In this report, we study the global jute industry. The size of the global jute industry is ~USD 1.75 billion, of which India accounts for ~USD 1.25 billion or 70% of jute produced. Globally there are 12 publicly traded companies engaged in the jute business of which 5 disclose segmental information on contribution from jute. All of these 5 companies are based out of India.
Cheviot (BSE: 526817) and Gloster (BSE: 590085) are the two major standalone jute companies for investors to participate in the dynamics of jute industry. The jute segment contributes around 8% or USD 38 million to Birla Corporation’s (BSE: 500335) overall revenue of USD 449 million (other segments include Cement, which contributes 82.9% or USD 400 million).
In order to support the farming and manufacture of raw jute and jute products, the Government of India introduced The Jute Packaging Materials Act (JPMA) in 1987.1 The act made it compulsory to use jute bags for packaging food grains and sugar (in pack sizes greater than 50 Kg). As a result, Food Corporation of India (FCI), state governments and sugar millers are major buyers of jute bags in India.
In India ~84% of the total jute produced is used for packaging food grain with no other major use for jute. A limited end user market prevents farmers from increasing the supply of raw jute despite the yearly increase in raw jute prices. In most years the Government of India tends to dilute (reduction on compulsory 100% usage) jute packaging norms based on raw jute production data.
Cheviot (BSE: 526817) and Gloster (BSE: 590085) are the two major standalone jute companies for investors to participate in the dynamics of jute industry. The jute segment contributes around 8% or USD 38 million to Birla Corporation’s (BSE: 500335) overall revenue of USD 449 million (other segments include Cement, which contributes 82.9% or USD 400 million).
In order to support the farming and manufacture of raw jute and jute products, the Government of India introduced The Jute Packaging Materials Act (JPMA) in 1987.1 The act made it compulsory to use jute bags for packaging food grains and sugar (in pack sizes greater than 50 Kg). As a result, Food Corporation of India (FCI), state governments and sugar millers are major buyers of jute bags in India.
In India ~84% of the total jute produced is used for packaging food grain with no other major use for jute. A limited end user market prevents farmers from increasing the supply of raw jute despite the yearly increase in raw jute prices. In most years the Government of India tends to dilute (reduction on compulsory 100% usage) jute packaging norms based on raw jute production data.