July 15, 2020
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A Skein Of New Troubles

Big traders face extortion threats, but the effects are felt throughout the jute industry

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A Skein Of New Troubles

FOR the low-profile jute merchants of Assam, prosperity has come with a bitter message: demands of extortion from the states various insurgent groups. In the late 80s and early 90s, the tea industry in Assam was the prime target for extortion. But over the past couple of years, insurgent groups, especially the Bodo militants from lower Assam, have shifted their attention to the jute industry. Not only money, even lives are being lost to militant attacks, especially the lives of those who try to defy the extortion notices.

Four months ago, two leading jute traders, both of whom had tried to resist the militants, were attacked by Bodo extremists in Dhubri districts Chapar township. One of them, the owner of a large warehouse, was killed in the attack, while the other's son suffered serious injuries. The latter has since shifted his operations to Calcutta.

The incident has sent shockwaves through the close-knit community of jute traders. In panic, some of the more prominent traders have since left for safer places in neighbouring West Bengal. And because most of them also act as financiers to the trade, jute production in the state has been badly hit.

Assam's jute industry has an annual turnover of well over Rs 120 crore and contributes 15 per cent of the country's total output (West Bengal accounts for 80 per cent). According to the statistics available with the state's agricultural department, from a high of 950,000 bales (one bale equals 148 kg of raw jute) in 1994-95, output has fallen steadily to 875,000 bales in 1995-96, and 860,000 bales in 1996-97.

The uncertainty among the jute traders has cast a long shadow over the jute market in the rest of the country, leading to wild fluctuations in prices of the fibre all over. Says a leading Dhubri-based trader, who does not want to be identified for obvious reasons: The top traders have either stopped putting their money in the trade or have drastically reduced their involvement. Since the militants started paying visits to us, we are not sure of the returns anymore.

Even government officials, like the staff of the Jute Corporation of India (jci) offices spread over the state, have not been spared by the militants. Sources in the jci told Outlook that most officers in two of the corporations branch offices - the ones at Gossaigaon and Bongaigaon - have fled the area following the militants threats. Both these offices fall in the Bodo militant-dominated area. The jci is seriously thinking of closing down these two branches for good, the officials revealed.

The jci office at Dhubri is currently being run by a handful of staff members, who have even less work to do in the absence of any decision-making authority in the office. Officially, the jci maintains that its functioning in Assam has been affected because it cannot procure jute at the support price of Rs 550 stipulated by the government. However, the traders and cultivators of the region say that this situation has arisen only out of the short supply of jute in the Assam market following the withdrawal of several large traders from the local business scene.

Militants have also forced traders and cultivators to alter their mode of operation. Explains jute cultivator Abdul Hamid: Last year, we did not find enough buyers for our crop, so we got a very low price. The absence of buyers was because of the fear among the traders. As a result of the low prices we got last season, this year, many cultivators have not been able to invest as before. This year therefore, the crop is really short.

As a direct offshoot of the smaller production volumes, jute prices have shot up. Even the lowest quality of the fibre is fetching a markup of Rs 250 per quintal over the previous year's prices. The jute trade is divided among three categories of operators - farmers, balers and millers - and is sensitive to the vagaries of nature, cashflows and the general law and order situation. A small variation in any of the three factors is a good enough excuse for wild price fluctuations, analysts say.

As Suresh Todi, one of the leading balers - those who purchase raw jute from the farmer and make bales before selling it to the jute mills in West Bengal - says, This year, the crop is also in short supply because of the devastating floods in Assam during the monsoons. Also, many traditional jute-growing farmers have shifted to cultivating the Chinese variety of paddy which fetches a good price and does not require much hard work. Farmers in Dhubri district, which lies at the end of the mighty Brahmaputra's course in Assam, have indeed suffered heavy losses due to unprecedented floods this year. This has naturally affected production. But, as Todi and another trader Vijay Singh Chauraria point out: The cultivators did not want to take chances of suffering a big loss as they did last year and therefore did not cultivate as much quantity as they normally do.

According to intelligence sources monitoring the situation, the militants have turned to jute traders after exhausting all other avenues - tea companies and large general traders. By convention, the jute trade has been a very low-profile and secretive one. Unless one really goes deep into its working, it is extremely difficult to know the full extent of the money involved in this business. But clearly, the militants have done their homework and targeted the big guns in the jute trade, says an official.

Police officers in lower Assam point out that the militants actually have a limited choice of targets - big distributors, traders dealing in essential commodities and finally, the jute traders. Since the first two categories have been squeezed dry over the years since the unrest began, it was natural that the jute traders would now come under scrutiny. Despite the threats however, traders haven't sought official help yet. We know that its better not to go to the authorities since the militants will be after us anyway. It is therefore easy to buy peace, says a trader. Like their counterparts in the tea business, jute traders in Assam have chosen to reconcile themselves to the situation.

Although Assam produces all three varieties of jute, it is well known for the tossa variety, which is the best-known quality produced in the country and is used for manufacturing decorative items and fancy bags. The other two varieties - sada or white, and mesta - are slightly inferior. Apart from Dhubri, the main jute-cultivating and trading centres in the state are located in central Assams Nagaon district, north Assams Darrang district and lower Assams Barpeta district.

Although jute farmers are mostly Muslims and all the balers and traders exclusively Marwaris, the militants continue to extort money from both. And the problem is likely to worsen in the coming days. As a trader says philosophically, We may be forced to opt out of the trade. But an even greater loser will be the thousands of poor people who earn their livelihood through this trade. About one lakh direct and indirect workers are employed in the jute trade in Assam, whose future right now is as bleak as that of the golden fibre they grow.

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