Sugar millers in Uttar Pradesh expect a lower quantity of cane to be diverted to jaggery and khandsari units this year, thanks to high support prices announced by the State Government.
“Cane diversion will be negligible this year as farmers are getting better prices from sugar factories,” sources at the Indian Sugar Mills Association (ISMA) said. As a result, mills are getting full cane from their designated areas and are operating at full capacity, resulting in higher output. In the current season that began in October, sugar output till December increased 17 per cent to 7.57 million tonnes (mt), about 1.1 mt more than the corresponding season last year.
Hike in SAP
Traditionally, about 30 per cent of the sugarcane gets diverted to jaggery and khandsari units. But this year, the industry expects it to be around 5 per cent. “It will be very negligible and much less than a year ago,” an official at ISMA said.
The UP Government had announced a 20 per cent hike in State Advised Prices (SAP) at Rs 240 a quintal, making it attractive for the farmers to sell to sugar factories.
Jaggery production is largely in the unorganised sector and production estimates were not available. Low cane availability to jaggery units is not reflected in prices of jaggery or gur.
On the National Commodities and Derivatives Exchange, gur contracts for January, deliverable at Muzzafarnagar, dropped 2 per cent to Rs 1,066 for 40 kg.
Similarly, March contracts were down 1 per cent at Rs 1,090, while July contracts were up 5 per cent at Rs 1,201. According to the UP Sugarcane Department, about 40.89 lakh tonnes of cane were crushed to produce 1.78 lakh tonnes of khandsari in the 2010-11 season.
“We expect it to be 30 per cent lower than the last year,” a source said.
Sugar output rise
ISMA said sugar production in UP was up 5 lakh tonnes, a rise of almost 50 per cent due to early start of crushing season this year. UP has crushed 26.1 mt of cane till December against 19.7 mt last year. However, the recovery is lower at 8.45 per cent this year against 8.81 per cent last year. A total of 503 factories have started crushing as on December 31, against 490 in the previous season.
Sugar output was up by 3 lakh tonnes in Maharashtra, where cane crushing was higher by 15 per cent at 26.6 mt over last year's 23.1 mt. The recovery has been higher at 10.35 per cent as against 9.8 per cent in corresponding period last year. However, Maharashtra is expecting a lower yield of sugarcane and therefore, one will have to wait to see the cane production figures in the State, probably at the end of January to better estimate final production, ISMA sources said.