Jaggery producers face losses on supply glut

Production likely to rise by 10%.

Jaggery producers are expected to accumulate huge losses this year because of higher estimated production on the back of higher availability of sugarcane. Jaggery production for this season "� beginning October 2006 "� is estimated at 120 lakh tonne compared with 100 lakh tonne last season.

Sugarcane supplies for jaggery production went up to 10 per cent till last year which is expected to go up to 12 per cent despite major expansion carried out by sugar mills.

Deepak Shah, partner of Nagindas Harilal & Co, a leading jaggery producer based in Mumbai, said, "Sugarcane supplies are bound to go up this year for jaggery manufacturing, as the Rs 800 a tonne minimum buying price fixed by the government for sugarcane procurement by mills looks imaginative."

Sugarcane growers would have no other choice than supplying their output to jaggery producers, he added.

In terms of jaggery prices, the situation in Maharashtra is different from that in Uttar Pradesh. A majority of UP-based jaggery producers have started their activities much earlier than expected, thereby, boosting supplies in the state market. Hence, major stockists ran into heavy losses owing to the supply glut of pre-season jaggery.

"Major stockists still have about 40 per cent carryforward stocks "� up to 8-10 lakh tonne "� in the western UP market only. Daily new arrivals of 1,800-2,000 tonne have blocked the movement of old stocks, thereby suppressing prices by almost 40 per cent in the last fortnight," said Bijendra Kumar, ex-chairman of Chamber of Commerce, Hapur, and proprietor of Durgadas Narayandas & Co.

At present, good quality jaggery in Hapur, today, is quoted at Rs 1,255 a quintal compared with Rs 2,075 a quintal on September 20. Jaggery prices were expected to fall further to Rs 1,100 a quintal this month, Kumar said, adding the market could recover hardly Rs 100 next month.

In Maharashtra, jaggery production has already started in Neera, Baramati, Pune and Sangli, while that in Kolhapur and Karad is yet to take off.

"Jaggery prices in Maharashtra move with rains. When supply gets disrupted with rains, the prices go up by Rs 2-3 a kg," Shah said.

Jaggery in Mumbai is currently quoted in the range of Rs 2,100-2,150 a quintal on the lower side and Rs 2,600-2700 a quintal on the higher.

Prakash Naiknavre, MD of Maharashtra State Sugar Co-operative Association, said the government had fixed statutory minimum price (SMP) for 2006-07 at Rs 802.50 a tonne with minimum 9 per cent recovery.

For the cane with over 9 per cent recovery, for every 1 per cent more recovery, an additional Rs 90 a tonne would be added to SMP, he added.