LAHORE: Non-opening of LCs by the banks has created shortage of raw materials imported mainly from Bangladesh for manufacturing of jute bags essential for packaging and storage of grains thus leading to hampering the wheat procurement efforts by the official agencies in the coming procurement season.

Pakistan Jute Mills Association (PJMA) has written separate letters to the State Bank of Pakistan, the Federal Ministry of National Food Security and Research and the Federal Ministry of Commerce to bail out the jute bag manufacturers to avert the looming crisis.

“The jute industry is a critical industry both for local use and exports. The members of our Association import Raw Jute (mainly from Bangladesh) and manufacture Jute sacks which are a critical item for the country, being required for wheat packing and storage,” stated the letter.

The letter said, “Presently we are supplying jute bags to PASSCO to pack and transport imported wheat and our member mills are working round the clock to meet the additional demand from PASSCO and to meet wheat bags requirement for all provincial Food Departments, and to fulfill exports commitments.”

“Due to the current economic situation, our member mills are facing hardships in opening and retiring LCs with all our Commercial Banks and are facing refusals in practical terms, despite the fact that the Jute industry falls in “Essential Imports” list vide sub-clause No.3 of EPD circular letter no. 20 of 2022 dated December 27, 2022,” stated the letter.

In addition to this critical local need, the industry is also a significantly growing export sector, which has grown by approximately 100 percent per annum with orders and shipments expected to reach US$20 million in this fiscal year.

This latest scenario has created a big concern for the indigenous jute industry as the dried-up supply of raw material shall force the industry to default on critical local supplies for incoming wheat imports and for the winter wheat season as well as default on export commitments.

“In the event of an industry shutdown with no alternatives of production/supply of grain sacks in the market, the public and private sectors will suffer badly. This can jeopardize the operations of all food departments as well as PASSCO, in meeting the wheat supply chain,” the letter added.

It is pertinent to note that the country is already facing issues regarding wheat availability and in absence of the required number of jute bags, wheat procurement, storage and transportation will be impossible. Besides wheat, our crops like rice, potato, onion and other perishable vegetables are also packed in jute bags; the non-availability of the bags will badly affect the storage and transportation of crops as well.

“The entire nation shall find itself at the mercy of much more expensive foreign imports resulting into a further huge burden on our foreign exchange exchequer. We humbly request to direct all commercial banks to continue the opening of LCs for Raw Jute in routine and without any hesitation so that the working of the jute industry remains normal and smooth,” stated the letter.

“We believe that the urgency of the matter demands to find out an immediate and swift remedy to the upcoming problem and thus avoiding any irreparable damage to our food security and the indigenous jute industry,” the letter concluded.

Copyright Business Recorder, 2023

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