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New Delhi, Dec. 12: The Comptroller and Auditor General (CAG) has criticised Jute Corporation of India (JCI) for “failing” to play a significant role in price stabilisation and said the agency’s present price support operations were “ineffective”.

According to the CAG report tabled in Parliament, “The agency procured only 0.99 per cent to 10.4 per cent of the available jute in the country. It could not play any significant role in price stabilisation and in ensuring remunerative prices to jute farmers.”

The report indicated that the agency — set up in 1971 to provide minimum support price to jute cultivators and serve as a stabilising agency in raw jute — had failed in its basic objective.

Average jute production in the country is about 109.79 lakh bales (a bale is about 180 kg), with 9.37 lakh hectares of land under cultivation. India produces 58 per cent of world jute followed by Bangladesh with a 33 per cent share.

Jute is produced mainly in eastern India and north Andhra Pradesh. It is a source of livelihood for around 40 lakh farm families and provides direct employment to two lakh.

The auditing body found that the operational expenses per quintal of JCI were Rs 409, which were higher than the expenses of Rs 367 incurred by private traders. The firm suffered losses during most of the six-year audit period of 2003-09.

It said growers in Andhra Pradesh had been issued passbooks for money transactions. No similar measure was available for the growers in eastern India.

“The JCI did not have the system of identifying such farmers. It depended on the state governments to furnish a list of growers,” the report said.

The auditing body said there was a delay in the announcement of minimum support price, which adversely affected the decision of farmers. It said there was a marginal price difference between the superior and inferior grade jute.

Jute produced in north Bengal is superior in fibre quality and yarn tenacity. It fetches a premium of Rs 300 to Rs 400 per quintal (one quintal is 100 kg) over the jute produced in south Bengal. However, its better quality is not considered while fixing the minimum support price (MSP).

The report said JCI did not procure during the peak period when the market was overflowing with the fibre and prices fell below MSP.

Although state-owned purchases were made from 500 centres, several places were far from the jute growing areas. “This resulted in both long-distance travel and extra cost to the farmers and even distress sale of jute in the local markets.”