My understanding about the Jute Industry is limited to the fact that it’s highly Government-regulated, both on the Pricing Side (More MSP means higher input costs for companies like Cheviot) and on the Revenue side (GOI mandate forces many firms to use Jute-based packaging material).
Reference Material (Report from Ministry of Textiles, GOI): https://texmin.nic.in/sites/default/files/Textiles_Sector_Jute.pdf
What I don’t understand is:
- Why does the GOI support the Jute industry so much? (MSP for farmers, packaging materal stipulations which support copanies like Cheviot)
- Why, even after GOI’s support, Jute volumes (Both import and export) don’t show a secular growth trend? (For the 5-year period shown in the report, it’s flattish)
- If all governmental support were to be removed, will Jute-based packaging industry continute to operate profitably? (The report and generally other materials online call Jute the ‘crop of the future’ what with its many environment-friednly qualities)
Answering these questions could be the key to unlocking the Competitive Advantage, if any, of Cheviot Company.
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