Jute balers seek increased regulation for prompt payment from millers

“Non-payment to raw jute suppliers is the one and only reason for closure of jute mills,” the JBA letter said. (Representational image)

Jute balers want the textile ministry to increase regulation of the open raw jute market to ensure prompt payments to raw jute suppliers from mills. The Jute Balers Association (JBA) has demanded that more powers be vested in the hands of the jute commissioner to prevent mills from rigging raw jute prices.

The JBA, in a letter to the textile ministry, alleged that a sizeable number of millers delay payment or even refuse to clear outstanding dues despite the Centre’s order last year of making prompt payments to raw jute suppliers. Many mills have refused to clear their outstanding dues of `500 crore and some clear old dues in lieu of fresh consignment. The “vicious circle continues eternally without any full and final settlement of dues in sight”, the letter alleged.

It said raw jute hoarding at some level might have contributed to price increase, but that was not the prime reason for price escalation. A section of jute mills intentionally keep prices going up to lure suppliers. Such desperate trade keeps overall raw jute prices in the open market moving up creating a false sense of scarcity, the JBA said.

The government releases payment for b-twill bag purchases in four to five days. But many jute mills are cash-strapped since they are diverting money for other purposes instead of procuring raw jute and clearing suppliers’ dues, it said.

Had the mills made regular payments and kept raw jute supplies steady at their mills, there wouldn’t have been any shortfall in supplies of b-twill bags to the government and mills wouldn’t have closed down for lack of capital. “Non-payment to raw jute suppliers is the one and only reason for closure of jute mills,” the JBA letter said.

The Centre has announced a near double MSP of Rs 4,500 a quintal against the Commission for Agricultural Costs and Prices’ estimated production cost of RS 2,832 a quintal, but farmers cannot directly sell their produce to jute mills.  They sell to registered balers or traders, who the JBA said have been purchasing against spot payments.

While the jute commissioner’s office did not want to comment on the issue, it agreed that the purpose of providing MSP to support farmers was failing owing to price rigging by a section of raw jute traders or balers and some mills. While the Jute Corporation of India was only supposed to make MSP operations when open market prices crashed, in case of raw jute prices sky rocketing, the commissioner has the powers to regulate the open market.

Indian Jute Mills Association chairman Raghavendra Gupta said non-payment by a handful of jute mills cannot be the reason for the entire industry to be regulated through government or ministerial intervention. Raw jute price are market determined, and should be left to market forces, he said.