Sugar Production in India Could Drop by 25% this Season

With uncertainty over the commencement of crushing by sugar mills of Uttar Pradesh, farmers there have started supplying high-recovery sugarcane to jaggery units. This has posed a threat to the country’s sugar output which is expected to fall over 25 per cent this season as a result of the lower coverage.

Sugarcane is a commodity which cannot be left unprocessed for long after harvest as it gradually loses its sucrose (sweetener) content. Therefore, farmers of early sugarcane crop supply their produce to jaggery units and divert the land for wheat.

“Any further delay in cane harvesting may hit wheat sowing. Hence, it is important to vacate the land for another remunerative crop and not just to wait till cane procurement prices are determined for sugar mills,” said a local farmer.

Generally, cane with less than 9 per cent of recovery is supplied to jaggery units as cane with low sugar content is unviable for sugar mills.

But, as mills are awaiting Supreme Court directive on cane prices, they are holding back on procurement of cane as well leaving no option for farmers but to supply to the jaggery processing units.

Uttar Pradesh raised the state advised price (SAP) — the price at which mills procure cane from farmers — to Rs 140 per tonne for the 2008-09 season, from Rs 125 per tonne during the previous year.

Sugar mills resisted the price hike arguing that the crushing of cane would not be viable at such high cane prices. The matter is presently pending with the Supreme Court and Allahabad High Court.

Largely dominated by unorganized players, the number of jaggery processing units fell 40 per cent this year because of the pre-season fear over supply of cane. But, since supply has risen phenomenally, the existing jaggery units are operating over their capacity.

Deepak Shah, Partner of Nagindas Harlal, a Vashi-based jaggery trader said, “Jaggery units are the ultimate beneficiary of the huge financial strains faced by sugar mills. Hence, farmers’ preference for cane supply to jaggery units is justifiable.”

While comparing the payment system, Shah said farmers receive the full payment from jaggery producers at a promised time soon after selling the cane while sugar mills stretch the payment for up to two years.

Nothing unusual Is happening on Tuesday as the glut in the pre-season cane supply to jaggery units is a normal phenomenon, said Arun Khandelwal, president of Muzaffarnagar—based Federation of Gur Traders. Even 5-10 per cent higher estimated output at 1 crore tonnes this year, jaggery price is presently quoted 67 per cent higher, between Rs 600-650 per bag (40 kgs each), as compared to Rs 360—400 per bag around same time last year.

Source: Business Standard