Jaggery prices shoot up, in line with those of sugar

In the past five weeks, jaggery prices have risen 11 per cent on concerns about low production due to unseasonal rain and hailstorms in major sugar-producing regions, including Uttar Pradesh, Maharashtra and Tamil Nadu.

Traded at about half the price of sugar a few years ago, jaggery has almost bridged the price gap and is currently being quoted at Rs 1,170/40 kg, or Rs 29.25/kg (chaku variety) in the benchmark wholesale Muzaffarnagar market. In the retail market, however, it is being sold at Rs 33-35 a kg, against Rs 35-36 a kg for sugar.

Since March 15, when most production units stopped operations due to unseasonal rains, jaggery prices have risen 11-12 per cent. “There are several reasons for the rise in jaggery prices. The intermittent and unseasonal rains and hailstorms hit jaggery production in the last six weeks…This reduced jaggery supply to mandis. Also, festival and export demand is coming up,” said Arun Khandelwa, president of the Muzaffarnagar-based Federation of Gur Traders.

Jaggery production in India is likely to stand at 8,000,000-8,200,000 tonnes, about 20 per cent lower compared to the previous year. Also, jaggery production costs have risen sharply due to higher cane and labour costs.
 

Farmers have shifted a large amount of high-quality cane (about 10 per cent) to jaggery units so that these fetch 5-10 per cent premium to the standard price fixed by sugar mills. While sugar mills pay Rs 260 a quintal for high-quality cane, jaggery units pay at least Rs 280 a quintal, depending on the quantity and recovery of molasses from the cane. Consequently, the cost of jaggery production has risen. Khandelwal said for the supply of cane to jaggery units, farmers received cash payments upfront, while in the case of sugar mills, payments were uncertain.

On Thursday, jaggery (regular variety) prices stood at Rs 38-42 a kg in Kolhapur, against Rs 34-35 a kg about five weeks ago. Shivaji Bhoite, owner of Heatech Pvt Ltd, a Kolhapur-based jaggery unit and exporter, said jaggery prices remained upbeat in local market, following a similar trend in Tamil Nadu and Uttar Pradesh. Also, export demand had picked up in the last few weeks, which fuelled jaggery prices in local markets, he added.

Hapur-based Vijendra Kumar Bansal, head of jaggery trader Durgadas Narayandas, said prices would remain high this year due to lower production. He feels prices will rise to Rs 55 a kg. Khandelwal explained that farmers receive cash payment upfront for supply cane to kolhus in comparison with an uncertain payment recovery from sugar mills. Normally, jaggery price declines in case consumers prefer in favour of sugar and vice-a-versa.