Compulsory jute packaging raises concerns in sugar industry

The Department of Food and Public Distribution recently issued a memorandum with guidelines for assessing ethanol production from various feedstocks. Along with this, another important policy decision that affects the sugar industry is the reservation norms for compulsory jute packaging. The Cabinet Committee on Economic Affairs approved these norms on December 8, 2023, which require:

-All food grains to be packed in jute bags.
-20% of sugar to be packed in jute bags compulsorily.

This policy aims to support the domestic jute industry and the livelihoods of the farmers and workers involved. However, it poses several difficulties for the sugar mills, such as:

Higher cost: The price of jute bags is much higher than that of PP bags, which are commonly used by sugar mills. Jute bags cost around ₹ 60-65 per bag, while PP bags cost around ₹ 16-20 per bag.

Delayed delivery: The supply of jute bags may not meet the demand, as the jute industry was not prepared for this sudden order. The jute industry has to first produce jute fabric and then make jute bags, which takes time. The delivery of jute bags may be delayed by 20-30 days, affecting the packaging process of sugar mills.

Short deadline: The government has given a short deadline of 10 January 2024 for the sugar mills to comply with the jute packaging policy. The sugar mills have to report their compliance to the DFPD through email and fill information related to jute packaging in form P-II on NSWS portal by this date. Failure to do so will result in penalty in the form of deduction of monthly domestic release quota of sugar.

These difficulties pose a challenge for the sugar industry, which is already facing financial stress due to rising cane prices. The sugar industry has to adapt to the new policy and manage the cost, delivery, and deadline issues. The government has to provide support and feedback to the sugar industry and the jute industry to ensure smooth implementation of the policy and minimize disruption. The policy aims to promote sustainability and economic benefits, but it also raises concerns and challenges for the sugar industry.

Disclaimer: The views and opinions expressed in the article by Dilip Patil, Managing Director of Samarth SSK Ltd., are solely his own.


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