Jaggery producers demand subsidy

Jaggery producers from across the country have demanded production subsidy in line with the sugar sector from the Union government.

Industry bodies, including Muzaffarnagar-based Federation of Gur Traders, are in the process of finalising the proposal to be submitted to Union Minister for Agriculture Sharad Pawar.

Federation President Arun Khandelwal said that only the subsidy could lead to a turnaround as the sector is reeling under an output glut of over 10 million tonnes resulting in producers selling jaggery at cut-throat prices. "What to do? The rollover of money is extremely important for survival for which we are fighting tooth and nail," said Khandelwal.

Jaggery being a cottage industry, it would be slightly difficult for the government to identify and provide the necessary subsidy but nothing is impossible if the government shows determination, said a local trader.

Jaggery has been reeling under tremendous price pressure nation-wide after the Centre permitted leftover standing sugarcane crop to be converted into jaggery. The price has declined Rs 50 a tonne over the last fortnight as quoted in the range of Rs 1100-2700 a tonne in Maharashtra depending upon its quality, quantity of purchase and payment terms.

In Uttar Pradesh, however, the benchmark Chaku variety sweetener, which did not attract any demand, is quoted in the range of Rs 460-520 per 40 kg. Although a marginal demand has been seen in low quality jaggery priced between Rs 465 and Rs 470 per 40 kg, demand has dried up for good quality.

"The government is trying everything to protect the interest of the 65 per cent of the cane crushers. But, what about the remaining 35 per cent?," asked Deepak Shah, partner of Vashi-based jaggery trading firm Nagindas Harlal.

Jaggery units were crushing canes, which were not picked up by the sugar mills because of low recovery of sugar. Sugar mills generally lift canes with at least more than 9.5 per cent recovery as a normal practice.

Hence, in addition to jaggery units doing their business they are protecting sugar mills from a mandatory crushing practice and thereby, piling up their losses.

In Maharashtra alone, the state government compensated 52,400 hectares of the standing crop at Rs 25,000 a hectare, accumulating Rs 131 crore. Still, the disposal of the crop is a big worry for farmers and the government.

Sugarcane is sold at Rs 50 per tonne in the South to clear the standing crop, which is mopped up by the jaggery producers from western UP reducing the overall production cost, said Vijendra Kumar Bansal, proprietor of Hapur-based Durgadas Narayandas, a veteran trader in UP.

Occasional traders like Madhya Pradesh is also posing a threat on cane crushing as the state does not have many sugar mills, he added.

For the sugar sector, the Centre has been providing the subsidy on exports made by road or rail on the basis of actual expenditure incurred.

If the actual expenditure is higher than Rs 1,350-1,450, only then will it be reimbursed. Exports through the sea route will be eligible for a fixed subsidy at a rate of Rs 1,350-1,450 per tonne.

According to the fourth advance estimate, sugarcane production is pegged at 345.31 million tonnes for 2006-07 and the 2007-08 output is estimated at 375 million tonnes.