Presented To: Standing Advisory Committee (Twentieth Meeting) held on 20 th June, 2012

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Rudolf Leonard
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1 Presented To: Standing Advisory Committee (Twentieth Meeting) held on 20 th June, 2012

2 JPMA, 1987 Initially covered foodgrains, cement, fertilizer and sugar. Cement excluded in the year Fertilizer was excluded in Foodgrains procured and subsidised by Government. Sugar remains the only private/non-government sector industry still under JPMA.

3 Last SAC Meeting: 13 th June Jute Commisioner had suggested for either full removal of sugar and 100% foodgrains or 80% compulsory packing of both Opinion of the Jute Commissioner was ignored by the SAC. SAC recommended 90% of foodgrains and sugar to be packed in jute bags. For reasons unknown, CCEA mandated 100% of foodgrains and sugar to be packed in jute bags.

4 Availability Issue 4 Particulars % change Production of Foodgrains Production of Sugar Production of Raw Jute 208 mn tons 250 mn tons +20% 19.3 mn tons 26 mn tons +34% 11 mn bales 11 mn bales 0% Production of foodgrains and sugar has gone up substantially, whereas production of raw jute has remained stable.

5 Foodgrains production vis-à-vis Jute production during the last six years Production of Jute(in mn bales) Production of foodgrains (in mn tons)

6 Sugar production vis-à-vis jute production in the last 6 years Production of jute (in mn. Bales) Production of sugar (in mn. Tons)

7 Availability of Jute 7 Raw jute is regularly imported from Bangladesh Year Import of Raw jute (lakh bales) Import of raw jute is consistently increasing Clearly establishes that domestic raw jute is inadequate to meet full domestic demand arising due to compulsory packing order.

8 100% compulsory packing in jute bags resulted in 8 Lack of competition for packing material for foodgrains & sugar A total dominant position for jute industry. Very high price of jute bags in comparison to other packing material Ministry of Textiles in their Annual Report has accepted that this has led to Lack of modernization in jute industry. Lack of development of new opportunity or new product.

9 Increased Cost to Consumers/BPL Families 9 Comparative cost of 50 kg bags: HDPE bag : Rs. 15 Jute bag: Rs. 35 Translates into additional cost of 40 paise/kilo of sugar Loss of Rs.1000 crore to the sugar industry per year. Adversely impacts capacity of mills to pay good price to cane farmers. Industry generally pays 65-70% of revenue to farmers Translates to Rs.650 to 700 crore loss to farmers every year Affects cost of levy sugar procured for PDS for BPL families

10 Price Protection to Foodgrains 10 FCI and State agencies procure 60% of the jute bags produced in the country. An administered price on Tariff Commission formula is announced by Government every month. Such protection is not available to the sugar industry.

11 Procurement Price of Jute Bags for Sugar and Foodgrains Sugar Foodgrains

12 Quality of jute bags: BIS Specifications 12 BIS specification for 50 kg jute bags itself defective. Bags with mildew and fungal infection upto certain percentage are still permitted. Moisture regain value over 22% is also allowed, which causes bacterial contamination affecting the quality of sugar.

13 Quality Problems 13 Presence of jute batching oil, used during the softening process of jute, also affects the quality of sugar. Gaps of 1.5 cm results in leakage of sugar, causing loss to the mills as well as to consumers, including FCI & States. Bags not as per specifications and weight Mills have to put extra sugar to match gross weight requirement Sample bags submitted through Food Ministry to Jute Commissioner accepted to be defective and below weight Refusal by UP State Agency to lift levy sugar

14 Bulk Consumers 14 About 65% of sugar in India is purchased by bulk consumers viz- Coke, Pepsico, biscuit manufacturers, pharmaceutical companies etc. who do not accept sugar packed in jute bags. The mills have to use alkathene liners to avoid jute fibers and batching oil, which further increases the cost. Nowhere in the world is there a compulsory packing order of sugar in jute bags Indian Government, recognising non-acceptability of jute bags internationally, allows sugar exports to be packed in HDPE/PP bags

15 Shortage of Jute Bags 15 Due to implementation of ILO convention, packing is now to be done in 50 kg bags. This has increased the quantity of raw jute required for jute bags. Lack of inadequate production of raw jute and capacity with jute mills, there is shortage of jute bags in the country. This has been accepted by the Government in Parliament also. Also accepted that shortage of jute bags caused wastage and rotting of foodgrains

16 Shortage. 16 The Government has announced that they are going to import jute bags. As per the JPMA notifications, foodgrains and sugar have to be packed in jute bags manufactured in India from raw jute produced in India only. Therefore, imported jute bags cannot be utilised for packing of foodgrains and sugar.

17 Shortage.. 17 Phased exemptions granted by Government to foodgrains Exemptions have been granted for use of HDPE bags for packing of foodgrains, in the States of M.P., Haryana and U.P. Foodgrains require air to avoid deterioration in quality which can be ensured by jute bags, But air and moisture are harmful for sugar and is to be absolutely avoided. Hence, exemptions from jute packaging should be allowed first for sugar to the xtent of 100% and then only for foodgrains

18 Request/Demand of Sugar Industry 18 Sugar should be completely removed from JPMA. If mandatory packing in jute bags has to be continued, it should be continued with foodgrains because foodgrains are non-hygroscopic. the Government agencies procure jute bags at an administered price. due to inadequate production of raw jute, increased production of foodgrains and sugar, Indian jute mills are not able to meet the demands of both the foodgrains and sugar sector.

19 19 Thank You

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