the prices of raw jute

northwards.

3.4.17. Raw jute trade can be fluctuated easily considering regional focus i.e., focused around West Bengal

and some parts of Bangladesh as demand and supply estimates are easily available.

INDUSTRY

3.4.18. The challenges currently faced by the jute industry pertaining to market and sales are as follows:

a) Demand constraint.

b) Dominance of single product - sacking

c) Dominance of domestic consumption.

d) Non exploitation of full export market potential.

e) Absence of institutionalized marketing effort at an industry level

f) Lack of awareness about jute in developed nations

Demand constraint:

3.4.19. The demand for jute goods suffers from various constraints like stagnant volumes, types of products

and low global market share.

Stagnant volumes:

3.4.20. The production of the Jute Industry has largely remained stagnant during the last decade growing only

at the rate of 0.1% CAGR during this period. One of the major reasons of this stagnancy is severe

competition from cheaper alternatives which has been gradually eroding the traditional market of the

jute products. The jute industry due to various reasons could not respond and come up with cheaper

products to counter the threat of such alternatives. In order to protect the interest of the farmers and


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the workers, the government in the year 1987 stepped in and provided a protected market for

traditional jute goods mainly sacking by mandating packaging of certain commodities in jute materials.

This protection today creates a market of around 50% of the total production of jute goods.

3.4.21. The provision of unconditional protected market over the years coupled with administered cost plus

pricing system for such products has its own draw-backs.

3.4.22. Even though the government has been providing a sizable protected market (without any conditions)

for nearly two decades, the Industry has been unwilling to make concerted efforts to safeguard its

existing markets by developing price competitive traditional goods through new product development

and technological up-gradation / adoption nor has it been able to venture out in creation of innovative

products with new technology development neither has it been adopting the existing developed

technologies. The unwillingness of the Industry, to develop processes and products and failure to

adopt new technologies has only complicated matters. The markets are gradually shrinking, the

products are being priced out and worst of all most of the machine developers and manufacturers

have withdrawn from the field. The stagnancy in production also causes substantial carry over stock

of raw jute after each cropping season, which affects farmer sentiments and impacts his portfolio

decision in every growing season.

3.4.23. Dominance of single product: As a result of substantial demand of sacking goods under reservation

under JPM Act and administered cost plus pricing system for such products the Industry has been

reluctant to put in much effort in diversification and new product development. Thus all along the

product mix of the Industry is heavily lopsided in favour of the traditional products like sacking and

hessian which constitutes more than 80% of the total production.

3.4.24. Low global market share: Presence of a secured domestic market under the Government

patronage wherein profitability is assured without making much of investment either in manufacturing

or market development, the Industry have been soft pedaling on exploring new markets specially in

markets abroad. As a consequence Bangladesh has been increasing its share in the global market.

Bangladesh is the key competitor of India in exports of jute products. Bangladesh contributes to

almost 70% of the export volume. Yarn, sacking and hessian are key exporting products for

Bangladesh. The yarn market has increased manifold over the years in Bangladesh. The Bangladeshi

jute industry is characterized by large number of yarn units. Of the total 129 units in Bangladesh, 52

are yarn units. Even though the Bangladeshi jute industry scores less compared to India

technologically, they have higher grade jute availability compared to India. The reasons for higher

share of exports of Bangladeshi jute as compared to India are:

i. availability of good quality jute (price is almost equivalent or slightly higher compared to

India),

ii. lower cost structure (low wage and power cost),


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iii. export cash incentives 7.5% - 10% of FOB value in 2009, compared to zero at present in

India

iv. very low domestic market contributing to 20% of share.

3.4.25. The key advantage that the Bangladesh industry enjoys is a leaner cost structure and cash incentives

for exports, which are making Bangladeshi products price competitive compared to India making India

the residual supplier of yarn, etc.

3.4.26. Preoccupation of the industry with the domestic market and its unwillingness to innovate processes

and products has out priced many of their products in the global market. India has become the

residual supplier of yarn and exports as Bangladesh is not able to supply.

Absence of institutionalized marketing effort at industry level

3.4.27. The industry has been largely operating in silos with limited sharing of market intelligence on type and

quantity of jute products required for an export market. Marketing efforts have been at best piece meal

with no concerted industry wide effort. Key challenges faced on the marketing front are as follows.

i. Push-based rather than pull-based marketing;

ii. Absence of fabric standardization policy for a given end use requirement;

iii. Inadequate sales infrastructure at mill level;

iv. Inadequate technical selling capabilities for technical products like technical textiles.

v. No long term realistic export promotion plan.

Lack of awareness of jute in developed nations

3.4.28. Jute is largely a product of India and Bangladesh, as compared to other natural fiber e.g. Kenaf.

Popularity of kenaf is its wide global acceptance as substitute for wood. Kenaf-based particle wood

boards are predominantly used in countries such as the US, China, Indonesia, Thailand and Malaysia.Hence, it is important to understand the significance provided to other natural fibers e.g., kenaf to

understand the industrial and commercial use by advanced countries.


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TECHNOLOGY

3.4.29. Jute industry predominantly produces traditional products like sacking and hessian using age old

technology. Stagnant worker and machine productivity is a key area which has led to the high

conversion cost.

3.4.30. Some specific areas of concern are as follows:

There has been no major technological breakthrough that has been adopted by the jute

industry after the change from rove to sliver spinning system in early 1960s.

Efforts by the government to enhance the level of technology in jute industry through various

schemes did not have the expected impact so far.

The processing stages involved in manufacturing of jute goods remained same, for example,

2 stage cardings and 3 stage drawings, and no major technological change has taken place.

Few mills have upgraded to advanced technologies such as Ring Spinning & Shuttle less

looms (One Mac). Most of the mills have added capacity vs. modernization by replacing old

machines with new ones of same technology. Very few mills have installed shuttle less looms

capable of making sacking.

Varying levels of efficiency and utilizations for same machines and product mix across mills -

It has been observed that in mills of similar capacity, that have similar product mix and use

similar technology there is a wide degree of variation in operational efficiency. It has also

been observed that few mills, after installing shuttle-less looms, were not able to run them

efficiently, which resulted in low machine utilization.

Smaller number of new jute technologists joining the industry: Due to the tough working

conditions compared to the textile industry and poor compensation structure in the jute mills,

Jute Technologists are not keen to join the jute industry preferring to work in other textile

industry, resulting in lack of new pool of management with technical skills to oversee jute

production inside mills.

Poor work culture within the mills, lack of proper training for running machines, breakdown

maintenance, lack of suitable ergonomic working conditions etc.

Technology Development in jute industry

3.4.31. During 197095, the manufacturing of jute products gradually got concentrated in the raw jute

producing countries of India and Bangladesh. At the same time machinery manufacturing technology

got concentrated, with some renowned European machine manufacturers, such as Mackie, Fraser

etc. They started offering new jute machinery with improved features (adopted mainly from flax or


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worsted systems). The jute industry, mostly engaged in manufacturing conventional sacking and

hessian, showed limited interest in installing the entire range of such machinery. Only selected

machines, such as Spreaders, JF Cards, Scroll Winder, Beaming, Hemming and Herackle (Sewing)

machines were adopted by the industry. The motivation for installation of these machines was cost

reduction for manufacture of existing product range.

3.4.32. Interestingly, even modern Mackie and Russian Looms, exclusively designed for weaving

hessian/sacking fabrics with improved quality and productivity, were not found suitable by the industry

to replace the conventional flat bed looms with 100 year-old technology as these modern looms

require improved yarn quality as well as better yarn preparation for higher efficiency.

3.4.33. Industrys inability to modernize is evident from its limited adoption of newer machines despite soft

loan availability since 1986 through GOIs Jute Modernization Fund scheme. Another case in point

was the poor acceptance of apron-draft (AD) jute spinning machine, developed by Mackie in 1960s.

This machine is capable of producing better yarn (of below 8.0 lb/spy quality) as compared to slip-

draft spinning machines. Presently, the share of AD spinning frame is below 10%. The key reason for

slow adoption of AD is its lack of cost-effectiveness for production of conventional sacking and

Hessian products.

3.4.34. Batching: Prior to 1990, Softener was used to soften the raw jute. Now Spreader is gradually

replacing the Softener. The difference is saving of man-power and space, automatic doffing and

ejection of rolls.

3.4.35. Carding: Prior to 1990, there were three stages in carding: breaker, inter and finisher. After 1990, it

has been reduced to two stages breaker and finisher, but still the industry has not been able to reduce

stages of carding or increase the speed of existing cards. Wooden cylinders have been replaced by

steel cylinders with the cards being same Mackie/JF cards. Mackie and JF exited the business in

early 1990s but Indian counterparts have been manufacturing the Mackie and JF design cards with

not much difference in speeds and quality.

3.4.36. Drawing: The stages in drawing has remained same (1st drawing, 2nd drawing and 3 rd drawing) and

speeds have also not gone up significantly. The only change has been that push bars have been

replaced by screw and rotary gill resulting in productivity enhancement, but these were also done prior

to 1990.

3.4.37. Spinning: In spinning the 5 frames with 80 spindles have been replaced by 4 inch pitch frames

with 96 spindles, thereby improving the productivity by almost 40%.

3.4.38. However, the speeds of spinning frames have largely remained unchanged. Apron draft has come in

place of slip draft, which improves the yarn regularity, and the two legged flyer has mostly been


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replaced with Baxter flyer. Ring spinning has been very limited in the jute industry as it requires better

back processing system and higher quality of raw jute.

3.4.39. Weaving: The industry is still running traditional shuttle looms that are mostly used for hessian and

sacking. These looms run at slower speeds, create a lot of noise and produce a lower quality output

compared to shuttle less looms. There is a large number of suppliers for shuttle looms and typically

one can produce these looms for as low as Rs 50,000 compared to Rs 5, 00,000 for a shuttle less

loom. However, very few mills have installed shuttle less looms such as STB, Rapier which can make

both sacking and Hessian products. The speeds of conventional looms making sacking and hessian,

which are the mainstay of the jute industry has remained the same over time.

3.4.40. The jute industry has vintage machines which evident from the following facts as reflected in IJIRA

Study (2005):

a) In the softener section only 2% of the machines are less than 20 years old;

b) In carding only 8% of the machines are less than 20 years old; and

c) In spinning and weaving sections only 7% of machines are less than 20 years old.

3.4.41. The reasons for no major technology development in the jute industry have been:

i. All European machinery manufacturers such as M/s Mackie, Fraser etc. which were earlier

responsible for the technology developments in the jute industry, exited the business in theearly 1990s as many of the machines developed by them were not successfully adopted by

the jute industry which had got concentrated in India and Bangladesh and were predominantly

interested in producing traditional products like sacking and hessian.

ii. As in the case of the international jute machinery manufacturers, the domestic textile machine

manufacturing industry were also not inclined to develop jute mill machinery and as a result

the development of new technology machines did not take place baring a few exceptions.

iii. Heavy dependence on reservation under JPM Act provided little incentive to the industry to

innovate and look for newer technologies. The price of B. Twill is administered by thegovernment, which is a cost plus arrangement and there is little or no impetus from the

industry to either improve quality or cost.

iv. Ineffective technology development by Indian machinery manufacturers precludes their

effective commercialization: Technology developments by Indian machinery manufacturers

such as Lagan, Milltex etc., have been ineffective and their commercialization have not taken

place.


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3.4.42. The Government of India has taken several steps for the modernization of the jute industry since

1980s, these are:

1. Jute Modernization Fund Scheme and Special Jute Development Fund both launched in the

year 1985 failed to enthuse the jute industry.

2. The UNDP assisted CCF I programme (2000) specially meant for new technology

machinery development have not also met with the desired success.

3. There have been the Technology Up-gradation Fund Scheme (1999 onwards) and the JMDC

Incentive Scheme for Modernization of Jute Industry (2002 2007) for technological up-

gradation in jute industry, which has achieved limited results.

4. The ongoing Jute Technology Mission (2007 onwards) is making an effort to address theissues in a comprehensive manner however the utilization of funds in the three years has not

been encouraging.

Slow adoption of advanced technologies

3.4.43. The jute industry has been slow to adopt the existing advanced technologies such as Ring spinning

and One Mac looms. From 200208, of the total 173 spinning frames that have been installed, only

17% were Ring Spinning (Figure below). Similarly, in the same period, of the total 1,402 looms

installed, only 13% were shuttle less looms. Majority of the mills still use old technologies, even when

technologies that are proven for the jute industry are available. For example in batching, 70% of the

machines installed are softeners and only 30% are spreaders, a better technology to soften jute as it

gives a better sliver quality and reduce man power requirement. Similarly in the carding section, out of

the total number of cards installed across mills, 53% are Non JF/Mackie cards highlighting the use of

other local cards. In material handling also, it is observed that 29% of the mills still do not have a

forklift relying on traditional manual operations.

3.4.44. The reasons for slow adoption of advanced technologies have been:

i. Lack of availability of high quality raw jute (TD3) and weak backend processes. The adoption

of advanced technologies such as Ring spinning and One Mac looms require strong backend

processes along with higher quality of raw jute so that the sliver can be operated at higher

speeds. It is observed that most mills, due to lack of process and quality controls coupled with

inferior quality of raw jute have been unable to adopt advanced high speed machines.

ii. Administered price given by government. The JPM mandatory act to package all food grains

and sugar in jute packaging has not only safe guarded the industry but also, in a way,

stopped the industry to innovate and improve processes as well as look to diversify and

reduce cost. The administered price by the government on B Twill bags for packaging food


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grain follows a cost plus pricing mechanism and there has been no thrust by the end

customers, in this case the government, to push the industry to become price competitive.

iii. Lack of concerted effort by industry to customize existing textile machines. There has been a

lack of a collective effort by the industry to customize existing textile machines be it Thibeau

Card from NSC or other machines such as One Mac loom, Ring spinning etc.

iv. Government intervention to modernize the jute industry has not been successful

v. The government has supported the jute industry in its modernization efforts but with limited

success. The industry has added capacity by replacing old machines with new ones but only

few mills have actually installed advanced machines, which can run sacking, the conventional

product of the jute industry.

vi. The Jute Modernization Fund was initiated in 1986 and TUFS launched in 1999 to help jute

industry modernize. Only a few mills have taken advantage due to the limitation of banks

coming forward to finance the modernization drive of jute mills due to poor financials of the

jute mills and because of the preoccupation of the mills with traditional products. There after

the JTM scheme for Acquisition of Plant and Machinery was launched with an outlay of Rs.

100 cr. The assistance is 20% capital subsidy or Rs 75 lac per mill (whichever is lower). The

off take of funds under this scheme has so far been poor primarily because of the low subsidy

cap.

Varying efficiencies and utilizations of machines across mills

3.4.45. The jute industry shows varying efficiencies and utilizations across same machines for same product

mix. The reasons for varying efficiency and utilizations of machines across mills are as follows:

i. Varying batch mix by mills: It is observed that not all mills use superior quality of raw jute

for the same machine condition and same product mix. Also there is a general shortage

of high quality raw jute, which results in varying batch mixes by jute mills.

ii. Lack of proper maintenance of machines: In most of the mills cheap non-standard spares

of relatively low quality are being used. Most mills procure non-standard spares from local

vendors and do not approach the OEMs. In most cases, the mills do not even have the

standard drawings of spares. It is observed that most vendors for spares give mills a

credit period of four months to a year to pay back thus compromising on the quality of

spares for giving this credit period. Adding to this is the problem that most mills fail to

maintain machines as per the instructions given by OEMs .The mills operate 3 shifts (8hr

each) and 7 days a week and machines are run on continuous bases to offset the lower

efficiency.

iii. There is a severe shortage of quality staff in the maintenance department and there is a

lack of proper training in maintenance.


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iv. Age of the machines: The machines in the jute industry are generally old and machine

conditions in different mills vary depending on maintenance practices followed, worker

training on the machines, age of machines etc., which results in variation in machine

breakdown and quality of output produced.

v. Lack of new jute technologists coming into the industry: Due to the tough working

conditions compared to the textile industry, low compensation structure in the jute

industry and outstanding statutory dues by jute mills, Jute Technologists are not joining

the jute industry.

vi. Absenteeism and shortage of workforce: Absenteeism and shortage of workforce in

certain sections, such as spinning and weaving, is a major problem in most of the jute

mills. This has resulted in varying utilizations of machines across mills. In contrast there

are excess workers in some sections such as batching. However due to wage

discrepancies the workers are not interested to move to jobs requiring higher skill and

more effort jobs such as spinning and weaving.

vii. Lack of strong process and quality control: In most of the mills, there is a lack of proper

process controls along with lack of quality controls. Very few mills have ERP systems for

electronic data collection, planning, review and monitoring of processes. More so, most

mills do not even have electronic maintenance logs and still maintain primitive hand

written logs, which makes it difficult to analyze past data and take corrective actions.


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3.5RECOMMENDATIONS

AGRICULTURE

3.5.1. The Department of Agricultural Research & Education, Ministry of Agriculture, Govt. of India and

Agriculture departments in the State Governments are primarily involved in administering the issues

pertaining to Raw Jute its production and development. However, to supplement these efforts, Jute

Manufactures Development Council (JMDC) is mandated (Section 7 of the JMDC Act 1983) to evolve

an integrated approach to Jute cultivation in the matter of formulation of schemes, extension work,

implementation and evaluation of schemes aimed at increasing the yield of jute and improving the

quality thereof. The National Jute Board Act 2008 (Section 5) also mandates similar functions for the

National Jute Board (NJB), under constitution. JMDC / NJB will, therefore, have an important and

proactive role to play in jute agricultural sector to supplement the efforts of the Agriculture Ministry and

the State Governments.

3.5.2. In order to overcome the challenges the following four pronged approach needs to be followed:

1. Increase availability of certified seeds and improve distribution of the same through

government agencies / channels. R & D of seeds involving reputed seed companies and

development and maintenance of buffer stock of seeds.

2. Increase penetration of new farm techniques by conducting awareness programme.

3. Empower the growers, improve the marketing systems and infrastructure and develop buffer

stock of raw jute at JCI.

4. Encourage contract farming for jute.

Availability of certified seeds and R & D of seeds:

Direct Government intervention in the production and distribution of jute seeds:

3.5.3. The total requirement of different kind of seeds per annum is as follows:

Breeder seeds: 1 ton

Foundation seeds: 70 tons

Certified/Truthfully Labeled seeds: 5500 tons

3.5.4. Out of the total requirement of 5500 tons NSC and other state seed corporations supply around 1000

tons, major private seed producers supply around the same quantity and the rest is supplied by small


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private seed producers. Majority of the seeds supplied by the small private producer are non certified

seeds and non TL seeds. The private producers have the capability to produce more jute seeds, but

they will require confirmed indent in advance from relevant stakeholders.

3.5.5. Government should directly procure seeds through JCI from the private producers apart from NSC

and distribute the same at a subsidized rate through its Departmental Purchase Centres, dealers of

NSC, Panchayats, Cooperatives etc.

3.5.6. Further special interventions by CRIJAF and other Agriculture Universities of West Bengal should be

initiated to take up cultivation of certified seeds in dry districts like Purulia and Midnapore in West

Bengal with direct funding from JMDC from cess fund. This will increase the acreage under jute seed

cultivation and add to the availability of certified seeds.

Develop buffer stock for jute seeds by Government

3.5.7. Total demand for seeds in India is 5,550 tons / annum. Currently no buffer stock is maintained by

NSC as well as private producers. Like jute, the yield for jute seeds fluctuates around 1.258

quintal/ha, which makes it important to maintain buffer stock for jute seeds.

3.5.8. Seeds storage requires special infrastructure i.e., controlled temperature and humidity levels. NSC

already has the necessary storage infrastructure in different locations across India. NSC should

support the storage of buffer stock of jute seeds by allowing the usage of its infrastructure. Buffer

stock planning and coordination with different stakeholders should be taken up by JMDC.

Buffer Stock funding will be arranged by JMDC from cess fund.

Set direction for new seed development and involve reputed companies e.g.

Monsanto to develop HYV of jute seed

3.5.9. Jute yield and productivity have hardly changed over the years. In order to provide competitive returns

to the farmers it is imperative to increase productivity in raw jute manifold. This can only be achieved

through use of high quality seeds. A steep change in cotton productivity was witnessed post

introduction of BT seed varieties developed by Monsanto. Direct governmental involvement would be

required as neither the jute industry has the capability to fund the research nor is the jute seed market

big and lucrative enough to attract private research and development companies to invest in research

in jute seed development. The aim of the program should be to replicate the benefits obtained by the

cotton industry with the development of BT Cotton, which has doubled the yield of cotton in India.

3.5.10. Ministry of Agriculture may be requested to initiate the development process.


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Increase penetration of new developments in seed and farm techniques by

conducting awareness programmes.

3.5.11. The extension wing of the respective State Governments may be asked to intensify their effort in

creating awareness among the farmers regarding the new developments in seed and farm

techniques. Over and above these joint efforts should be made by CRIJAF/NIRJAFT and JCI in

the dissemination of the new developments. Funds may be provided from JMDC cess fund.

Improve the existing marketing systems and infrastructure to improve farm

remuneration.

3.5.12. A sizeable quantity of raw jute passes from the hands of the growers to the traders at the village /doorstep despite the existence of the Agricultural Produce Marketing Act which prohibits any kind of

trade ( changing of hands ) (in notified agricultural products including jute) outside the market yard

premises. Most of the farmers are small and marginal and are in need of immediate cash flow from

their produce. Many of them take cash advance from the traders. Further jute is a high volume low

value product. This characteristic constraints movement and adds to cost of selling. These factors are

primarily responsible for doorstep/village trade.

3.5.13. The trade at the village/doorstep level has its advantages but at a price. The grower is freed of the

trouble of transporting the produce to the market yard and of the uncertainty of striking a deal at themarket yard. He however is exposed to the risk of being paid prices lower than ruling market prices

and of being cheated on moisture content and grade.

3.5.14. The growers at village levels are not organized and are unable to take a collective position. The non

existence of effective growers groups/organizations especially at the village level exposes individual

growers to the unscrupulous traders.

3.5.15. Organising the growers into self help groups and empowering them to address their issues will

go a long way in reducing the volatility in raw jute prices and ensuring better returns to them.

A special program for formation of Self Help groups of growers and their empowerment may

be taken up immediately by JMDC through cess fund.

3.5.16. The state governments may be requested to strictly implement the provisions of APMC act to

increase the volume of trade of raw jute in the premises of market yards.

3.5.17. Out of the 710 markets, 500 markets do not have proper infrastructure. Hence, it is important to study

the different markets where raw jute is traded in detail and develop a plan to build marketing

infrastructure with initial focus on the four key jute growing districts in West Bengal. Market yards are

largely social infrastructure; hence, it is important for the government (state and center) to develop a

roadmap considering that other crops will also be a part of the marketing infrastructure.


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Develop buffer stock of raw jute at JCI.

3.5.18. Considering the high fluctuation of prices of raw jute, it is imperative to develop a buffer stock, which

can be used during upward price revision. The Jute Corporation of India should undertake judicious

commercial operations to build up buffer stock and play a price stabilizing role. While carrying out

commercial operations JCI should not be solely driven by profit motive. It should not restrict its role to

only MSP operations.

3.5.19. It is suggested that buffer stock should be maintained by JCI, and Govt. should compensate JCI for

that. At present JCI carries out MSP operation and sells the jute through linkage with PCO by J.C.

office. In a normal jute year (July to June) (yield more than 100 lakh bales), prices generally hovers

around MSP during the heavy arrival months August to November, mainly in Sept & Oct. JCI should

purchase raw jute at a predetermined price band say 5 to 7% above MSP and keep the jute as stocks

in its newly developed godowns under MM-III scheme of JTM and not dispose it through linkage. The

cost of holding should be compensated by the Govt utilizing the jute cess fund. During the time of jute

shortage and higher prevailing market price (which happens in short crop year) these jute should be

sold to mills at a determined price (by a expert committee comprising of JS (Jute), JC, CMD JCI,

representative from IFA of Ministry, and IJMA representative). This will act as a hedge against

speculation of raw jute and also will stabilize the ruling market price of raw jute. The difference

between sale price and purchase price should be treated as the profit of JCI.

3.5.20. In extreme situations the powers to regulate stock under Clause 5 of the Jute and Jute Textiles

Control Order 2000, may be exercised by the Jute Commissioner.

Encourage contract farming for jute

3.5.21. One of the key challenges currently faced by the grower is that of market linkage and that of the jute

mills is the unavailability of the right quality and quantity of raw jute. Hence, the jute mills should adopt

on pilot basis 12 villages and enter into legal agreement with the grower in terms of price i.e., market

prevailing price and minimum quantity off-take. The jute mills should assure higher of MSP or market

prevailing price and ensure adherence of the partnership agreement. The mills should assist in

obtaining financial assistance to the grower to buy farm implements and crop loan.


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Develop effective mechanism for delivery of government interventions

3.5.22. Adoption of new farming technologies, new variety of seeds, use of fertilizers and pesticides are all

dependent not only in their availability but to large extent on the remuneration the grower gets.

Unfortunately the raw jute sector is at the mercy of the middlemen and traders. Despite existence of a

plethora of laws, rules and state machinery the traders are able to exploit the growers at will. The free

play of the traders reduces the remuneration of the farmers which affects their sentiment and impacts

their portfolio decision. The jute sector is a strong case for empowerment

3.5.23. For any governmental intervention to succeed in the farm sector of jute the recipients should first be

organized and empowered. Without organizing them and empowering them all deliveries made will

have limited impact.

3.5.24. At present the growers at village levels are not organized and are unable to take a collective position.

The non existence of effective growers groups/organizations especially at the village level exposes

individual growers to the unscrupulous traders. Organising the growers into groups and empowering

them to address their issues will go a long way in reducing the volatility in raw jute prices and ensuring

better returns to them. Better returns in turn would motivate the growers to adopt new seeds and

farming techniques.

3.5.25. The government of India and the state governments have been implementing various schemes for

empowerment of women and poor in the rural areas throughout the country by forming self help

groups. The self help groups not only take care of credit needs (the SHG is eligible for bank credit

also) of its members it also organizes them to collectively solve their problems and carry out economic

activities. These schemes have met with varied success across the country.

3.5.26. A special scheme may be taken up under JMDC for organizing and empowering the jute

growers by adopting the self help group model.

3.5.27. It is possible that a large number of jute growers are already members of self help groups in theirvillages. A survey may be carried out in collaboration with the District authorities to assess the extent

of coverage jute growers through existing self help groups. New SHGs may be formed in gap areas

and in existing SHGs efforts may be made to focus on jute farming and raw jute trading issues . The

same self help groupscan be targeted for dissemination of new technologies and knowledge.


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INDUSTRY

Placing conditions along with government orders and gradual withdrawal of

reservation under JPM Act

3.5.28. One of the most important factors responsible for many of the ills affecting the jute sector today is the

unconditional protected market provided over the years coupled with administered cost plus pricing

system for such products. As discussed earlier the protection has made the industry lethargic and non

competitive. However immediate and full withdrawal of the protection would probably drive the last

nail in the coffin especially keeping in view the disappearance of the major players in the machinery

development and manufacturing sector. It would therefore be advisable to continue the protection

at the present levels for a few years with certain conditions :

a) Condition 1: the mills should modernize their processes progressively during this period.

b) Condition 2: The man days taken for pricing the government purchase would progressively be

reduced from the present level to the best man days achieved in the industry at the end of the

third year.

c) Condition 3: The raw jute to jute bag conversion would be progressively reduced from the

present levels to the best conversion ratio achieved in the industry, at the end of the third

year.

3.5.29. From the fourth yearonwards pricing will be based on the best achieved parameter. From the

sixth year, gradual reduction of the protection should be introduced . Only mills which are willing

to comply would be given the benefit of government orders. In case a mill does not comply and there

is change of management even then it would not be given benefit of government orders.

Creation of a Jute Development Fund for R&D efforts:

3.5.30. At present the R & D is being carried out through a CJMD set up as an SPV on PPP mode. The total

funding is around Rs. 28.0 Cr. for development of machinery. This effort need to be intensified further

through creation of a jute development fund.

3.5.31. A jute development fund may be created with a corpus of around Rs. 100 crores to fund the R

& D efforts of technology development and commercialization. Industry should have a holistic

perspective while developing technological solutions and should ensure adequate returns. The

industry may assume a more pro-active role in technology development / modernization. These may

be by way of exploring the progress in related areas by making visits to machinery manufacturing


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facilities, R & D facilities etc. both in India and in abroad. Foreign collaboration in knowledge

resources and investment for technology and machinery development may be tied up.

3.5.32. Modernization and adoption of new Technology:

The government may intensify its support to modernization of the Jute industry as well as

development and the adoption of new technology.

Machines should be categorized and a higher subsidy can be decided for mills installing

technologically advanced machines.

Government may look to promote special machines such as shuttle less looms, intersecting

gill drawing frame, non-woven technology, etc. with regard to allocation of B Twill orders, and

linking it to External Market Assistance.

The funding for schemes of machinery development and subsidy for investment in new and

modern machines under JTM mini-mission IV need to be substantially augmented. Initially the

fund size was Rs. 100.0 Cr. which was reduced to Rs. 80.0 Cr. For meaningful Modernization,

the size of the fund needs to be increased. The government needs to provide additional

funding after the present amount is used up. The Modernization support needs to be

continued even after the end of JTM period. The cap of Rs. 75 lakh per mill in the subsidy

scheme for acquisition of machinery may be increased / removed.

Improve working conditions at the shop floor, develop better work culture and adopt

better maintenance practices.

3.5.33. The industry will have to improve working conditions in the mills, develop better work culture and

adopt better maintenance practices in order to achieve the rated efficiencies of the machineries.

a. Mills should improve processes by implementing Total Quality Management: Mills have been

installing machines without improving their process and quality controls. Scientific production

scheduling needs to be undertaken and bottlenecks needs to be identified and removed to get

maximum throughput from the system.

b. There is a big need for mills to move to ERP system so that the system itself can build in

controls to carry out activities and can help timely relay of information and analysis of past

data to make informed decisions.

c. Mills should enhance use of statistical tools to improve processes.

d. Mills should look to improve maintenance practices through use of quality spares, by

rationalizing vendors and spares, by sourcing all critical spares from original machinery

manufacturers, the drawings of all their spares should be standardize . The mills should follow

practices as suggested by OEMs and should rigorously follow OEM maintenance schedules

and by providing proper training to maintenance workmen.


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e. Mills should look to adopt automated material handling equipment where possible.

3.5.34. Assistance for undertaking the above activities, JMDC will continue to extend support from the Cess

fund.

3.5.35. Skill Development and Upgradation of the Workforce:

i. Industry may take necessary steps to expand the talent base available with more attractive

compensation packages, better working environment etc. They may also play a bigger role in

operating skill development programmes in collaboration with Institute of Jute Technology.

ii. Industry may create a pool of new well trained work force by imparting training to the new

entrants in collaboration with different Government agencies.

iii. Industry should take up programmes for continuing up-gradation of skills of workers. Workers

should be trained across all sections so that they have multiple skill sets and can be rotated

across jobs. More importantly incentives should be given to workers by the mills for skill up-

gradation

iv. For the industry to attract talented people, the image of the industry needs to change. It has to

change from being one, which does not comply with the labor laws to an industry, which is

100% compliant with labor laws, is transparent to its employees and has good future growth

prospects. A big need of the hour is for the mills to clear off all statutory dues, improve

working conditions and strictly follow labor laws. A strong value system needs to be created

for the industry to prosper and grow.

v. The present workers training programme under JTM needs to be refocused.

vi. Further, new scheme with a total funding of Rs 100 Crore for a period of five years requires to

be created for all round development of HRD need in the jute sector across the value chain.

Export Market Development:

3.5.36. Various approaches need to be adopted by the relevant stakeholders in order to increase

competitiveness of India in export markets.

i. Export incentive schemes need to be revived and the Indian industry may be supported to

remain competitive

ii. Assist in commercialization of new and innovative jute products and their applications e.g.,

low cost jute bags, geo-textiles, composites and other technical textiles.

3.5.37. JMDC may fund the above two initiatives from the Cess fund.


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Product Development and Marketing:

(a) Product Development:

3.5.38. The industry may undertake more market driven product development to produce innovative jute

products and to increase the cost competitiveness of existing product range with the help of R&D

institutes.

(b) Protection of existing markets and development of new markets

i. The industry should adopt a two-pronged approach to reduce the single product dominance. It

has to retain its existing market and protect it from loss of share against competing products

and at the same time also focus on developing new markets and products.

ii. Key lever for protection of existing market is to optimize the cost of production of current jute

products and focus on clearing regulatory hurdles for global acceptability of jute products by

highlighting the life cycle benefits of jute bags and products over synthetic bags and products.

iii. Industry should come up with cheaper and lighter weight bags for government use and for

other usage.

iv. For existing products the focus should also be on new markets and it is important to identify

the key potential markets.

v. Regular Market surveys, both for domestic and international markets should be conducted to

find new markets for existing products, to find new application areas and their market

potential and to develop market intelligence and marketing strategies.

vi. In order to support usage of natural fibers over poly propylene, many of the governments

worldwide (Hong Kong, Ireland, USA) have imposed pollution tax on plastic bags. Certain

states/ union territories in India have imposed a complete ban / restriction on usage of plastic

bags. Similar steps are required to be taken uniformly by all State Governments and the

Union government. The Jute industry should establish appropriate supply chain to seize

the opportunity created due to such imposition and restrictions.

vii. Conduct an immediate study to internationally establish the ecofriendliness of jute and

develop its hydrocarbon free equity.

c) Institutionalized marketing effort at industry level

3.5.39. Multiple approaches that have to be deployed are:

i. Standardize products for given end user applications and branding.

ii. Assist efforts in commercialization of jute products through applications in geo-textiles, etc.


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d) Creation of awareness about jute in developed nations

a. Jute has several environmental benefits like bio-degradability, is recyclable in nature and

helps in soil fertility improvement. In addition jute has various other properties such as

mechanical strength, resistance to heat and high moisture absorption capacity. On account of

the detrimental environmental impact of plastic based packaging materials and the increasing

focus of countries towards environment friendly products, there is a need for jute to be

promoted as the natural and environment friendly fibre to the world.

b. Eco-labeling of jute products is necessary to position jute products as environment-friendly,

economical and acceptable to developed countries. Increasing awareness of the deleterious

impact of global warming to environment must be effectively leveraged by the industry using

jutes strong ecofriendly credentials especially to the developed world.

c. Besides eco-labeling the industry must make concerted efforts to make jute products

hydrocarbon free.

d. Creation of mass awareness for jute products and their applications in domestic as well as

international market, supported by appropriate supply chain is also necessary.

3.5.40. JMDC has already conducted a Life Cycle Analysis on Jute on certain products. Their present

efforts need to be refocused and intensified in light of the above.

Strengthening of informal sector for production of diversified Jute Products:

3.5.41. A large number of medium and small sector entrepreneurs, NGOs, SHGs and individuals are

engaged in production and marketing of jute diversified products (JDPs) as a result of concerted

efforts made by NCJD since its inception in 1994. The efforts of NCJD have not only increased the

usage of jute as such, it has also changed the image of jute from that of a packaging material to one

that can be used for diversified application including niche products. NCJD is implementing different

schemes under the JTM for entrepreneurship development, empowerment of WSHGs, etc. NCJD will

continue its efforts and widen its sphere of activities in this direction. The funds allotted for schemes

under mini-mission IV of JTM need to be augmented to widen their scope and coverage. This

will not only lead to increase the use of jute and jute products but will also help in

empowerment of the weaker section in the rural and semi-urban areas and help in generation

of employment in the sector.


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3.6ROADMAP

BASE YEAR 2010

NEXT 5 YEARS NEXT 10 YEARS NEXT 15 YEARS

1. AGRICULTURE

Direct Govt intervention inthe production & distributionof Certified Jute Seeds

Develop buffer stock for jute

seeds by Govt.

Set Direction for new seeddevelopment & involvereputed internationalcompanies

Increase penetration of newdevelopments in seed &farm techniques byconducting awarenessprogramme

Organising the growers into

self help groups andempowering them toaddress their issues toreduce the volatility in raw

jute prices and ensuringbetter returns to them.

Develop high output rettingtechnologies

Develop market yards inkey focus districts

Develop buffer stock for raw

jute at JCI Encourage contract farming

for jute

To achieve a target ofincreasing raw juteproduction by 25% (over2010) to around 115 - 120lakh bales

Direct Govt intervention inthe production & distributionof Certified Jute Seeds


seeds by Govt.

Development of new seedsin collaboration with reputedinternational companies

Increase penetration of newdevelopments in seed &farm techniques byconducting awarenessprogramme

Continue to extend supportto self help groups of

farmers to reduce thevolatility in raw jute pricesand ensuring better returnsto them.

To utilise and improve uponhigh output rettingtechnologies

Ensure raw jute tradingthhrough market yards inmost districts

Continue to hold buffer

stock for raw jute at JCI Spread contract farming for

jute

To achieve a target ofincreasing production ofhigher grade raw jute by35% (over 2010) to around125 -130 lakh bales

Direct Govt intervention inthe distribution of CertifiedJute Seeds


seeds by Govt.

Continue to extend supportto self help groups offarmers to reduce thevolatility in raw jute pricesand ensuring better returnsto them.

To utilise and improve uponhigh output rettingtechnologies

Ensure raw jute trading

thhrough market yards inmost districts

Continue to hold bufferstock for raw jute at JCI

Continue to spread contractfarming for jute

To achieve a target ofincreasing production ofhigher grade raw jute by45% (over 2010) to around135 -145 lakh bales


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NEXT 5 YEARS NEXT 10 YEARS NEXT 15 YEARS

2. INDUSTRY

Placing conditions alongwith government ordersunder JPM Act

Creation of a JuteDevelopment Fund for R&Defforts in developing newmachines and Technology

Modernisation in juteindustry and Developmentand adoption of newTechnology

Sk

fibre policy sub groups report dir mg d 20100608 3

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