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Half of UP jaggery units migrated to MP gin 5 years

Source : BUSINESS_STANDARD
Last Updated: Tue, Jan 01, 2013 19:31 hrs

Around 50 per cent of jaggery manufacturing units (popularly known as kolhus) have shifted from the sugarcane-rich state of Uttar Pradesh (UP) to neighbouring Madhya Pradesh (MP) in the past five years.

According to statistics from the Indian Sugar Mills Association (ISMA), the number of jaggery units of different capacities had reduced to 22,000 in the state: a migration of around 50 per cent in five years.

Similarly, the number of operational khandsari units has also plunged to 43 this crushing season beginning October 2012.

The reason is obvious. The continuous upward revision of cane prices year after year makes production of sugar unaffordable in UP. With every ruling party’s attempt to reserve cane farmers’ vote bank through a dramatic raise in prices, production of jaggery turns into a loss-making venture.

The state advised price (SAP) announced by the state government supersedes the fair and remunerative price (FRP) announced by the central government every year. Since SAP is almost double of FRP, farmers demand higher realisation from cane, resulting in excessive cost of raw material.

In MP, however, there is no SAP regime. The sugarcane farmers need to be compensated at the rate of FRP. Hence, the cost of jaggery production works out to be cheaper there.

Another reason for this migration is dealing with competition from sugar mills for raw material procurement. In every sugar mill area in western UP, there were around 3,000 jaggery units this year. Similarly, the number of jaggery units works out to 130 and 115 on every sugar mill in central and eastern UP, respectively.

These units remain operational largely in the pre-crushing season for around 200 days. Khandsari units have also migrated to MP, resulting in the total number of operational factories falling to 11, 27 and five in western, central and eastern UP, respectively.

In MP, jaggery units also receive high-quality cane resulting in higher recovery. “No major sugar mills currently exist in Madhya Pradesh, unlike in Uttar Pradesh. Hence, cane supply is smooth in the state,” said Abinash Verma, secretary general of ISMA.

With an average recovery rate of 8.3 per cent, jaggery units are estimated to crush around 43 million tonnes of sugarcane in 2012-13 to produce 3.7 million tonnes of jaggery in the state. In Madhya Pradesh, however, cane area and jaggery production are increasing by the day.

Hapur-based jaggery trader Vijendra Kumar Bansal, proprietor of Durgadas Narayandas, estimates jaggery production this year would surpass last year’s level of 10 million tonnes across the country due to the delay in commencement of sugar crushing season in UP. Jaggery production during the last season was lower by 10-15 per cent as the government in UP had asked sugar mills to crush the last cane supplied.

Keeping in view the issue of viability, sugar mills generally do not crush cane with less than 7-7.5 per cent recovery potential. But, under pressure from the government, mills, especially in states that have the SAP regime, crush all the cane supplied to them irrespective of recovery rates.



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