Lower prices hit jaggery producers' bottom lines

Jaggery prices have declined by Rs 250-400 a quintal, owing to higher output and lower offtake. This has hit the bottom lines of jaggery makers, with their price realisation dropping to Rs 120 a quintal from Rs 400 a quintal two years ago.

The prices are expected to remain subdued throughout the current season. Jaggery prices in Mumbai are hovering in the range of Rs 1,450-2,000 a quintal, while they are quoted between Rs 1,100 and Rs 1,500 a quintal in the rest of Maharashtra, including major growing area such as Karad, Sangli and Kolhapur.

The intensity of drop in prices of jaggery, however, is not as much as that of sugarcane, giving some respite to jaggery producers.

Arrivals at the APMC market in Vashi are high, witnessing a way-in at around 15,000 trucks (each truck carrying 10 tonne of jaggery). The markets in Sangli, Karad and Kolhapur are seeing an average arrivals of 7,000, 5,000 and 20,000 lumps (35 kg each), respectively.

"Jaggery prices are not expected to rise this season, even as producers have raised their output. The prices are set to be subdued until May," said Deepak Shah, partner, Nagindas Harilal & Co.

Shah added that jaggery prices in physical markets in some parts of Maharashtra had gone below those of sugarcane. Producers from other centres, however, do not agree with Shah.

Vijendra Kumar Bansal, former chairman of the Hapur Chamber of Commerce, said farmers were still making money from jaggery, as sugarcane prices had declined dramatically. Citing examples of Jamnagar in Gujarat and some parts of Madhya Pradesh, Bansal said sugarcane prices there had come down to as low as Rs 650-750 a quintal, while jaggery of lower and average varieties still sold around Rs 900 a tonne, making jaggery a profitable venture.

Sugarcane with a sugar recovery level lower than 10.5 per cent is supplied to jaggery production, cane juice and sowing for the next season, while the crop with a recovery level higher than 10.5 per cent is supplied to sugar mills. About 12 to 15 per cent of the country's total cane output is supplied to jaggery production and about 75 per cent goes to sugar mills.

The country produces about 100 lakh tonne of jaggery every year, but this year, the production is estimated to rise by at least 10 per cent.

On the jaggery scenario in Muzaffarnagar, Arun Khandelwal, president, Federation of Gur Traders, said western Uttar Pradesh was gradually warming up because of lower arrivals in mandis. The average quality jaggery is quoted between Rs 440 and Rs 485 per 40 kg in Muzaffarnagar, with the arrivals dropping to 10,000 bags (40 kg each) as compared with 20,000 bags last year.

Khandelwal attributed the lower arrivals to cane diversion towards sugar mills and new sugarcane areas developed in the bordering districts of Madhya Pradesh.

Higher capacity addition in the ten existing sugar mills in Muzaffarnagar required about 7.8 lakh quintal of sugarcane each day as against 5.8 lakh tonne last year. This would result in sugarcane supply to jaggery producers slumping to 24 per cent this year as against 38 per cent last year, he said.

Muzaffarnagar produces about 16 crore tonne of sugarcane every year.