The Jute bag controversy- A Lobbying "contest"!

The eternal fight between jute lobby and plastic lobby for cornering a greater share of orders for packing bags for sugar and food grains does not seem to be ebbing as reflected by the attempts to dilute the much touted Jute Packaging Material Act of 1987 (JPM ACT) promulgated by Government of India to protect the interests of the jute farmers and jute mills predominantly located in North Eastern India. It was realized early by the government that jute industry is vital for saving employment and sustenance of jute farmers for which policy protection is necessary. There appears to be about 4 lakh workers engage by the jute industry who are not adept in doing any other work and therefore working of these mills is imperative for their livelihood. Besides about 40 lakh families are involved in farming activities to raise jute fiber whose very existence depends on the working of the jute mills. In the light of these compulsions government's move in promulgating the above Act mandating the use of jute bags for packing food grains and sugar has been timely and reassuring.

Advent of cheaper plastic sacks seems to have tempted the food grain and sugar sector to switch over to them though under the Law there is a limit beyond which plastics cannot be used. Offense under the JPM ACT is serious punishable crimes capable of attracting financial penalty and imprisonment. Still this Act is violated frequently while the government is a helpless bystander! The reasons are many for such a peculiar situation vis-a-vis jute bag use. According to JPM Act at least 40% of sugar produced must be packed in jute bags while 100% of grains stored and distributed must be in jute bags. From time to time government dilutes the stringent provision of the Act mainly because of inadequate availability of jute bags when required, based on the recommendations of ministries concerned. In 2012-13 the jute bag demand was about 14 lakh bales while the jute industry could supply only 13 lakh bales calling for increased use of plastic sacks. Similarly in 2013-2014 Government projected a need of 20 lakh bales but jute industry could only "commit" 16 lakh bales. Ultimately how much they can really supply is some thing one has to wait and see.

As a packing material plastic sacks recommend themselves because of their greater functionality, especially with regard to moisture ingression. For a commodity like sugar protection from moisture is absolutely necessary to prevent moisture absorption by this hygroscopic product. Some blame must be borne by the jute industry for its stagnant technological base and lack of innovative spirit. If adequate research and development activities were practiced it could have thrown up modified jute bags with superior functional properties. Still jute use must be encouraged in India because empty bags generate so much down stream business activities providing gainful employment to millions of people. Besides jute is a sustainable commodity unlike plastics which are made from fossil fuels with high polluting capacity.

In a move that smells of a victory for the plastic lobby, recent advocacy by the textile ministry for allowing plastics to be allowed for packing 80% of sugar production in the country, raises many uncomfortable questions. There is nothing wrong if plastic sacks are allowed to be used if there is a genuine shortage of jute bags. But whether there is really a shortage is not clear though there are reports that domestic jute industry is importing jute bags from Bangladesh illegally. Indian situation is some what odd because the government is being asked to micro manage two industries and it can never satisfy both of them. Probably since the government buys more than 40% of the jute bags produced in the country for packing procured grains in different states, it may be inevitable that such a role is played to act equitably for all the stake holders.

If there is a choice between plastics and jute, government is justified in going for the latter considering social, environmental, economic and other advantages inherent in the case of jute. By providing a minimum support price (MSP) to jute farmers government is doing a yeoman service and in the absence of such a mechanism jute would have vanished from India long ago. It is another matter that to day's market price for jute is significantly higher than the MSP but these are good times for jute industry and MSP's USP will be realized only during distress time when market value plunges due to extraneous problems, both domestic and international. The unique strength of India as a top jute producing country must not be forfeited though Bangladesh is almost at the heels of India in matching jute production. As against India's production of 2 million tons (MT) Bangladesh raises 1.5 MT and China 4,400,00 MT. 

A million dollar question that begs for an answer is whether the domestic demand for jute bags will remain same if and when the country goes in for modern storage technology like silos which can considerably reduce jute bag use. Similarly use of paper bags with ultra strength properties may also pose a challenge while new technologies in the plastic front can throw up much superior and cheaper alternatives to jute. Here is where the jute industry must try to diversify jute uses and exploit the "natural" tag attached to their products. Besides its "Green" credentials are high making it the choice for millions of people concerned about global warming and environmental destruction through unsustainable technologies and resources. probably it could take a leaf out of the strong coir industry in Kerala which has diversified the use of coir in a wide variety of modern day products.     

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

THE JUTE BAG POLICY-IS IT RIGHT?

Jute cultivation and production are more or less concentrated in the Indian subcontinent and being the second most important natural fiber after cotton, it has garnered for itself a distinct market during the last 300 years. Britishers, the colonial overlords in this region till the first half of last century were literally looting countries like India by taking the harvest to the UK to process into value added product for local use. Though the jute fiber extraction and processing were predominantly manual, Britishers still found it a good source of high quality fiber with many potential industrial uses. It is a fact of history that Britishers discovered a special way to make jute fiber amenable to machine processing involving treatment with Whale oil. It is another matter that many innovative products have been developed using jute as a base and jute is meeting the new aspirations of the modern world to move away from synthetic fossil fuel based fibers by providing an excellent natural alternative.

The jute plant belonging to the genus Corcherous yields long, soft, shiny vegetable fibers, found very strong with many desirable physical properties. It is a ligno-cellulosic substance containing both cellulose (plant fiber) and Lignin (wood ) and hence provides the softness of celluloe as well as the strength of wood. There are similar fiber sources growing wild like Kenaf, industrial hemp, Flax, Ramie etc which are available only in limited quantities in some parts of the world. Organized cultivation of jute is confined to India, Bangladesh, Myanmar and to a smaller extent in some other countries and the most prolific producers are India and Bangladesh, accounting for more than 95% of world production to day. While Bangladesh exports a substantial portion of its jute production, in India there is enough domestic demand to absorb the entire production leaving very little for export.

As many jute mills are reporting losses in their operations because of the advent of more economical and convenient plastics based bags, it had the effect of reducing demand for jute bags progressively. Government of India in its wisdom came to the rescue of jute mills, probably considering the adverse impact large scale closure of these mills might have on jute farmers and mill employees, promulgated coercive laws to force two commodities viz, food grains and sugar to be sold only in jute bags. It is true that jute is eminently suited for packing these materials but providing such a prop for a section of the industry raises some questions regarding its impropriety. How can the rich jute mill owners have any incentive to bring in innovation and improvisation for modernizing the production facilities and diversifying its use into other more profitable areas under such a protective regime? Is it not that the government is exposing its weakness by the blackmailing tactics of the jute mills by way of threatening their closure frequently?

Why should the jute industry be given such protection? Is the price of jute in India very high compared to prevailing prices in the neighboring countries? What prompted the government (GOI) in this country shoot down a proposal to import jute from Nepal and Bangladesh in the light of complaints by the users about shortage? The ruling price for jute in Bangladesh is about Rs 7000 for a bale of 180 kg while in India the corresponding price is Rs 3000 per 100 kg which is some what cheaper and therefore importing jute from that country is going to be costlier. Unless there is a significant quality superiority who is going to buy jute from Bangladesh?   


The Jute Packaging Materials Act (JPMA)-1987, a Central legislation, provides for 100 per cent mandatory reservation for jute bags for packaging of sugar and food grain. Since both sugar and foodgrains are under the reserved sector, the Union law ministry has expressed reservations over import of gunny bags from Nepal and Bangladesh under the garb of legal and technical difficulties. It should be recalled that the very GOI had allowed such imports earlier, probably for use by industries other than food grains and sugar packers. If the Jute Mills Association (IJMA) spokesman is to be believed only one million tonnes (mt) of jute sacks are needed to pack food grains and 0.2 mt for packing sugar. This can be met comfortably by the Indian jute industry which has the capacity to churn out 1.5 mt of sacks and sacking capacity is almost 0.55 mt higher than peak government demand. One wonders whether these calculations are really realistic considering the bumper production of food grains this year with the possibility of a substantial portion of the surplus production forced to be stored under the CAP mode using gunny sacks as primary packing material. 

Bangladesh, considered an "all weather" friendly neighbor to India, produces around 0.5 mt of gunny bags each year as against India's 1.1 mt. Bangladesh's raw jute production is around five million bales (1 bale is 180 kg) in comparison to India's 11 million bales. What is notable is that Bangladesh is a more prominent player than India when it comes to international trading in jute products. There is an allegation that this country mostly thrives on discounts that are covered up by huge government subsidy, enabling the jute industry there to export over 60 per cent of its products while Indian export is hardly 10-12 per cent. Interestingly the jute bag order exempts packing below 25 kg and above 100 kg from its purview! Major industrial sugar users like giant beverage manufacturers still refuse to use Indian gunny bags as they contend that sugar packed in these bags is unsuitable for their manufacturing process! 

It is time that the closed Indian mindset in controlling "every thing and every body" through the brutal power at the disposal of the government is changed in favor of a free regime as under the WTO regime and allow free trade for attaining its own equilibrium through market forces. If Bangladesh is using unfair means for dumping its jute bags in the Indian market there are always policy and legal options to check them. Jute is a precious natural resource which is likely to be pole-vaulted into prominence in the near future because of its multifaceted advantages. It is 100% biodegradable, cheapest fiber available, high tensile strength, low extensibility, better breathability, low thermal conductivity, good aquastic insulating property etc. Of course its poor drapability, poor crease resistance, britleness, fiber shredding tendency and gradual yellowing may make it unsuitable for some applications. Even if a fraction of the investment going on cotton fiber development in India, were to be made for improving jute fiber, the results would have been phenomenal by now! Scientific neglect of this sector has ensured that it remains an archival piece on the modern industrial landscape in the country. 

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com