RAW JUTE PRICE
STABILISATION
MECHANISM
IN INDIA
Fluctuation in price
and availability of
raw jute is the single
important factor
affecting the jute
economy.
FLUCTUATION IN PRICE OF RAW JUTE DURING THE
LAST TEN JUTE SEASONS
Average Kolkata Landed Price for TD-5 Ex Other States
(Fig in Rs. / Qtl)
Year
1998
-99
19992000
200001
2001
-02
2002
-03
2003
-04
2004
-05
200506
200607
2007
-08
Maximum
1135
1110
1780
1670
990
1050
1680
1570
1575
1510
Minimum
725
860
800
920
810
815
975
1200
1090
1130
Prices
2000
1500
Maximum
1000
Minimum
500
0
1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 200799
2000
01
02
03
04
05
06
07
08
Year
PRODUCTION OF RAW JUTE / MESTA (KENAF) FOR THE
LAST TEN JUTE SEASONS
Figure in lakh bales of 180 kgs
Year
Production
1998
-99
83
1999
-2000
78
2000
-01
2001
-02
2002
-03
2003
-04
2004
-05
2005
-06
2006
-07
2007
-08
90
105
110
90
75
85
100
97
120
Value
100
80
60
Production in lakh bales
40
20
0
1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 200799
2000
01
02
03
04
05
06
07
08
Year
ANALYSIS OF THE REASONS FOR
FLUCTUATION IN RAW JUTE PRICES AND
PRODUCTION
Two major forces are responsible:
1) Price received by the farmers during last jute season
(-)
Un-favourable
Dedicate less
area for
cultivation
(+)
Favourable
Dedicate more
area for
cultivation
2) Weather Condition at the time of sowing
(-)
Un-favourable
Dedicate less area for
cultivation / Productivity
per unit area decreases
(+)
Favourable
Dedicate more area for
cultivation / Productivity
per unit area increases
Raw jute price / production fluctuation matrix
Price received by the farmers during last jute season
Favourable
Un-favourable
(Good / Favourable)
Bumper Crop
(Bad / Favourable)
Uncertain
(Bad / Favourable)
Uncertain
(Bad / Un-favourable)
Short Crop
Un-favourable
Good
Bad
Favourable
Weather Condition at the time of sowing favourable
Good
Bad
Most jute season witness either one of the
two scenarios
Scenario
Resultant Effect
Bumper Crop
Distress sale. Growers losing impetus to grow jute.
Short Crop
Unduly high price (mostly at the later part of the
season). Adversely affecting Manufacturer’s
profitability and competitiveness of jute products.
Governmental
Mechanism for raw
jute price stabilisation
Announcement and administration of Minimum Support Price
Announcement of Minimum Support Price is a three-step procedure :
1)
Keeping in view all the relevant factors, the Commission for Agricultural Cost and
Prices (CACP) recommends the Minimum Support Price of TD-5 grade of jute exAssam.
Variables Considered For Calculation of MSP
 Cost of Cultivation
 Productivity per unit area
 Wage rate for agriculture labours
 Prices of farm inputs
 Annual Inflation Rate
 Price of Jute Goods
 Price parity with other crops
 Anticipated market price
 Emerging supply demand situation
 Views of different stakeholders regarding MSP
 Views of Govt. Agencies regarding MSP
2) Based on such recommendation of CACP, Govt. of India fixes the Minimum
Support Price for TD-5 grade of jute ex-Assam. (Reference Price)
Year
1999
-2000
200001
200102
2002
-03
2003
-04
2004
-05
2005
-06
2006
-07
2007
-08
2008
-09
TD-5 basis MSP
ex-Assam
(Rs,/Qtl)
750
785
810
850
860
890
910
1000
1055
1250
R
1400
1200
Value
1000
800
Rs. / Qtl. On TD-5 basis
600
400
200
0
1999 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008-2000 01
02
03
04
05
06
07
08
09
Year
3) The corresponding Minimum Support Price for other varieties and grades of raw
jute across locations are fixed by the Office of the Jute Commissioner, Kolkata.
States
Assam and
Meghalaya
Districts
All
Districts
Variety
Grades
TD1
TD2
TD3
TD4
TD5
TD6
TD7
TD8
W1
W2
W3
W4
W5
W6
W7
W8
Northern
TD2 +
70
TD3 +
70
TD4 +
140
TD5 +
100
REF
TD5 –
70
TD6 –
90
TD7 –
145
Others
TD2 +
70
TD3 +
70
TD4 +
120
TD5 +
70
REF
TD5 –
70
TD6 –
90
TD7 –
145
Tossa
1630
1560
1490
1350
1250
1180
1090
945
White
1580
1510
1440
1300
1200
1130
1040
895
Rs. 685 per Qtl.
While calculating the Minimum Price for other varieties and grades incentive is
given to the growers for producing grades 4 and above which are in short supply
in the Country.
The derivative minimum price of raw jute for different varieties
/ grades in baled condition landed Kolkata are then calculated
Minimum Support Price of raw jute (in loose condition)
+
Assortment / baling / handling cost
+
Insurance
+
Interest
+
Freight to Kolkata
+
Other incidental charges
Rs. 1250.00 per Qtl.
Rs. 393.00 per Qtl.
+
Taxes and levies
Derivative Minimum Support Price in baled
condition landed Kolkata
=
Rs. 1643.00 per Qtl
(TD5 ex-Assam
for 2008-09)
Administering the Minimum Support Price
Jute Corporation of India (JCI) is acting as the Central Nodal Agency to
undertake the Minimum Support Price operation.
JCI in association with its agent Corporative, siphon the marketable
surplus for arresting the downward trend in raw jute price.
The jute / mesta procured by JCI / Corporative under MSP Operation is
sold to the Mills in a staggered manner through out the jute season
against B. Twill linked sale arrangement.
Thus the MSP Operation helps in stabilising raw jute prices and
ensures safe guarding the interest of both the jute growers as also the
end users.
Procurement by JCI / Cooperative during last 10 years
(Figure in ‘000 bales of 180 kgs)
199899
19992000
200001
200102
200203
200304
200405
200506
200607
200708
Procurement
under
Price support
/
(Commercial)
Operation
54
107
463
246
1314
1118
352
140
483
755
Value
Year
1400
1200
1000
800
600
400
200
0
Procurement in '000
bales
1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 200799
2000
01
02
03
04
05
06
07
08
Year
Another means for stabilisation of raw jute price
through Governmental effort
Creation of a Buffer Stock, both on intra-seasonal and inter-seasonal
basis, may bring out stability in price of raw jute.
The successful operation of the scheme, on a long term, should even out
seasonal fluctuation in price and supply of raw jute to the benefit of the
growers of raw jute and its end users.
The Commission for Agriculture Cost and Prices (CACP) in their
recommendation on price policy on Raw Jute has recommended
utilisation of this means for stabilisation in raw jute prices.
Extra governmental mechanism
for stabilisation of raw jute
prices.
Farmer - End user Partnership
Approach in Raw Jute Agriculture
and Marketing
Creating a role for the Jute Mills in
Agriculture Development / Extension
and Direct Marketing in Raw Jute
Some basic reasons why jute / kenaf
farmers are deprived of a remunerative
price
• Small and marginal growers with low bargaining
power.
• Reluctance to adopt new farming technologies.
• Inadequate Institutional credit facility.
• Gap between producers and
consumers bridged by a chain of middlemen.
• Imperfection in marketing structure.
Need to forge a direct linkage
between the End-user
(Jute Mills)
and Farmers
Identify an appropriate System/
Model
for
Farmer
End-user
Partnership Approach
3 Models which met with remarkable
success
•
•
•
•
ESSENTIALLY :
Manufacturer's/end-users
engage
the
farmer to plant the crop on his land.
Manufacturer / end-users supply farmer
with selected inputs.
Harvest and deliver to the Manufacturer /
end-users .
Delivery may be / may not be at a
predetermined price.
Model 1: Hindustan Lever Limited (HLL), Rallis
& ICICI Model of Wheat Farming in M. P.
Agency
Service Provided
Benefit accrued
Rallis
Agro- inputs and
know how
Assured Clientele of
Products and
Services
ICICI
Financing farm
credit
Assured Clientele of
Products and
Services
Hindustan
Buy back
Lever Limited Arrangement for
(HLL)
farm output.
Supply Chain
efficiency
The consortium is also planning to rope other specialist partners
including insurance, equipment and storage companies.
Model 2:PepsiCo Model for Tomato
Farming in Punjab
• Focused on developing Region and Product
specific research and extension services
through Punjab Agricultural University (PAU)
and Punjab Agro Industries Corporation
Limited (PAIC).
• Encouraged by sweeping success in Tomato
Farming (14- 52 tons / ha), emulated the
model in food grains (Basmati Rice), Spices
(Chillies), oil seeds (Groundnut) and Potato.
Model 3: Integrated Cotton Cultivation (ICC)
Model of Appachi Cotton Company (ACC)
(Coimbatore Dist. of Tamil Nadu)
• In
• Formation
of farmers’ Self Help Groups
• Crop loan.
• Easy availability of quality seeds, fertilizers
and pesticides at discounted rate.
• Expert advise and field supervision
• Unique selling option (no prior price fixing).
Key Learning Experience
• Extension service team
– locally drawn
– user friendly.
– available at farmers’ call
• Never offer any commercially untested technology.
• Ensure availability of adequate and appropriate inputs.
• Agriculture implements offered free to growers
– an investment that yields long term benefit
• Preferably no pre fixed prices- no climate of uncertainty.
• Timely payment to the farmer is a priority
Formulation of a model for Farmer Enduser partnership approach in Jute
Agriculture and Marketing
Key principles:
•
•
•
•
•
•
•
•
•
•
A nodal officer to implement and monitor.
The participating farmers to form SHGs.
A MoU between the Mill Co and the SHG (s)
Involvement of local agencies.
One village –one variety of jute seed.
Supply of timely and quality farm inputs on credit.
Synchronized sowing.
Supply of agriculture implements free of cost
Integrated crop management
Payment at a price acceptable to farmers’.
Building Steps for the Model
Commercialisation:
• Land preparation and Planting
• Crop monitoring and Crop Management
• Harvesting, procurement and transportation
• Prompt farmer payment system
Technology Transfer :
• Selection and training of extension service team
• Farmer education programme
• Field trial at farmer field - Multi locational crop timing
R & D Activities:
 Evaluation of location specific varieties.
 Blue print for agriculture practices to suit local conditions,
intellectual and finance means of the farmer
 Demonstration farming
How the Model would benefit
Farmer
Seed money for farming.
Exposure to mechanised
agro technology.
Crop monitoring and
technical advice on a
regular basis - Free of Cost.
Supply of farm inputs.
Supply of free Agricultural
Implements
Assured market outlet of
produce.
End- user (Mill Company)
 Uninterrupted and
regular flow of raw
material.
 Long term planning
made possible.
 Dedicated supplier
base.
Generates good will for
the organization.
Ultimate goal
• Shift from prices to return per acre –
Productivity increases.
• Promote long
investment.
term
planning
and
• Build up a long lasting relationship of
trust and dependence between the jute
farmers and the end-users.
The Model can sustain in the
long run only if the initiative /
empowerment comes from the
farmers’ rather than the
participating Mill.
FARMER END USER PARTNERSHIP APROACH
VERSUS PRICE SUPPORT MECHANISM
Farmer end-user
partnership approach
 Planting Material Supplies
 Technology Transfer
 Assured Price
 Assured Quantity
 Free Equipment
 Partnership Approach
 Builds Commitment
 Long Term
Price Support
Mechanism
 None
 None
 Minimum Guaranteed
 No Assured Quantity
 No Free Equipment
 Avail only when beneficial
 No Commitment
 Short Term
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