Jute mills losing Rs 1000 per tonne on faulty calculation

The jute mills in West Bengal are losing Rs 900-1000 per tonne on jute bags owing to a faulty calculation made by the Jute Commissioner's office. The mill owners have claimed that between July 2009 and August 2010, the industry has lost around Rs 42 crore. The mill owners have alleged that they are being forced to buy low grade jute at high price and sell the manufactured jute bags to the government at low prices because of a faulty calculation being made by the Jute Commissioner's (JC's) office. The JC office fixes the price of B Twill jute bags meant for Govt. purchase based on the average of three months' price quoted by the Jute Balers Association (JBA), a private raw jute agency and significant body in Kolkata. While the raw jute prices quoted by JBA are shown as low, in actual practice, the jute mills are buying the fiber at higher prices from the market. A number of jute mills in West Bengal have joined hands to take up the issue with the JC office. “The jute mill owners are suffering because of this faulty calculation of the JC's office”, said a mill owner on condition of anonymity. The mill owners are purchasing the lower grade raw jute with a 21 -25 per cent moisture content at a higher price of around Rs 36000 tonne from the market. But, they are forced to sell the manufactured jute bags to the government at a lower price as the JC office is making its calculation on the price of jute bags based on the average three months' price of raw jute taken at Rs 35000 per tonne and that too with a lower moisture content of 18 per cent. “The government is now purchasing jute bags at a price of Rs 55350 per tonne while it should be purchasing that at around Rs 56350 per tonne”, said an official of the Indian Jute Mills' Association (IJMA). The industry has been demanding a fair and justified price for a long time based on the latest recommendation of the Tariff Commission (TC) Report of June 2009 and this would to a very small extent offset a portion of that loss. The Union government has scrapped the TC Report because of identified discrepancies and anomalies and is making a fresh study. The industry claims that in the past eight years, it has lost Rs 1200 crore as it has been denied a fair and justified price on jute bags from 2001. The last TC Report was of 2001 and expired in 2003. The mill owners are mulling to move court soon against the Centre's decision to scrap the TC report. It may be noted that 35-40 per cent of the total jute bags produced in the country is purchased by the government through different state procurement agencies and Food Corporation of India (FCI) for food grain and sugar packaging in every agriculture season as per the Jute Packaging Materials Act (JPMA) of 1987.