Faced with delayed crushing of cane by sugar mills and uncertainty over final prices, farmers in Uttar Pradesh, India’s second-largest sugar producer, have started supplying the raw material to jaggery units at Rs 220 a quintal. Though the prevailing cane price is Rs 20-30 a quintal lower than the state advised price (SAP) of Rs 250 recently announced by the state government, yet farmers want to vacate the field for wheat sowing. Farmers in Madhya Pradesh are also selling cane to jaggery units.
Jaggery units, in turn, are comfortable paying Rs 15 higher for cane procurement over last year’s SAP of Rs 205 a quintal for early variety. At this price, the jaggery cost of production works out to Rs 980 for 40 kg against the current prevailing market price of Rs 940-950 for 40 kg. However, jaggery units sell cane residues to paper mills to cover losses.
For sugar mills, however, crushing of early cane variety is not affordable due to low recovery. Early variety cane fetches 7.5-8 per cent of recovery which intensifies with the onset of cold, resulting in high sucrose content in the standing cane crop. Against the average annual recovery of 9.2-9.3 per cent in Uttar Pradesh, the procurement of early variety cane is not promoted by sugar mills. However, for same cane where sugar mills gets lower recovery, jaggery units enjoy substantially higher recovery of 9.5 per cent as they do not leave moisture in residues.
“Sugar mills in Uttar Pradesh commence crushing generally in the third week of November. However, it would not be true to say that farmers are opting for cane supply to jaggery units instead of sugar mills. Since, sugar mills have not yet started crushing, cane farmers have no choice but to supply to these units,” said Abinash Verma, secretary general, Indian Sugar Mills Association (Isma).
However, a new trend has emerged this year as many jaggery units have shifted to Madhya Pradesh from the bordering western Uttar Pradesh to avail bumper cane crop in the state. Apparently, unlike Uttar Pradesh, jaggery units face no competition from sugar mills in Madhya Pradesh due to the absence of large crushing units there, he added.
There are 10-12 small sugar manufacturing units present in Madhya Pradesh. But, they are unable to crush the entire cane available in the state. Also, average recovery in the state is 10.5-11 per cent, much higher than 9.2-9.3 per cent in Uttar Pradesh. Hence, jaggery units in Madhya Pradesh are in advantageous position versus their counterparts in other states.
Generally, sugar mills list all large farmers in the beginning of season and procure their cane first. Small and medium scale (mostly in large number but marginalised) farmers find economical supplying to jaggery units as they cannot hire a cart/tractor for transporting cane to sugar mills. Hence, they prefer supplying cane to nearby jaggery units to get immediate cash and buy oilseeds or wheat along with fertiliser and pesticides for immediate sowing of next crop, said Vijendra Kumar Bansal, proprietor of Durgadas Narayandas, a Hapur-based jaggery trader.
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In other major states including Maharashtra, Karnataka and Bihar, farmers find supplying cane more remunerative, Bansal added.
Jaggery output is likely to remain range-bound this year at around 10 million tonnes across the country.
Bansal, however, said that stormy eastern wind post-monsoon prevented sugarcane crop from maturing fully. Hence, the average yield in the state may not crops the benchmark nine per cent this year, he added.