The government feels increase in MSP would benefit the jute industry
The latest hike in Minimum Support Price
(MSP) of raw jute
has little to cheer for the ailing jute
industry beyond bringing marginal economic gains for farmers engaged in raising the fibre crop.
The Cabinet Committee on Economic Affairs
(CCEA) Wednesday gave its nod to raise MSP
of raw jute
from Rs 35,000 to Rs 37,000 per tonne. The revised MSP
is in line with the recommendation by the Commission for Agricultural Costs & Prices (CACP). The Commission takes into account the cost of production, overall demand-supply, domestic and international prices, inter-crop price parity, terms of trade between agricultural and non-agricultural sectors and the likely impact of MSP
on the rest of the economy while recommending the MSP.
The government feels the increase in MSP
would benefit the jute
industry which supports the livelihood of around four million farm families and provides direct employment to 0.37 million workers in organised mills and in diversified units including tertiary sector and allied activities. These farm families are mainly concentrated in West Bengal, Bihar and Assam which account for over 95 per cent of the area as well as jute
production in the country.
industry, however, has more sticky issues to grapple with such as lacklustre market prices of raw jute
and consistently falling area under cultivation.
"For most part of the last financial year, market prices of raw jute
ruled below the MSP.
Of late, prices have squared up. The other worry for the industry is declining acreage and slump in raw jute
production”, said an industry source.
According to government data, area under jute
cultivation has seen a marked decline between 2012-13 and 2017-18 from 756,ooo hectares to 684,300 hectares. Over the comparable period, raw jute
production has fallen from 11 million bales to 9.83 million bales (one bale is 180 kg).
production is concentrated in the states of West Bengal, Bihar and Assam. In terms of area, West Bengal accounts for 76 per cent of the cultivated area (in 2016-17) followed by Bihar (13 per cent) and Assam (11 per cent). On raw jute
production too, West Bengal is the leader, contributing 78 per cent to the total output followed by Bihar (14 per cent) and Assam (8 per cent).
is one of the commodities covered under the Wholesale Price
Index (WPI). It has a weightage of 0.545 in the WPI with 2011-12 as the base year.
The financial implications of the increase in MSP
of raw jute
would hinge on the quality of its procurement. The procurement of raw jute, in turn, would depend on market prices.