Reweaving Value Chain with Digital Margins: A Socio-Economic Appraisal of Jute Economy in India

Journal of Research and Development A Multidisciplinary International Level Referred and Double Blind Peer Reviewed, Open Access ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-11| November2025 66 Reweaving Value Chain with Digital Margins: A Socio-Economic Appraisal of Jute Economy in India Manish Ur Rahman1, Jadab Krishna Das2, Sajal Kumar Maiti3 1SACT Professor of Information Technology, Goenka College of Commerce and Business Administration. 2Professor and Dean, Department of Commerce, University of Calcutta. 3Ex-Professor,Department of Commerce, Goenka College of Commerce and Business Administration. Email: [email protected] Manuscript ID: JRD -2025-171113 ISSN: 2230-9578 Volume 17 Issue 11 Pp. 66-78 November. 2025 Submitted: 16 Oct. 2025 Revised: 27 Oct. 2025 Accepted: 11 Nov. 2025 Published: 30 Nov. 2025 Abstract The Indian jute sector employs nearly four million cultivators in eastern India, mainly West Bengal; however, despite the Minimum Support Price (MSP) in place as well as institutional procurement by the Jute Corporation of India (JCI), farmers remain mired in long-term low-income living. This paper analyzes the socio-economic dimensions of the jute economy—cost-return patterns; dependence on intermediaries; access to credit and technology—through the use of secondary data (2012–2024) and primary field interviews. Using a profit framework along with price-spread models, the article finds factors that affect farmer welfare. Results show that limited direct access to markets, low familiarity with digital procurement platforms, and high dependence on input costs help in maintaining income asymmetry. The paper ends with suggestions on digitally-enabled cooperative procurement, micro-insurance, and credit integration mechanisms to increase socio-economic resilience of jute-farming households. Keywords: Jute, Socio-Economic Status, Farmer Livelihood, MSP, JCI, Middlemen, Digital Inclusion, Rural Bengal. Introduction Jute is the ―golden fibre,‖ and it has long been integral to eastern India’s agrarian and industrial economy, particularly along the Ganga–Brahmaputra delta, serving over four million farm families and a vast network of labourers, traders, and mill workers. West Bengal accounts for nearly 75 percent of India’s raw jute and dominates national production. While jute may take on economic significance, it is also deeply integrated within rural social life through the cultivation and retting of jute. As the cheapest bast fibre and second only to cotton in global usage, jute is extremely versatile by virtue of its strength, breathability, and insulating properties. It is so versatile, that it can be used in packaging, textiles, geotextiles, furnishings, and burgeoning eco-composite applications. Increasing worldwide concern on plastic pollution and the demand for sustainable materials have reinvigorated global interest in natural fibres. Jute being biodegradable and carbon-positive, stands of potential advantage to fit in. This growing environmental milieu presents unique opportunities for traditional jute-producing communities to reinforce their competitive position in global value chains by promoting jute’s eco-friendly and multifunctional nature. Amid this changing landscape, West Bengal (which was once the heartland of jute production and processing) now finds itself in a challenging, yet promising headspace. The state’s leadership of raw jute production and trading is no longer the norm but must be reframed and re-implemented to establish its post-emerging leadership role. Constraints to the sector’s growth include declining competitiveness, market price variations, and inefficient procurement mechanisms. Nonetheless these same problems can be turned into prospects if strategic measures such as increased productivity, improved links between farmers, and improved trade systems are undertaken. Modern IT and digital infrastructure in the jute value chain is an effective road to reform through which the transparency, efficiency, and farmer focus of market operations can become higher. Quick Response Code: Website: https://jrdrvb.org/ DOI:: Creative Commons (CC BY-NC-SA 4.0) This is an open access journal, and articles are distributed under the terms of the Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International Public License, which allows others to remix, tweak, and build upon the work noncommercially, as long as appropriate credit is given and the new creations ae licensed under the idential terms. Address for correspondence: Manish Ur Rahman, SACT Professor of Information Technology, Goenka College of Commerce and Business Administration. How to cite this article: Manish Ur Rahman, Jadab Krishna Das, Sajal Kumar Maiti (2025). Reweaving Value Chain with Digital Margins: A Socio-Economic Appraisal of Jute Economy in India. Journal of Research & Development, 17(11), 66-78. Original Article Journal of Research and Development A Multidisciplinary International Level Referred and Double Blind Peer Reviewed, Open Access ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-11| November2025 67 Such a digital transformation is in line with India’s overarching vision for smart agriculture, and of global sustainability, responsible production, and inclusive growth. In the end, the jute industry is at a crossroads — a juncture where environmental necessity converges with technological opportunity. The fiber’s own natural benefits, paired with clever innovation and policy support, can position West Bengal and India in general to take the lead to restore green industry to jute so that jute becomes both an icon and an answer to the world’s quest for sustainable growth. Literature Review India’s association with jute traces back centuries, with early records (such as those of Ain-i-Akbari (1590)) mentioning jute being used in rural clothes during Akbar’s time. As for examples, archaeological and literary evidence indicates white jute was extensively used in Bengal for everyday products, including ropes and twines. It was in the 17th century that a major shift took place with the introduction of raw jute into the British East India Company, which tied the fibre to global trade. By the late 18th century, growing industrial demand in Europe firmly assimilated Indian jute into international markets under the Company’s monopolistic control, creating the basis for a colonial export system. In the industrial era (1800–1947) the jute used to be treated as a craft fiber, and now it is regarded as the backbone to the global manufacturing industry. The first jute mill was established at Rishra in 1855 by Margaret Donnelly to accelerate mass industrial production, driven significantly by demand from Dundee. By 1910, Indian mills exported more than a billion yards of cloth and 450 million bags from India every year, and by 1940, the number of their mills controlled almost 57% of the world’s looms. Geographical location of mills around Calcutta was aided by Bengal’s fertile soil, humid weather, riverine transport and widespread workers. But oligopolistic control, state intervention in the business, and exploitative labor practices continued while it was dominated by British capital. The greatest structural rupture in the jute economy occurred in 1947 with partition. As Bose (1993) points out, Partition generated a geopolitical schism—81 percent of jute production was concentrated in East Pakistan (now Bangladesh), and virtually all jute mills were situated in West Bengal (Ghosh 1999). This spatial dislocation created long-standing shortages of raw materials and erratic price surges. Since the British capital was withdrawn, mill ownership was Indianized but the loss of colonial export markets and weak institutional support meant the industry had little global competitiveness. The post independence era brought protectionist industrial policy to the fore, focusing on price stability and self-reliance. Such solutions had taken through price controls, as well as through institutional arrangements like the Office of the Jute Commissioner (1956) and the Jute Corporation of India (1971), devised with a view of ensuring that growers received compensation for their labor. However, the rise of substitutes of the industrial variety, such as in the 60s–70s, along with strict pricing schedules and technological decline, ushered in a period of protracted declining productivity. In 1991, economic liberalization triggered a resurgence of challenges as well as reform opportunities. More competition from across the globe laid bare structural weaknesses in that industry and spurred the introduction of modernization projects like the UNDP-supported National Jute Development Programme (NJDP) and the National Jute Policy (2005). Scholars like Moulik and Shukla (2009) argued for product diversification and flexible production systems while there are examples from Pal and Chakraborti (2011), in the form of partially increased productivity but on-going old machines and poor investment quality. Studies by Sadat et al. (2017) recommend development of new technologies to drive productivity. The COVID-19 pandemic created a new layer of disruption. Logesh et al. (2020) did not find statistically significant differences between average prices of jute pre and during the pandemic, however, arrivals into the market increased (due to higher demand for packaging materials). Farmers were insulated from the agri-industrial disruptions, though there was little direct distress but mill workers faced large-scale losses in earnings and jobs as shutdowns and disruptions from migration took their toll. Recent empirical studies have highlighted the importance of technological capacity and the development of skills in jute sector competitiveness. Collectively, they indicate that the continued competitiveness of the jute economy will rely on ensuring the integration of technological upgrades with institutional reform, skill development and digital connectivity across the value-chain. Research Objectives The broad objective is to analyze the socio-economic status of jute farmers and the institutional factors influencing their livelihoods. Specific objectives are:  To quantify cost-return structures and evaluate disparities in price realization under different marketing channels.  To assess how institutional access and digital literacy affect income outcomes.  To identify policy and technological pathways that can enhance socio-economic resilience. Research Methodology The Data Collected for the study are from both Secondary Data and Primary Data. Secondary Data has been collected from various Institutes like Jute Corporation Of india (JCI), Research Institutes like Central research Institute of Jute and Allied Fibres (CRIJAF), Indian Jute Mills Association (IJMA), National Institute of Jute and Allied Fibres Journal of Research and Development A Multidisciplinary International Level Referred and Double Blind Peer Reviewed, Open Access ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-11| November2025 68 (NIRJAF), Jute Manufacturers Development Council (JMDC), Reports of Ministry of textiles, Govt of India and other websites like worldjute.com, jutecomm.in. Primary Data has been collected through questionnaires by one-to-one meeting with the farmers of Bagda Sub-Centre and Berachampa Sub-Centre. For the analysis of the data, R Statistical Package has been used to analyze and represent various Primary and Secondary data. The secondary data of period from 2014-15 to 2022-23 has been used in most cases whereas the collection of primary data based on the questionnaire spans over a period of 2022– 2023. 2. International and National Scenario of Jute Production Graph 1: Trend of Area of Production of Raw Jute in the International Scenario Data Source: Faostat Bulletin 2024 Based on Graph 1, the trend in the area under raw jute cultivation has remained largely stagnant over the past eight years (2015–16 to 2023–24). Such stability has stemmed from the fact that the two leading jute producing countries (India and Bangladesh) have kept their own cultivation areas nearly constant during this period. There are many structural reasons why growth in jute acreage is limited: competition with other crops; fluctuating market prices; and no significant technological advancements resulting in enhanced yield. Consequently, total field production capacity for jute has plateaued across the world for quite some of its cultivation and area. Graph 2 : Trend of Production of Raw Jute in International Scenario Data Source: Faostat Bulletin 2024 Graph 2 shows that the global raw jute output is exhibiting a moderate downward trend throughout the middle years of the reference period, particularly among the two dominant producers—India and Bangladesh. Even as both countries fluctuated slightly in terms of output, production levels finally stabilized and conformed with stagnation of cultivated area. Production volumes of the smaller jute producing countries have been steady, thus contributing little to the overall variation of supply worldwide. Since production is relatively stable across the globe, it indicates that production has achieved structural equilibrium and that neither substantial technological advancement nor area expansion has influenced the global supply dynamics of raw jute during this period. Graph 3: Trend of Productivity of Raw Jute in the International Scenario Data Source: Faostat Bulletin 2024 0 2000 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 Trend in World Production of Raw Jute 2016-17 to 2023-24 1 BANGLADESH 2 CHINA 3 INDIA 4 NEPAL Linear (1 BANGLADESH) Linear (3 INDIA) Journal of Research and Development A Multidisciplinary International Level Referred and Double Blind Peer Reviewed, Open Access ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-11| November2025 69 Graph 3 shows that the productivity of raw jute (yield per hectare) has remained virtually constant across all major producing countries throughout the study period. This pattern closely corresponds with the trends of area and total production, suggesting that productivity enhancement has been relatively stagnant. The stagnation in yield indicates that specific targeted interventions (e.g., improved seed dissemination, mechanization, or agronomic innovation) have been lacking or ineffective. By improving productivity, it would be a major incentive for farmers as they could improve profitability as well as cut down costs through economies of scale in production. Thus, without concentrated efforts to raise yield, the jute sector risks long-term stagnation despite stable cultivation and production levels. National Scenario Further, if we look State wise in India, the same trend is substantiated with West Bengal being the only major Raw Jute producing State. Graph 4 : Trend of State-wise Area of Raw Jute Production in India Data Source: www.jutecomm.gov.in Graph 4 The area for jute farming appears to be virtually unchanged in the last decade. West Bengal remains a dominant share (consistently above 70–75 percent of the total jute area in India) with Assam, Bihar, Odisha and Meghalaya making only a marginal contribution. Only small changes can be observed in Assam and Bihar, mostly due to climatic variability and shifting crop preferences. Total Area: The near-horizontal curve for total area indicates no major expansion of jute acreage, indicating farmers’ limited incentive to increase land allocation because of unstable market prices and competition from more remunerative crops such as paddy and maize. Graph 5: Trend of State-wise Production of Raw Jute in India Data Source: www.jutecomm.gov.in Graph 5 shows the overall raw jute production pattern from cultivated area only, that is no significant rising or falling over the years. Once again over 80 percent of national production comes from West Bengal. The production levels in other states are nearly unchanged, illustrating that total national output is affected essentially by the production of West Bengal. This consistency of results further implies a lack of yield increases from yield-enhancing intervention or of large technological changes in the production process. Such fluctuations are correlated with years of inconsistent monsoon or floods in the lower Gangetic plains, and recovery over subsequent years suggests cyclical weather-based variation, not structural growth. Journal of Research and Development A Multidisciplinary International Level Referred and Double Blind Peer Reviewed, Open Access ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-11| November2025 70 Graph 6: Trend of State-wise Productivity of Raw Jute Data Source: www.jutecomm.gov.in According to Graph 6, productivity is stable in most large producing states (yield per hectare) with only yearto-year variability. West Bengal is still enjoying the largest yield to date, may be due to relatively good irrigation, soil fertility. The productivity curves of Bihar and Assam are low and flat. That said, the overall stagnation in productivity is simply mirroring the trend in area and production which clearly sums up that agronomic/mechanization-driven gains of any importance have not occurred in recent years. This illustrates an important policy and technological gap. Furthermore, fierce competition from the other synthetic alternatives in the international market, the outdated production machinery and cumbersome production process are also factors hindering the jute industry from becoming market competitive. The demand for jute products in the market can only be increased by making the jute products more cost-effective so that they can compete against the other available alternatives in the market in terms of price. This makes the current study a humble attempt towards developing a novel solution to revitalize this sunset industry. In general, the graphs highlight an important structural flaw in the jute sector of West Bengal, despite its historical and geographical advantages. Targeted policy interventions focusing on yield improvement, technology dissemination, and farmer training may be the reasons behind it. Therefore, questions that need further investigation are shown in the following Table 1. Table 1: Areas that Remains to be Explored on the Supply & Demand Side of the Jute Industry Supply Side Demand Side Area under cultivation: Fluctuations in area allocated to jute suggest competition with other crops (paddy, maize, vegetables). Industry demand: The jute industry’s dependence on government orders (sacking, packaging) means market demand is not always stable. Productivity constraints: Yield stagnancy points to limitations in seed quality, technology adoption, and extension services. Substitutes: Growing use of synthetic fibers and plastic substitutes erodes demand for raw jute. Farmer incentives: Minimum Support Price (MSP) coverage and procurement mechanisms often fail to motivate farmers to expand area. Policy intervention: Demand-side policies such as the Jute Packaging Materials Act are critical, but enforcement remains to be Questioned. Thus, the stagnation of the production is not just an agricultural issue, but is the result of the interplay of supply-side constraints and demand-side uncertainties. We should understand more about the two sides to see why raw jute production has plateaued, even though West Bengal is the one in command of the crop. So, if this sunset industry is to be revived, it becomes necessary to increase the cost-effectiveness, quality, and market adaptability of jute products. Against this backdrop, the current study was adopted to provide a holistic framework for investigating and suggesting innovative technology-based solutions, which integrate agricultural and industrial approaches to account for the persistent stagnancy in raw jute production, and to help determine pathways for its revival. Findings The Demographic Profile of Jute Farmers: From demographic point of view of jute farmers, this is a predominantly middle age agricultural group, mostly aged 35 to 55 years. Most households are male-managed, but women tend to take on ancillary farm work like sorting, 0 5000 2014-152015-162016-172017-182018-192019-202020-212021-222022-232023-24 Trend of Productivity of Raw Jute in India 2014-15 to 2023-24 Andhra Pradesh Assam Bihar Chattisgarh Jharkhand Karnataka Madhya Pradesh Maharastra Meghalaya Nagaland Odisha Tamilnadu Journal of Research and Development A Multidisciplinary International Level Referred and Double Blind Peer Reviewed, Open Access ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-11| November2025 71 drying and bundling. They are likely to have low to moderate levels of education where a significant proportion have only primary or secondary schooling, which makes it challenging for them to access information, technology and market participation. Farm sizes are often small and fragmented, likely around 0.5 to 2 bighas in average. Jute cultivation is a small-scale affair dominated by small and marginal farmers who rely on family labor and seasonal hired labor. Household income also varies and is constrained by income from agriculture predominantly as the key source. Income from other wage jobs, petty trade, or being migrant workers sometimes act as supplement. Limited access to institutional credit obligates many farmers to rely on informal lenders like mahajons or phorias. In short, the demographic profile is consistent with a resource-poor farming community that is largely devoid of technological information but relies heavily on manual labour and has high exposure to risks from market and climatic uncertainties. Parameters Influencing Cost of Raw Jute Cultivation: The economics of raw jute cultivation is mainly depended the material inputs and intensive labour. The cost analysis helps identify the viability of jute farming per unit area (bigha). Main cost heads include land preparation, seed and sowing, intercultural (niren) operations, irrigation, fertilizer, cutting, retting and drying which require specific combinations of labour and input. Land preparation is the most labour intensive of these and employs approximately three labourers per bigha. Seed costs include both purchase and sowing labour, while niren (weeding and intercultural work) is repeated about thrice per crop cycle. Irrigation and fertilizer application both involve material costs and the relatively small labour input; cutting (harvesting) is one of the most labour-intensive activities. Retting (soaking and fermenting the stems) provides a large portion of total costs through water and handling cost. Finally, drying needs about two workers to handle the fibre or to operate drying facilities. The analysis then quantifies these eight operations to form the entire cost structure for jute farming and to compare the price and contribution of each stage to the overall price incurred for production. This detail serves as the basis for assessing potential areas of cost-saving, mechanization, or targeted policy support to improve profitability and sustainability in raw jute farming. The following table 2 depicts the story of the cost of Jute cultivation. Table 2: Interpretations of Cost Components Cost Component Statistical/Economic Interpretation Cost of Preparing Land Distribution is slightly left-skewed (mean < median). Most farmers spend around ₹2700, with low variation, showing a fairly standard land preparation expense. Seed Cost Very limited variability (std ≈ 6% of mean). Reflects a consistent pricing of seeds, perhaps as a result of standardized supply channels. The majority of farmers pay Rs 500 per bigha; a small group have the least cost of seed (≈ Rs 390–450). This could be linked to differences in access to subsidized seed or bulk purchase. Cost of Niren (Weeding/Thinning) More variability than land prep. Farmers spend between ₹2100–₹2800, which indicates wage variations and differences in labor availability. Well concentrated at Rs 2800 implying common practice. But some farmers are able to control the costs lower (around Rs 2100–2450), possibly because of their family labour or fewer weeding activities. Irrigation Cost Highly stable, nearly identical between farmers. Suggests standardized irrigation practices, minimal efficiency improvement. It hints at a flat-rate payment system for pump usage. Fertilizer Cost Slightly more variable, but tightly clustered around ₹1000. Reflects use of standardized fertilizer packages. Cutting Cost Wide range of costs, but mean ≈ median → symmetrical distribution. Being labour-intensive, it drives total cultivation expenses and may fluctuate depending on seasonal wage rates and labour shortages. Retting Cost Fairly uniform, costs fall within ₹3700–₹4000. Influenced by availability and proximity of water bodies. Drying Cost Median = 0, meaning most farmers don’t spend (sun drying). A few incur high costs (up to ₹800), raising mean & std. Total Cost of Cultivation Tightly clustered between ₹15,050–₹17,900. Suggests strong predictability and consistency of cultivation costs per bigha. The tight interquartile range indicates that cost structures are quite uniform across farms, with limited scope for savings except in labour-intensive operations (cutting, retting). Journal of Research and Development A Multidisciplinary International Level Referred and Double Blind Peer Reviewed, Open Access ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-11| November2025 72 Thus the economic implication being farmers operate in a cost-stable but margin-sensitive system. Even a 5– 10% shift in labour/drying costs or a dip in MSP could wipe out profits. Contribution of the Cost Component in Raw Jute Cultivation The contribution of each cost components are depicted in the following table, where, Contribution (%) = (Average of Component/ Average of Total Cost)×100 Table 3: Cost Components of the Total Cost of Cultivation of raw Jute Cost Component Percentage of Total Cost Insights Cutting cost 27.4% They are the two dominant expenses together making up ~50% of total costs. Retting cost 23.3% Niren 16.2% These two are secondary contributors. Land preparation 16% Irrigation 6.4% These two together account for only 12% Fertilizer 5.8% Seed 2.9% Negligible Impact on Total Cost Drying 1.9% Though only ~2% on average, acts like a hidden cost shock when it appears (₹800 at once).  Cultivation economics are heavily labour-intensive (cutting, retting, niren).  Input-based costs (seed, fertilizer, irrigation) are relatively minor. Any changes in labour wages or labour availability will have a disproportionate impact on farmer profitability. Profitability Analysis of the Jute Cultivation: Subsequently, the Profitability of the Jute farmers are shown in the following Table 4 where the Baseline Assumptions as got from the Field Study with the Farmers are: a. Average Total Cost per bigha: ₹16,500 b. Average Yield per bigha: 4.5 quintals c. Selling Price range (market): ₹3,800 – ₹4,000 per quintal d. MSP : ₹5,050 per quintal Table 4: Profitability at Different Selling price (As Shared by the Farmers) Selling Price (₹/qtl) Revenue (₹) Cost (₹) Profit (₹/bigha) Profit Margin (%) 3,800 17,100 16,500 600 3.5% 4,000 18,000 16,500 1,500 8.3% At market price, farmers earn ₹600–₹1,500 per bigha which are razor-thin margins. Thus, Break-even Price = Cost / Yield = 16,500 / 4.5 ≈ ₹3,667 per quintal If market price drops below ₹3,667, farmers face losses. At ₹3,800, they just scrape above break-even. As the raw jute cultivation cost structure is heavily labor-based, in particular the cutting cost and the retting cost, which together account for nearly half of the total production cost, any change in these expenses will directly alter the farm's profitability. A 10% rise in the costs of cutting alone will reduce the profit of a farmer by roughly ₹400, and a 10% increase in the cost of retting will reduce the profit by about ₹350. If drying is required, the increased cost of around ₹800 can almost entirely eliminate the farmer’s margin at prevailing market prices. Further, the following Table 5 depicts the scenario comparison (Best vs Worst Case Profits): Table 5: Best vs Worst Case Scenario of Profitability Scenario Cost (₹) Selling Price (₹/qtl) Revenue (₹) Profit (₹) Worst Case (high drying cost + low price ₹3,800) 17,300 3,800 17,100 –200 (loss) Baseline Market Case (avg cost ₹16,500, price ₹3,900) 16,500 3,900 17,550 1,050 Best Market Case (avg cost ₹16,500, price ₹4,000) 16,500 4,000 18,000 1,500 MSP Case 16,500 5,050 22,725 6225 Hence, we observed that, 1. Cultivation is highly Labour Dependence  Cutting and retting dominate costs (~50%).  Wage inflation or labour scarcity directly squeezes profits. 2. Risk from Climate & Drying Costs  Extra drying cost (~₹800) is enough to turn slim profits into losses at market price. Journal of Research and Development A Multidisciplinary International Level Referred and Double Blind Peer Reviewed, Open Access ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-11| November2025 73  Climate-resilient infrastructure (solar dryers, community drying yards) could stabilise margins. 3. Mechanisation Benefits  Cutting mechanisation (–20% cost) could increase profits by ~₹900.  Community retting tanks (–20% retting cost) will lead to +₹770 profit.  Together, mechanisation can double market profits even without MSP. 4. MSP as Safety Net  MSP ensures sustainable margins (37% vs 3–8% in market).  Without MSP procurement, farmers are exposed to price volatility and risk of losses.  But Farmers don’t sell on MSP. If they want to sell to MSP then additional logistic cost will come into play which will erode into the margin gained and then there is the hassle to take the produce to the JCI Procurement Centre.  Thus, Jute Farmers are fundamentally exposed to price volatility and risk of losses. Jute farming under current market conditions is barely profitable (3–8% margin). Farmers are highly vulnerable to price volatility, labour costs, and drying shocks. MSP procurement transforms the economics, making cultivation viable (38% margin). Procurement and Consumption of Raw Jute Jute farmers in West Bengal face a paradox. While the average cost of cultivation per bigha remains stable, the profitability from open-market sales is extremely fragile. Such narrow margins expose cultivators to severe risks from labour cost increases, drying charges, or minor price dips, often pushing them to the brink of losses. The MSP ensures much higher returns, but its benefits depend entirely on effective procurement by the Jute Corporation of India (JCI). Hence, in this section, we will analyze whether JCI’s procurement operations are sufficient, timely, and widespread enough to truly safeguard farmer incomes, or whether MSP remains more of a policy promise than a practical safety net. In this section we have used secondary data set of Procurement on MSP, MSP and Wholesale Price for our study as shown in the following Table 6. Table 6: Dataset for the Study Data Source: 1. JCI, 2. Office of Jute Commissioner, 3. Directorate of Economics and Statistics, Ministry of Agriculture and farmers' Welfare a. Procurement of Raw Jute at MSP by JCI Procurement levels are extremely small when compared to overall jute consumption, indicating that MSP operations exert only a weak influence on the market. Between 2012–13 and 2023–24, average procurement stands at just about 2.29 lakh bales, with the highest value reaching only around 6.1 lakh bales, and in some years—such as 2015–16 and 2021–22—procurement is virtually zero. Given the much larger scale of national production and mill consumption, this volume is negligible. Since procurement represents the quantity actually purchased by the government or JCI at the MSP, its limited size shows that MSP support reaches only a small fraction of farmers, leaving the broader market largely governed by open-market forces rather than policy-backed price stabilisation. If procurement is low, it means that: 1. Farmers are not selling much to JCI, either because market price > MSP or procurement operations were weak. 2. JCI’s role in stabilizing the market is limited (not enough purchase to influence overall prices). 3. Farmers may be selling directly to traders/middlemen instead of MSP channels. When procurement is low, the MSP acts more as a notional safety net rather than an effective support. Farmers’ income becomes more dependent on fluctuating wholesale prices, not guaranteed MSP. b. Wholesale Price Wholesale prices are dynamic and sometimes far over MSP (less need to procure) and it fluctuates a lot. Analysis of wholesale jute price from 2012-13 to 2023-24 indicates that it is a highly volatile market its price predictability very weak. The average wholesale price of this period is ₹4,595, although the standard deviation is as high as ₹1,419, which is close to 30% of the mean, suggesting a high level of year-to-year volatility. Prices bounced between the low of ₹2,622 in 2012–13 and high of ₹6,858 by 2020–21. Wholesale price, for instance, soared from ₹3,128 in 2014–15 to ₹5,053 in 2015–16 before falling to ₹3,880 in 2016–17, which then rocketed again to ₹6,858 in 2020–21 before finally again falling to approximately ₹5,492 by 2023–24 (October). Such instability has serious ramifications for the entire jute value chain. Farmers find their income highly unpredictable, cannot forecast production Year 2012 -13 2013 -14 2014 -15 2015 - 16 2016 -17 2017 - 18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 October Procurement 5.76 2.48 0.29 0 1.04 6.1 1.31 1.46 0.07 0.03 4.24 5.05 Wholesale Price 2622 2757 3128 5053 3880 3768 4413 4733 6858 6375 6066 5492 MSP 2200 2200 2400 2700 3200 3500 3700 3950 4225 4500 4750 5050 Consumption 105 105 82 79 90 79 79 64 75 80 84 95 MSP, Market Price and Procurement of Jute in India Journal of Research and Development A Multidisciplinary International Level Referred and Double Blind Peer Reviewed, Open Access ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-11| November2025 74 or even household finances. Mills confront similar issues like volatile raw jute prices adding up complexity to cost projections and inventory forecasting. On the policy level, we can see weak price stabilisation mechanisms and how MSP has failed to prevent sharp swings in the open market. c. Minimum Support Price (MSP) MSP policy creates a stable floor but does not fully stabilise the market. The minimum support price (MSP) of raw jute has been on an upward trajectory for some time, starting at ₹2,200 in 2012–13 and 2013–14, and gradually increasing at intervals of one to two years, eventually reaching ₹5,050 by 2023–24. Of particular note, there are no downward revisions, reinforcing the observation that MSP is not a market-directed outcome but rather an administratively determined policy tool. The sustained upward increase highlights the government’s desire to synchronise the support price with increasing cultivation. The rising rate of changes is also an indication from policy of the government’s continued commitment to farmer welfare and income stability. On the positive side, the farmers are always ought to get at least a somewhat higher benchmark each year. But, since procurement is very low, the MSP increase is often symbolic. The government continues to increase the guaranteed floor price year on year, but it is not enough since farmers don’t always stand to gain in absence of strong procurement by JCI. d. Consumption Consumption stability shows that mills’ demand remains strong even when production/procurement is volatile. The raw jute consumption by mills has consistently shown a pretty good amount of stability, with fluctuations within a narrow band of 64–105 lakh bales and the coefficient of variation of about 14%. This strength of demand signals that mills need raw jute to sustain their production lines even when procurement is weak or production may change due to weather. Both production and procurement show dramatic volatility. JCI procurement especially varies with its coefficient of variation of approximately 101% and procurement even drops to zero in some years. Despite such unpredictable behaviour, mills manage to obtain the raw jute they need, which they procure through private traders and open market channels, especially when JCI procurement is low. Economically, that mirrors the very inelastic nature of mill demand because they need to keep operating to meet orders for gunny bags, sacks, and other jute products, most of which are mandated to be produced under the law. Thus, consumption does not fall suddenly reflecting a resilience in the mill-level demand of Raw Jute in the value chain. In simple terms:  Farmers face uncertainty in sales (since JCI procurement is inconsistent).  But mills always need raw jute, so their demand remains steady.  This ―stability of demand‖ contrasts with the ―instability of supply/procurement.‖ Price Spread Analysis Within this context we looked for the Price Spread, that is, the difference between what the consumer pays and what the farmer receives in order - a. To measure market efficiency, that is, how much of the final price actually goes to farmers vs. intermediaries. b. To identify middlemen’s margins (phorias). c. To evaluate whether policy interventions (like MSP, procurement) reduce unfair spreads. d. To highlight areas where farmers are losing value in the supply chain. In short, price spread analysis tells us: who captures what share of the consumer’s rupee. Table 7: Margin by Farmer and Middlemen at different Scenarios Scenario Cost (₹) Selling Price (₹) Profit = Price − Cost (₹) Margin on Cost (%) Middleman’s Margin (WSP − ASP) (₹) Farmer Actual (ASP) 3,667 (Average) 3,918 (Average) 251 6.8% — MSP Level 3,667 5,050 1,383 37.7% — Wholesale (WSP) 3,667 5,700 2,033 55.4% 1,782 General observations as learned from the above table 7, categorically, are that: 1. Farmer’s Profitability o At ASP, farmers earn only ₹251/quintal, i.e., a very thin 6.8% margin. o At MSP, they should have earned ₹1383/quintal. o At WSP, they could have earned ₹2033/quintal. 2. Middleman’s Margin o Middlemen capture ₹1782/quintal, which is 7 times the farmer’s actual profit. o This margin comes because farmers sell below MSP and far below WSP.