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LATEST NEWS UPDATES | Unsold jute bags stack up, but govt OKs import-Deeptimaan Tiwary

Unsold jute bags stack up, but govt OKs import-Deeptimaan Tiwary

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published Published on May 17, 2012   modified Modified on May 17, 2012

Even as the government races against time to procure enough jute bags to store grains in the face of record procurement , gunnysack traders are saddled with massive unsold stocks. A look at the godowns of some traders in the national capital alone shows there is no shortage of jute bags in the country.

While the central government has placed an order for four lakh jute bags to be imported from Bangladesh and asked jute mills in West Bengal to increase production, traders in Delhi are staring at losses with stocks running into 20 lakh bags lying unsold. The government has to meet the demand before May-end when procurement is scheduled to officially stop owing to the onset of monsoon.

Traders blame the government for creating a double crisis in which they claim both the states and the traders are going to suffer. Due to increased procurement of foodgrain by both Food Corporation of India (FCI) and various state governments, the demand for jute bags in the open market has plummeted leading to unsold stocks.

"We were not prepared for such a situation. We had ordered jute bags according to annual requirements of the market. But the government increased direct procurement from farmers manifold at high minimum support price leading to private players like multi-national corporations shying away from buying wheat. This has led to demand for jute bags going down by 20%. We are stranded now," said Rohini-based jute bags trader Dharamvir Agarwal, who alone has a stock of about 10 lakh bags lying in his godown.

"I have two more consignments ordered from Bangladesh , but I have stopped payment as there is no demand," added Agarwal, who also buys from jute mills in West Bengal.

The situation has been skewed because of a bumper harvest and increased procurement . This year, total food grain production is estimated at 253 million tonne (mt) compared to 232.1 mt last year. Earlier, the FCI and state government procured only 25-30 % food grains from farmers with private players filling in for the rest. The same figure is now over 50%.

Adding to the problem of traders is the government policy of procuring directly from jute mills or importing from Bangladesh to minimize cost. Now, traders want that government should give them a chance and they will match the prices of jute mills.

Chairman of Dilli Bardana Vyapari Association, Motilal Agarwal said, "At least at times of crises, the government can procure from us. We have close to 20 lakh bags at the moment. It will not only help the situation but also help us. If the government makes a policy and starts open tenders, we can deliver desired jute products at competitive prices."

Traders also allege that the shortage of jute bags is artificial and created by plastic lobby which wants the government to make an exception to its 100% jute bag policy in grain procurement and use plastic bags.


The Times of India, 17 May, 2012, http://timesofindia.indiatimes.com/india/Unsold-jute-bags-stack-up-but-govt-OKs-import/articleshow/13198112.cms


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