Title: PROJECT ON SMALL SCALE ENTREPRENUERSHIP DEVELOPMENT IN DIVERSIFIED JUTE PRODUCTS (CFC/IJSG/18) INDIA PART
1RAW JUTE PRICE STABILISATION MECHANISM IN
INDIA
2Fluctuation in price and availability of raw jute
is the single important factor affecting the jute
economy.
3FLUCTUATION 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)
Year 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Maximum 1135 1110 1780 1670 990 1050 1680 1570 1575 1510
Minimum 725 860 800 920 810 815 975 1200 1090 1130
4PRODUCTION 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
5ANALYSIS 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
6Raw jute price / production fluctuation matrix
Price received by the farmers during last jute
season
Good
Bad
(Good / Favourable) Bumper Crop (Bad / Favourable) Uncertain
(Bad / Favourable) Uncertain (Bad / Un-favourable) Short Crop
Favourable
Favourable
Weather Condition at the time of sowing
favourable
Un-favourable
Un-favourable
Bad
Good
7Most 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 the season). Adversely affecting Manufacturers profitability and competitiveness of jute products.
8Governmental Mechanism for raw jute price
stabilisation
9Announcement 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
102) 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 MSP ex-Assam (Rs,/Qtl) 750 785 810 850 860 890 910 1000 1055 1250
R
113) 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 Grades Grades Grades Grades Grades Grades Grades
States Districts Variety TD1 TD2 TD3 TD4 TD5 TD6 TD7 TD8
States Districts Variety 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 and Meghalaya All Districts Tossa 1630 1560 1490 1350 1250 1180 1090 945
Assam and Meghalaya All Districts 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.
12The 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.
(TD5 ex-Assam for 2008-09)
Assortment / baling / handling cost
Insurance
Interest
Rs. 393.00 per Qtl.
Freight to Kolkata
Other incidental charges
Taxes and levies
Derivative Minimum Support Price in baled
condition landed Kolkata
Rs. 1643.00 per Qtl
13Administering 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.
14Procurement by JCI / Cooperative during last 10
years (Figure in 000 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
Procurement under Price support / (Commercial) Operation 54 107 463 246 1314 1118 352 140 483 755
15Another 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.
16Extra governmental mechanism for stabilisation of
raw jute prices.
17Farmer - 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
18Some 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
- consumers bridged by a chain of middlemen.
- Imperfection in marketing structure.
-
19 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
203 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.
21Model 1 Hindustan Lever Limited (HLL), Rallis
ICICI Model of Wheat Farming in M. P.
Agency Service Provided Benefit accrued
Rallis Agro- inputs and know how Assured Clientele of Products and Services
ICICI Financing farm credit Assured Clientele of Products and Services
Hindustan Lever Limited (HLL) Buy back Arrangement for farm output. Supply Chain efficiency
The consortium is also planning to rope
other specialist partners including insurance,
equipment and storage companies.
22Model 2PepsiCo 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.
23Model 3 Integrated Cotton Cultivation (ICC)
Model of Appachi Cotton Company (ACC) (Coimbatore
Dist. of Tamil Nadu)
- 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).
24Key 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
25Formulation 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.
26Building 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
27How the Model would benefit
Farmer End- user (Mill Company)
Seed money for farming. Exposure to mechanised agro technology. Crop monitoring and technical advice on a regular basis - Free of Cost. Supply of farm inputs. Supply of free Agricultural Implements Assured market outlet of produce. Uninterrupted and regular flow of raw material. Long term planning made possible. Dedicated supplier base. Generates good will for the organization.
28Ultimate 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.
29The Model can sustain in the long run only if the
initiative / empowerment comes from the farmers
rather than the participating Mill.
30FARMER 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
31Thank You
Photo Album
by alok
THANK YOU