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Commodity
JUTE
Description | Overview | Characteristics | Uses of Jute | Varieties and Grading of Jute | Government Policy | Trading | Contract specifications
Description

Jute is obtained from a plant named Corchorus. Jute is spun into strong threads having a coarse appearance as it is long, shiny, and a soft fibre. Jute is the second most cheapest natural fibre after cotton, based on the two criteria- amount produced and types of uses. Plant materials are composed in the jute fibre. It is a fibre collected from the skin of the plant. Jute plant is generally 6 to 12 feet in height. Due to above reasons jute is one of the most important natural fibres. Its industrial term is Raw Jute. Jute is extensively used in manufacture of heavy yarns and textiles.

Features-

  • Jute is considered to be the cheapest vegetable fibre.
  •  It is obtained from the skin of the plant's stem.
  • After cotton, its the most important fibre, based on the criteria - availability, production, global consumption and usage.
  • It is recyclable and bio-degradable.
  • Jute ensures good ventilation and so it is used for packaging and agricultural areas.
  • It is used in raw materials for various activities i.e. textiles, non textile, agricultural sectors, packaging, agricultural sectors and construction as it is a versatile fibre.
Overview

India is the largest producer of jute in the world, accounting for over 60% of the world’s production of jute. For over a century, India has been producing, and exporting jute and fibre products. Bihar and West Bengal account for 50% of the country’s output, while 7 other states grow jute. The total area in India where jute is grown is a staggering 1 million hectares of land. The produce of raw jute is equivalent to about Rs. 1500 crore. The size of the jute industry (including raw jute production) is app. Rs. 4500 crore.  In India over 4 million families are involved in cultivation of jute. And there are over 76 jute mills in the country. India produces its own jute seeds. The state seed corporation of Andhra Pradesh and Maharashtra produces more than 90 percent of seeds.

USA, UK, South Africa and Belgium are the main importers of Indian jute in the world. They import 25% of the total India’s production of jute. India has excellent infrastructure facilities in meeting foreign (export) commitments. Apart from India, other countries like Bangladesh, China, and Myanmar are other important exporters of jute. As a matter of fact, the total production of jute in the world is 3 million tonnes (roughly around 24-25K Rs. Crore).

Other growing places in the world

India, Bangladesh, China, Thailand are leaders in jute production. Whereas in India the production is scattered over in the regions of Assam, Orissa, Tripura, Meghalaya and Uttar Pradesh besides West Bengal and Bihar.

Characteristics

Jute is a rainy season crop, and a yearly plant-fibre crop. It’s sowed in March -May and harvested anywhere between June to September (depending on when the crop is sown).
Jute is (from ancient times) been graded on visual characteristics such as the length, color, and root characteristics and its place of origin. Its also graded on six fibre characteristics such as strength, quality (how fine it is), its root content, how bulky it is, its  color and also its defects. Others like tossa and white jute have been classified into 8 grades.

Uses of Jute
 
  • Jute used in packaging material for storage and transportation of food grains and this contributes to app. 14 Million Tonnes.
  • In India most jute products are used in the domestic market.
  • Jute is environment friendly (so it is used as a replacement for plastic bags).
  • Jute fibres are woven into curtains, carpets and other clothes used in day to day activities.
  • Jute is said to have more than 800 uses, and it may as well be second most important and useful fibre (after cotton).
Varieties and Grading of Jute

There are four major varieties of jute namely Tossa, White Jute, Mesta and Bimli. Out of the total production of jute in the world, Tossa alone accounts for about 78% of this, while White Jute is 10%, Mesta is 7% and Bimli is 5%. 

Jute fibres are graded as the following (only after extraction). The ones featuring above the others are of more use, are stronger 

Top- Very strong Colour, lustrous and very strong fibres

Middle- Average colour,  not so lustrous average color

Bottom- medium strength, strong fibre

B-Bottom-  medium strength, unsuitable for higher grades, Fine fibre

C-Bottom- No well defined colour (can be any colour), average strength of fibre

X-Bottom-Very weak fibre.

The major types of Jute are classified into specified grades:

White Jute- 8 grades (ranging from W-1 to W-8)

Tossa Jute- 8 grades (ranging from TD-1 to TD-8)

Mesta Jute- 6 grades (M-1 to M-6)

Bimli- 8 grades (Bimli-1 to Bimli-8)

Other less famous types: Assam- 8 grades (Assam-1 to Assam-8)

                                      Jungli- 8 grades (Jungli-1 to Jungli-8)

Government Policy

 

  • Government has decided to take firm iniatives in strengthening the jute sector of India because millions and millions of Indians are directly or indirectly dependent on the jute industry.

  • Government of India makes sure that farmers are not forced to sell their  raw jute below the market price or the MSP (minimum support price).

  • Plastic, a cheap and hazardous material was being used in packaging of some commodities. Because of its property of not being bio-degradable (and since it was not eco-friendly), the government ordered the compulsory use of jute packaging for select commodities. This has given the industry a huge boost and helped it to stabilize, ensuring a better return for the jute farmers.

Trading


The yearly price volatility (ups and downs for a period of time) for raw jute is around 12.6%.
Jute futures- these are traded and exchanged by a fair bond to make and accept delivery of a certain quality and quantity of Jute during the period in the future, at a price confirmed upon at the time the engagement is made.

Jute futures are highly standardized products. Future prices are quoted for jute products with accurate specifications delivered at a discussed location during a specified period of time. The exchange assures a mechanism that makes sure that the contract will be honored, and therefore shuns out any counter party risk. This is because the two parties to the transaction trade without too much exchange on the information of the parties.

Traded mainly in NCDEX and NMCE (National Commodity and Derivatives Exchange Ltd. and National Multi Commodity Exchange of India Ltd. respectively.)


Future contract specifications of jute in various commodity exchange

 
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