'Gur' a sweeter option for cane growers

While the sugar mills in Uttar Pradesh are uncertain about crushing owing to high sugarcane prices in the new season, the farmers have started selling cane to the 'gur' and 'khandsari' units at a rate almost half the last year's state advised price (SAP) of Rs 125-130 per quintal.

Sugarcane farmers, particularly in Western UP, are selling sugarcane at a price ranging between Rs 60 and Rs 80 per quintal to these units.

This price, while being significantly lower than last season's SAP, is also lower than the price of Rs 90-110 that the gur and khandsari units paid last year.

The situation is in complete contrast to that of 2005-06 season, when mills offered a price higher than the SAP to ensure adequate supply of cane and the gur-khandsari units tried to match the mills' price.

The farmers, who need money to meet their expenses during the festivals like Eid and Dushehra, have no option but to sell to these units as sugar mills will begin crushing only a month later, in mid-November.

Moreover, sugar mills are sitting on huge cane arrears of Rs 1,188 crore and are not in a position to make payments. The fact that farmers are ready to sell cane at such low rates implies their awareness of the tough times that the sugar industry is facing.

"Gur prices have crashed significantly in last one year and the margins of gur manufacturers have come under pressure. The declining sugar price has also impacted the khandsari price. Both the gur and khandsari units are not in a position to pay higher cane prices," said Arun Khandelwal, president, Federation of Gur Traders, Muzaffarnagar.

The sugarcane production in the state is estimated at about 160 million tonnes, up almost 5 per cent from last year's 153 million tonnes.

However, a state government official said, "This happens every year and there is nothing unusual in it. Of the total sugarcane produced in the state, only 55 per cent is crushed by sugar mills, while 30 per cent goes to gur and khandsari units and the rest is used as seed. The gur and khandsari units never buy sugarcane at the SAP".