Despite a 10 per cent higher output estimated for sugarcane, jaggery units in Uttar Pradesh are facing a huge supply shortage this season. From almost 100 per cent supply before November 8, farmers are selling cane only to sugar mills, as the return there is higher.
The Mayawati government had announced a nearly 20 per cent increase in the State Advised Price (SAP) price that mills have to pay growers of cane, on November 8 to Rs 240-250 a quintal for the current crushing season. And, the government forced mills which had petitioned the courts against this rise to commence crushing immediately, without waiting for any judicial relief, or face action.
Since jaggery units did not raise cane prices proportionately and continued paying Rs 180-200 a quintal, farmers began selling only to sugar mills. Jaggery units using the assembled ‘kolhu’ means of crunching have shifted these to bordering Madhya Pradesh, which lacks mega sugar mills and has huge cane surpluses.
“The farmers’ decision is logical,as diverting the sweetener raw material to sugar mills fetches 33 per cent more,” said Narendra Murkumbi, managing director of Shree Renuka Sugars.
Kamran Rizvi, the cane commissioner of UP, recently announced a nearly 10 per cent rise in cane output to 120 million tonnes. Mills are likely to crush 66.5 mt this season, with an estimated sugar production of 6.2 mt, as compared to 5.9 mt last year.
“Along with the huge cane price differential, availability of high quality cane is a major issue for jaggery units in Uttar Pradesh. Since their economic health is not so strong to pay farmers upfront, the latter are reluctant to supply,” said Arun Khandelwal, president of the Muzaffarnagar-based Federation of Gur Traders.
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As large-size kolhus still prefer to remain in the vicinity of farmers who prefer to supply cane to these, such units are bound to compensate farmers at the SAP meant for sugar mills. As a consequence, jaggery manufacturing in UP has become a loss-making exercise, said Khandelwal.
Alternatively, kolhus are exploring making Madhya Pradesh a jaggery manufacturing hub. Unlike in the past, when Muzaffarnagar was considered the major jaggery producing hub in the country, the Agricultural Produce Marketing Committee (APMC) in this trading district has received 8,000 quintals of the sweetener from Madhya Pradesh so far this season. So, too, with APMCs in other districts such as Agra, Varanasi, Allahabad, etc.
The shortage of jaggery supply in the region has also reflected on its prices. The benchmark Chaku variety is up by Rs 300 a quintal since the beginning of this season, to trade currently between Rs 2,650-2,725 a quintal.
“Cane prices in Maharashtra, however, work out to Rs 216-220 a quintal. With the production estimated to remain higher, kolhus in major districts in the state remain upbeat for a rise in output this season,” said Deepak Shah, a partner of Nagindas Harlal, a jaggery-based trader at the Vashi APMC (Navi Mumbai).
Estimating higher overall production on increased cane availability this season, jaggery prices in other states remain under pressure. The benchmark super quality sweetener was trading at Rs 2,200 a quintal in Vashi, Rs 2,200 a quintal in Indore and Rs 2,050 a quintal in Ankapalli (Karnataka), witnessing a marginal decline of Rs 50 since the beginning of the current season.
Overall jaggery production this season is estimated to remain five to 10 per cent higher than last time, at 11 mt. The figure may vary, depending upon cold waves in the country. The more the cold, less the production, said Hapur-based Vijendra Kumar Bansal, proprietor of Durgadas Narayandas, a noted trader.