Sugar mills to determine fate of jaggery units

Sugar mills in the country are likely to determine the fate of jaggery units. If sugar mills stretch their production activities till April- end or early May, the availability of sugarcane for jaggery units will decline, meaning lower production and lower recovery of prices.

But since sugar mills are incurring losses, they may wind up production activities earlier than estimated, thus leaving ample sugarcane for jaggery units. This may lead to drastic decline in the prices of jaggery.

Sugar producers are suffering huge losses because of higher production cost and lower prices. A majority of sugar mills across the country usually wrap up production activities by the first fortnight of April, but due to bumper sugarcane crop this year, the current season is expected to stretch up to May 15.

Sugarcane with a recovery level below 9.5 per cent is not considered economical for mills and such cane is supplied only to jaggery units or juice makers. But, recovery is not an issue in Uttar Pradesh, the largest sugar producer in the country.

"Sugarcane is a very sensitive issue for politicians in Uttar Pradesh. Hence, recovery is immaterial," said Vijendra Kumar, a noted trader and ex-chairman of Chamber of Hapur. "This being the election year, the issue is a hot potato and the government would not take any harsh decision," he added.

Today, in order to avoid any recovery and yield losses, farmers are forced to supply sugarcane between Rs 500 and Rs 600 a tonne across the country, which means they are getting only Rs 200 a tonne for their output as around Rs 400 a tonne spent on transportation and labour charges.

Meanwhile, jaggery traders are expecting a further price decline of Rs 75 per 40 kg across the board this week due to abundance of supply and lack of demand stockists.

"A Rs 75 downward correction is due, which may happen probably this week," said Vijendra Kumar Bansal, a noted trader and ex-chairman of Chamber of Hapur.

Jaggery prices across the country declined about Rs 20 per lump (1 lump = 40 kg) due to huge arrivals in all mandis. Arrivals in Muzaffarnagar mandi alone peaked to 22,000 lumps, while supply in Hapur mandi perked up to 6000 lumps.

"This is the largest arrivals so far this year. I suspect the full-fledged arrival will continue throughout the next month, translating into little hope for price recovery this year," said Arun Khandelwal, president, Federation of Gur Traders, Muzaffarnagar, UP.

Gur Balti, Khudpa and Chaku in Hapur were quoted in the range of Rs 333-370, Rs 390-410 and Rs 450-480 per 40 kg respectively , a decline of Rs 20 from the previous day. Currently, stocks are very low in Western UP, which, if current scenario continues, would swell very soon, Bansal added.

"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 & Company.

Shah added 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.