The Centre has temporarily fixed a revised ceiling price for 50 kg foodgrain sackings procurement to stop price manipulation of jute bags. According to sources, the price of jute sackings, which is based on a cost plus formula, is normally fixed every month on the previous three months’ moving average price of raw jute and other cost such as power and labour.

However, it is alleged that the “malpractices of handful of mills” saw the raw jute prices soar since the second half of November.

The Jute Commissioner’s office has inspected six jute mills in West Bengal on suspicion of wrong doings and initiated criminal proceedings against the management of the mills.

Since, the procurement prices of sackings are directly related to raw jute prices, the ministry of consumer affairs, food & public distribution, responsible for procurement of bags, have been raising alarm since December last year. The ministry also suggested that the unfair practice would have an adverse impact on the subsidised procurement price of jute bags in the remaining part of the season until June.

Concerned over unabated raw jute price rise, the textiles ministry swung into action in March and pegged the ‘notional’ raw jute price at around ₹5,090 a quintal, the lowest level witnessed in January.

This ceiling is to prevail until June and related to purchase of bags meant for packing rabi crops. The raw jute notional price translates the jute sacking price at ₹86,740 a tonne, lower than the ruling cost price of ₹89,000 a tonne.

Official sources suggested that evidence of unfair trade practices were allegedly found in some sacking manufacturing units. Jute bags used for packing foodgrains are considered essential commodities.