Jute spins a modern yarn
A few jute companies are reaping the benefits of diversifying into agro-textiles and designer bags, but a likely shortage of good quality jute this year could hobble their progress
The over a century-and-a-halfold jute mill industry in the country is sharply divided in two groups. About half a dozen composite jute factories have by way of risking investment in newage value added products ( VAP) requiring installation of modern machinery and bringing about major changes in work culture in a highly unionised industry environment have seen their profits soar.
A textile ministry note says around 90 per cent of the industry’s annual production ranging from 1.15 million tonnes (mt) to 1.25 mt in recent years is domestically consumed as a packaging material. But in this industry, a few truly modern factories have managed to earn anything between 20 and 30 per cent of their revenues from exports. The majority in the industry have, however, remained frozen in time.
The stock market has not failed to take note of the success of the small group of jute mills, which made bold not to remain bound by traditional constructions such as sacking bags, hessian cloth and yarn and archaic production practices. Owners of shares of Cheviot, Gloster, Ludlow and Birla Corporation have been rewarded with major capital appreciation, regular dividend and share buyback.
Ludlow Chairman RV Kanoria says: “Thanks to the initiative of a few constituents of the industry, the brand equity of our diversified jute products is established in many parts of the world.” But this needs to be further strengthened by the industry exploring new markets riding on the growing world concern about pollution caused by unbridled use of synthetics. Unlike plastic, which is derived from a fossil fuel, jute is an eco-friendly, renewable and soil enriching biodegradable fibre posing no disposable problem.
Any mention of jute VAP will immediately conjure up an image of bags for shopping, an eco-friendly replacement for plastic bags. But VAP is an expanding universe that presently includes geo-textiles, agrotextiles, composites, fabrics made of jute in blends with other natural fibres and many lifestyle products such as designer bags for women and furnishing fabrics. Not many will be aware that the humble jute in the form of composites is finding increasing application in the interiors of cars made by the likes of Mercedes, Toyota and Tesla.
The local demand for geo-textiles, which prevents waste of construction materials while allowing water movement in building of highways and roads, is to grow at high rates as under the Bharatmala Pariyojana, 66,100 km of roads will be built to strengthen the country's highway network. At the same time, the global market for jute in construction is expanding with the developing and emerging countries strengthening their infrastructure.
Of the 78 working jute mills in the country, as many as 61 are on the banks of the river Hooghly in West Bengal where most of the country’s raw jute is grown. The discomforting fact about the industry is that except the six factories, all the others, assured of government orders for bags under the Jute Packaging Materials (JPM) Act, 1987, for packing of foodgrains, care little for product diversification. The Act ordains that 90 per cent of the country’s foodgrains and 20 per cent of sugar production will have to be compulsorily packed in jute bags. Kanoria says purchases of jute bags by government agencies on a cost plus basis are enabling the industry to generate surpluses. The fact remains however much a factory is diversified, it must depend on government orders for bags to ensure high levels of use of their spinning and weaving capacity. New age jute products are not about tonnage, but high margins.
It will be ideal if instead of the industry pleading for “extension of JPM Act” every year, the industry has the assurance of government sticking to foodgrains packaging in jute bags at the current rate over longer periods, Kanoria says. On its part, jute factories must ensure at all times uninterrupted supply of bags of right quality. The challenge this season for the industry will be to make regular supplies of bags to government procurement agencies in an environment of an expected major raw jute crop shortfall, but a good kharif foodgrains production. Leading jute trader Jyoti Kuthari says, “The 2018-19 raw jute crop will be down to 6.2 million bales (mb) of 180 kg each from last time’s 7.4 mb. Not only is there a major fall in production, the crop quality is also not good.”
The crop shortfall is somewhat intriguing since during the sowing months of March and April, the weather in West Bengal, the principal source of jute for making sacking bags, was quite favourable. According to the Indian Jute Balers Association (JBA) Secretary General SP Bakshi, “The growers frustrated by selling jute at low prices last season moved lands to other crops such as oilseeds and vegetables. The fibre quality depends much on what seeds are made available to them and availability of water for retting jute. There have been problems this year on these two counts.” Against last year’s 653,740 hectares under jute, the crop is grown only on 494,150 hectares in 2018-19. If there is a setback in crop in West Bengal, it cannot be otherwise in jute growing centres in Bangladesh where the quality too is down.
Quality fall of raw jute will make operation of VAP making factories difficult. They are already under pressure since January with the Bangladesh government putting a ban on export of uncut raw jute. The Dhaka move was prompted by New Delhi putting antidumping duty on jute goods from Bangladesh and suspicion that some traders there were exporting high grades of raw jute as uncut jute. According to the JBA, India’s imports of raw jute last year were 400,000 bales. Indian factories making VAP for exports seek Bangladeshi origin jute for its silky lustre. Hopefully, India will be able to prevail upon Dhaka to lift the ban on raw jute exports.
The challenge for the government is to rid the industry of the perennial uncertainty about the local crop quality. It is with this in view that New Delhi assigned National Jute Board to launch the Jute-ICARE (improved cultivation and advanced retting exercise) programme in 2015, now extended up to March 2020. The comprehensive programme, including supply of certified seeds, line sowing of jute using seed drill, weed management and scientific retting that has a big bearing on jute quality, has the potential to increase grower income by ~10,000 a hectare by way of lowering cultivation cost and improving productivity.
VAP is an expanding universe that presently includes geo-textiles, agrotextiles, composites, fabrics made of jute in blends with other natural fibres and many lifestyle products such as designer bags and furnishing fabrics