int. con. feb-2009 mr. ak khastagir

8/8/2019 Int. Con. Feb-2009 Mr. AK Khastagir

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RAW JUTE PRICE

STABILISATIONMECHANISMIN INDIA


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Fluctuation in priceFluctuation in price

and availability ofand availability ofraw jute is the singleraw jute is the singleimportant factorimportant factor

affecting the juteaffecting the juteeconomy.economy.


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FLUCTUATION IN PRICE OF RAW JUTE DURING THE

LAST TEN JUTE SEASONS

Average Kolkata Landed Price for TD-5 Ex Other States

Year 1998-99

1999-2000

2000-01 2001-02

2002-03

2003-04

2004-05

2005-062006-07 2007-08

Maximum 1135 1110 1780 1670 990 1050 1680 1570 1575 1510

Minimum 725 860 800 920 810 815 975 1200 1090 1130

(Fig in Rs. / Qtl)

0

500

1000

1500

2000

1998-

99

1999-

2000

2000-

01

2001-

02

2002-

03

2003-

04

2004-

05

2005-

06

2006-

07

2007-

08

Year

Price

Maximum

Minimum


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PRODUCTION OF RAW JUTE / MESTA (KENAF)FOR THE

LAST TEN JUTE SEASONS

Figure in lakh bales of 180 kgs

Year 1998-99

1999-2000

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

Production 83 78 90 105 110 90 75 85 100 97

0

20

40

60

80

100

120

1998-

99

1999-

2000

2000-

01

2001-

02

2002-

03

2003-

04

2004-

05

2005-

06

2006-

07

2007-

08

Year

Value

Production in lakh bales


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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

2) Weather Condition at the time of sowing

(-)Un-favourable

Dedicate less

area for

cultivation

(+)Favourable

Dedicate more

area for

cultivation

(-)

Un-favourable

Dedicate less area for

cultivation / Productivity

per unit area decreases

(+)

Favourable

Dedicate more area for

cultivation/ Productivity

per unit area increases


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Raw jute price / production fluctuation matrix

(Good / Favourable)

Bumper Crop

(Bad / Favourable)

Uncertain

(Bad / Favourable)

Uncertain

(Bad / Un-favourable)

Short Crop

Good Bad

Price received by the farmers during last jute season

Good Bad

Favourable

Un-favourable

Un-f

avo

ur

ab

le

Fa

vou

ra

ble

WeatherConditiona

tthetime

ofsowingfavourabl e


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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 theseason). Adversely affecting Manufacturers

profitability and competitiveness of jute products.


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GovernmentalMechanism for raw

jute price stabilisation


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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 andPrices (CACP) recommends the Minimum Support Price of TD-5 grade of jute ex-Assam.

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


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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

2000-01 2001-02 2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

TD-5 basis MSPex-Assam(Rs,/Qtl)

750 785 810 850 860 890 910 1000 1055 1250

R

0

200

400

600

800

1000

1200

1400

1999

-2000

2000-

01

2001-

02

2002-

03

2003-

04

2004-

05

2005-

06

2006-

07

2007-

08

2008-

09

Year

Value

Rs. / Qtl. On TD-5 basis


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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 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

Assam andMeghalaya

AllDistricts

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.


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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) Rs. 1250.00 per Qtl.

+

+

+

+

+

+

Assortment / baling / handling cost

Insurance

Interest

Freight to KolkataRs. 393.00 per Qtl.

Other incidental charges

Taxes and levies

Derivative Minimum Support Price in baled

condition landed Kolkata = Rs. 1643.00 per Qtl

(TD5 ex-Assam

for 2008-09)


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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.


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Procurement by JCI / Cooperative during last 10 years

(Figure in 000 bales of 180 kgs)

Year 1998-99

1999-2000

2000-012001-02 2002-03 2003-04 2004-052005-062006-072007-08

ProcurementunderPrice support /(Commercial)Operation

54 107 463 246 1314 1118 352 140 483 755

0

200

400

600

800

1000

1200

1400

1998-

99

1999-

2000

2000-

01

2001-

02

2002-

03

2003-

04

2004-

05

2005-

06

2006-

07

2007-

08

Year

Value

Procurement in '000

bales


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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.

Another means for stabilisation of raw jute price

through Governmental effort


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Extra governmental mechanism

for stabilisation of raw juteprices.


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Farmer - End user PartnershipFarmer - End user PartnershipApproach in Raw Jute AgricultureApproach in Raw Jute Agriculture

and Marketingand Marketing

Creating a role for the Jute Mills inAgriculture Development / Extension

and Direct Marketing in Raw Jute


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Small and marginal growers with low bargainingSmall and marginal growers with low bargaining

power.power. Reluctance to adopt new farming technologies.Reluctance to adopt new farming technologies.

Inadequate Institutional credit facility.Inadequate Institutional credit facility.

Gap between producers andGap between producers and

consumersconsumersbridged by a chain of middlemen.bridged by a chain of middlemen. Imperfection in marketing structure.Imperfection in marketing structure.

Some basic reasons why jute / kenaf

farmers are deprived of a remunerative

price


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Need to forge a direct linkageNeed to forge a direct linkagebetween the End-user (Jute Mills)between the End-user (Jute Mills)and Farmersand Farmers

Identify an appropriate System/Model for Farmer End-userPartnership Approach


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3 Models which met with3 Models which met with

remarkable successremarkable success

ESSENTIALLY :

Manufacturer's/end-users engagethe 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.


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Model 1: Hindustan Lever Limited (HLL), Rallis

& ICICI Model of Wheat Farming in M. P.AgencyAgency Service ProvidedService Provided Benefit accruedBenefit accrued

RallisRallis Agro- inputs andAgro- inputs andknow howknow how

Assured Clientele ofAssured Clientele ofProducts and ServicesProducts and Services

ICICIICICI Financing farmFinancing farmcreditcredit

Assured Clientele ofAssured Clientele ofProducts and ServicesProducts and Services

HindustanHindustan

Lever LimitedLever Limited(HLL)(HLL)

Buy backBuy back

Arrangement forArrangement forfarm output.farm output.

Supply ChainSupply Chain

efficiencyefficiency

The consortium is also planning to rope other specialist partnersThe consortium is also planning to rope other specialist partners

including insurance, equipment and storage companies.including insurance, equipment and storage companies.


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Model 2:PepsiCo Model for TomatoModel 2:PepsiCo Model for Tomato

Farming in PunjabFarming in Punjab

Focused on developing Region and ProductFocused on developing Region and Productspecific research and extension servicesspecific research and extension servicesthrough Punjab Agricultural University (PAU)through Punjab Agricultural University (PAU)and Punjab Agro Industries Corporationand Punjab Agro Industries Corporation

Limited (PAIC).Limited (PAIC).

Encouraged by sweeping success in TomatoEncouraged by sweeping success in TomatoFarming (14- 52 tons / ha), emulated the modelFarming (14- 52 tons / ha), emulated the modelin food grains (Basmati Rice), Spicesin food grains (Basmati Rice), Spices(Chillies), oil seeds (Groundnut) and Potato.(Chillies), oil seeds (Groundnut) and Potato.

o e : n egra e o on:


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o e : n egra e o on:Cultivation (ICC) Model of AppachiCultivation (ICC) Model of Appachi

Cotton Company (ACC)Cotton Company (ACC)

(Coimbatore Dist. of Tamil Nadu)(Coimbatore Dist. of Tamil Nadu) InFormation of farmers Self HelpFormation of farmers Self Help

GroupsGroups

Crop loan.Crop loan.

Easy availability of qualityEasy availability of quality

seeds, fertilizersseeds, fertilizers

and pesticides at discountedand pesticides at discounted

rate.rate.


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Key Learning ExperienceKey Learning Experience

Extension service teamExtension service team

locally drawnlocally drawn user friendly.user friendly.

available at farmers callavailable at farmers call

Never offer any commercially untested technology.

Ensure availability of adequate and appropriate inputs.Ensure availability of adequate and appropriate inputs.

Agriculture implements offered free to growersAgriculture implements offered free to growers

an investment that yields long term benefitan investment that yields long term benefit

Preferably no pre fixed prices- no climate of uncertainty.Preferably no pre fixed prices- no climate of uncertainty.

Timely payment to the farmer is a priorityTimely payment to the farmer is a priority


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Formulation of a model for Farmer End-Formulation of a model for Farmer End-

user partnership approach in Juteuser partnership approach in Jute

Agriculture and MarketingAgriculture and Marketing

Key principlesKey principles:

A nodal officer to implement and monitor.A nodal officer to implement and monitor. The participating farmers to form SHGs.The participating farmers to form SHGs. A MoU between the Mill Co and the SHG (s)A MoU between the Mill Co and the SHG (s) Involvement of local agencies.Involvement of local agencies. One village one variety of jute seed.One village one variety of jute seed. Supply of timely and quality farm inputs on credit.Supply of timely and quality farm inputs on credit.

Synchronized sowing.Synchronized sowing. Supply of agriculture implements free of costSupply of agriculture implements free of cost Integrated crop managementIntegrated crop management Payment at a price acceptable to farmers.Payment at a price acceptable to farmers.


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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

Technology Transfer :

Selection and training of extension service team Farmer education programme Field trial at farmer field - Multi locational crop timing

Commercialisation:

Land preparation and Planting Crop monitoring and Crop Management Harvesting, procurement and transportation Prompt farmer payment system

Building Steps for the ModelBuilding Steps for the Model


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How the Model would benefit

FarmerFarmer End- user (Mill Company)End- user (Mill Company)

Seed money for farming.Seed money for farming.Exposure to mechanisedExposure to mechanised

agro technology.agro technology.

Crop monitoring andCrop monitoring and

technical advice on atechnical advice on a

regular basis - Free of Cost.regular basis - Free of Cost.

Supply of farm inputs.Supply of farm inputs.

Supply of free AgriculturalSupply of free Agricultural

ImplementsImplements

Assured market outlet ofAssured market outlet of

produce.produce.

Uninterrupted andUninterrupted andregular flow of rawregular flow of raw

material.material.

Long term planningLong term planningmade possible.made possible.

Dedicated supplier base.Dedicated supplier base.

Generates good will forGenerates good will for

the organization.the organization.


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Shift from prices to return per acre Shift from prices to return per acre

Productivity increases.Productivity increases.

Promote long term planning andPromote long term planning andinvestment.investment.

Build up a long lasting relationship ofBuild up a long lasting relationship of

trust and dependence between the jutetrust and dependence between the jutefarmers and the end-users.farmers and the end-users.

Ultimate goal


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The Model can sustain in theThe Model can sustain in the

long run only if the initiative /long run only if the initiative /

empowerment comes from theempowerment comes from thefarmers rather than thefarmers rather than the

participating Mill.participating Mill.


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FARMER END USER PARTNERSHIP APROACH

VERSUS PRICE SUPPORT MECHANISM

Farmer end-user

partnership approach

Price Support

Mechanism

Planting Material Supplies Technology Transfer Assured Price Assured Quantity Free Equipment

Partnership Approach Builds Commitment Long Term

None None Minimum Guaranteed No Assured Quantity No Free Equipment

Avail only when beneficial No Commitment Short Term


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Photo Album

by alok

int. con. feb-2009 mr. ak khastagir

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