Balers to suspend raw jute supply from November 23 to protest govt

Raw jute suppliers have decided

to suspend trading activities of the commodity for an indefinite period from November 23 to protest against the Centre's decision to reduce the maximum stock limit to 500 quintals from 1,500, officials said on Sunday.

The proposed suspension of trading may disrupt manufacturing of jute bags at mills due to non-availability of raw material, they said, adding that this could aggravate the current shortage of sacks for packaging of foodgrain.

The Jute Balers' Association, in a letter to the millers' body, has informed that they will suspend all raw jute trade activities from November 23.

In a bid to prevent hoarding, the Jute Commissioner had capped raw jute holding at 1,500 quintals on own or third party account in August, and on Friday asked traders to bring it down to 500 quintals in the next 10 days.

The steps were taken after the price of the commodity had soared to an unprecedented level of over Rs 6,000 per quintal as against the MSP (minimum support price) of Rs 4,225.

"We have been compelled to take this unpleasant decision as it is nearly impossible to do business with such quantity," the Jute Balers' Association secretary A K Palit said.

A senior official of the Jute Commissioner's Office said control measures were taken to restrict abnormal price rise of the fibre, and they have been keeping a close watch on the situation.

Jute traders and suppliers play an import role in the commodity trading as they control nearly 100 per cent of the raw material supply to the mills, industry sources said.

Over 2.5 lakh of workers are directly associated with the jute mills, they said.

"This suspension is unwarranted and illegal. But if balers go on strike, production in mills will come to a halt after their stocks get exhausted," Indian Jute Mills Association chairman Raghav Gupta said.

"The move to reduce the stock limit for traders while raising the same for the mills will favour a section of millers, and the objective of equitable distribution of raw material among all units will not be achieved," a jute mill owner alleged.

There are many units which do not have stock of raw jute for even seven days, and now with balers' suspending their supplies, many mills may have to stop their operations, he claimed.

Mills are required to supply another four lakh bales of jute bags by December 15 to meet the target for foodgrain packaging, but any hindrance in the manufacturing process will derail the plan, the sources said.

"The control measures are dynamic and if other steps are required to be taken, the authorities will act at the appropriate time to check raw material price surge," the official of the Jute Commissioner's Office said.

IJMA had also written to West Bengal Finance Minister Amit Mitra, apprising of the raw jute crisis for the mills and sought the state government's intervention to resolve the issue.

Jute trade unions had also informed Chief Minister Mamata Banerjee about the surging price of raw jute and alleged that the steps taken by the Jute Commissioner's Office will aggravate the crisis.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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