Industry in turmoil as raw jute prices increase

A sudden rise in raw jute prices well above the Minimum Support Price (MSP) is causing severe turmoil in the industry, benefiting farmers but severely straining the operating margins of jute mills. The market price for raw jute (TD-3 grade, the reference grade) has crossed Rs 9,000 per quintal, representing a premium of nearly 60 per cent over the MSP for the 2025-26 season, which is set at Rs 5,650 per quintal.

The price spike is primarily driven by a tight supply-demand imbalance, resulting from multiple factors such as 15 per cent reduction in raw jute production. The inventory carried over from the previous season has plummeted significantly, compounding the shortage. Mills are reportedly beginning the season with historically low reserves (around 25 days of stock), compared to the traditional 10 lakh bales.

Restrictions on the import of raw jute, particularly from Bangladesh through land ports, have cut off a crucial source of high-grade raw material, further tightening domestic availability. Industry sources have suggested that some traders and stockists may be hoarding the commodity, further restricting market arrivals and driving up prices through speculative practices.

The high raw material cost has a direct and negative impact on jute mills, which process raw jute into yarn and products like gunny bags (B-Twill bags) for the government. Mills are being forced to purchase raw jute at the open market price of over Rs 9,000 per quintal, which severely compresses their profit margins. Some mills have reported facing operational strain, struggling to meet statutory dues, and even running for fewer days a week due to procurement challenges.

In response to the crisis, the Ministry of Textiles has taken decisive action to stabilize the market. The government has imposed stock limits on raw jute holdings for traders, stockists, and mills to deter hoarding and speculative trading. Mills are restricted to holding no more than 45 days of consumption Balers with presses are limited to 2,000 quintals while other stockists are limited to 300 quintals.