The lacklustre demand from the sugar industry notwithstanding, raw jute prices are likely to remain stable due to lower production in 2012-13.

Jute production is estimated to be seven per cent lower this season.

The raw jute prices (TD5 variety) are hovering at around Rs 2,700 a quintal currently against Rs 2,550 a quintal during the last week of November.

According to Manish Poddar, raw jute production for 2012-13 is estimated at approximately 92 lakh bales, down from 99 lakh bales in 2011-12.

“There has been practically no demand for jute bags for packaging from the sugar industry so far,” said Manish Poddar, Chairman, Indian Jute Mills’ Association.

Typically close to 40 per cent of the sugar industry’s total demand for packaging comes in by November-December.

However, the prices are not likely to inch up much from the current levels due to the high carry over stock and low demand. Currently, the carryover stock in jute mills is close to 40 lakh bales, which along with the current year’s production of 92 lakh bales, would be sufficient to meet the whole year’s demand, Poddar said.

Dilution

The Union Government recently diluted packaging norms under the mandatory Jute Packaging Materials Act (JPMA) of 1987. The Centre has permitted up to 60 per cent dilution in JPMA for packing sugar and 10 per cent dilution for packing food grains in 2012-13.

The JPMA directs all sugar factories to use jute bags for packing sugar to the extent of 100 per cent.

However, with jute mills often failing to meet the demand from sugar mills on time, and availability of cheaper substitutes of packaging materials in the plastics industry, the packaging norms were diluted in favour of sugar mills.

The jute industry is estimated to suffer a blow of nearly Rs 1,500 crore on account of the dilution.

Other markets

The jute industry is exploring other markets to offset the drop in demand from sugar industry.