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Down To Earth Magazine – July 2022, Part 1 | INDIA’S JUTE ECONOMY

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India’s Jute Economy: Why In the News?

  • Production of the cash crop has fallen by over 13 per cent in the past decade—from 2.03 million tonnes in 2011-12 to 1.77 million tonnes in 2021- 22—as per the third advanced estimates released by the Union Ministry of Agriculture and Farmers Welfare in May 2022.
  • The Same is the case with land under jute. According to a 2021 report by the Commission for Agricultural Costs and Prices (cacp), the average area under jute in the country was 0.82 million ha between 2000-01 and 2009-10, which declined to 0.73 million ha between 2010-11 and 2019-20.


India’s Jute Economy: Production

  • While India’s jute economy has faltered in the past decade, Bangladesh has not just increased its production and acreage, but also captured the global finished product market
  • India’s jute economy sustains about 4 million farmers and 0.37 million workers.
  • West bengal is the largest jute-producing state, with 70 of india’s 93 jute mill.
  • India together with bangladesh, the two countries account for 98 per cent of the global jute output.


The decline in Jute Production: Price Fell

  • These days,  jute stopped fetching a fair price and even causing losses.
  • In West Bengal—the R30,000-40,000 per tonne price in the late 2000s, was reduced to R25,000 in 2010-11. This was barely enough to recover the input cost.
  • When the prices fell, the Jute Corporation of India (JCI) Ltd, a government of India enterprise for procurement of raw jute from the growers at the minimum support price, barely intervened.
  • This reflects in official procurement figures as well. Between 2007-08 and 2021-22, the quantity procured
    by JCI decreased from 0.14 million tonnes to 0.014 million tonnes.


The Jute Packaging Materials (Compulsory Use in Packing Commodities) Act 1987 (JPMA)

  • It provides for use of jute packaging material for foodgrains.
  • Under this Act, the government issues orders from time to time for mandatory use of jute packaging.
  • Since 2017, the norms provide that 100 per cent of foodgrains and 20 per cent of the sugar should only be packed in jute bags.
  • Due to this, jute sacks account for 75 per cent of the total production of the jute industry. Ninety per cent of the jute sacks are supplied to the Food Corporation of India and state procurement agencies.


Jute Production: India vs Bangladesh

  • While India’s production and acreage declined, Bangladesh’s production and area under jute has increased over the years.
  • India is still the largest producer of jute but in terms of acreage, Bangladesh is the largest cultivator. It also accounts for nearly 75 per cent of the global jute exports, while India’s share is just 7 per cent.
  • Some 85 per cent of our jute is consumed domestically, while 15 per cent isexported. The situation is reverse for Bangladesh.
  • Bangladesh also does well in exports because it has three to four different kinds of subsidies. For instance, it gives 9-10 per cent export subsidy for food-grade packing bags, which is much higher than India’s 1.5-3 per cent subsidy.


Revival Of Jute Industry: Way Forward

  • Jute has a bright future. We need to create a demand for diversified products and modernise.
  • For modernisation of the jute mills, the Union government is implementing the Incentive Scheme for Acquisition of Plant & Machinery, under which capital subsidy is being provided to replace the old machines.

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