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.
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Fluctuation in priceand 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)
PRODUCTION OF RAW JUTE / MESTA (KENAF)FOR THE LAST TEN JUTE SEASONS Figure in lakh bales of 180 kgs
ANALYSIS OF THE REASONS FOR FLUCTUATION IN RAW JUTE PRICES AND PRODUCTION • Two major forces are responsible: • 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 Good Bad Favourable Favourable Weather Condition at the time of sowing favourable Un-favourable Un-favourable Bad Good
Announcement and administration of Minimum Support Price Announcement of Minimum Support Price is a three-step procedure : • 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 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
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) R
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. 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 Rs. 1250.00 per Qtl. (TD5 ex-Assam for 2008-09) + Assortment / baling / handling cost + Insurance + Interest + Rs. 393.00 per Qtl. Minimum Support Price of raw jute (in loose condition) Freight to Kolkata + Other incidental charges + Taxes and levies Derivative Minimum Support Price in baled condition landed Kolkata = Rs. 1643.00 per Qtl
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)
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.
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 • consumersbridged 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. 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 End-user 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
Ultimate goal • Shift from prices to return per acre – Productivity increases. • Promote long term planning and investment. • 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 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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