Jaggery price rises 25% in a month on high cost of sugarcane

Supply snags and higher cane cost push prices, softening likely in coming weeks

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The price of jaggery has risen 25 per cent in a month, on falling inventory and disrupted production due to lower availability of cane for crushing.

The benchmark Gur Chaku variety is currently quoted at Rs 1,080 a gatta (40 kg), translating to Rs 2,700 a quintal in the Western Uttar Pradesh market. Its medium variety, Gur Khudpa, is quoted at Rs 940 a gatta or Rs 2,350 a qtl.

Jaggery was considered a replacement sweetener of sugar due to the lower price until a few years earlier. It is now sold at par or with a marginal premium. The ex-factory sugar price in West UP is currently Rs 2,650 a qtl.

Arun Khandelwal, president of the premier Muzaffarnagar-based Federation of Gur Traders, said: “Normally, the jaggery price moves up around Makar Sankranti (mid-Jan) due to increase in demand. The price increase was very sharp this year, due to production disruption. Intermittent rainfall, followed by dense fog and cold, hit the harvesting. Jaggery production units get cane supply headed for sugar mills.”

NOT SO SWEET

• Falling inventory and disrupted production due to lower availability of cane for crushing led to the price rise
• Jaggery was considered a replacement sweetener of sugar due to the lower price until a few years earlier
• It is now sold at par or with a marginal premium

The production cost has gone up as kolhus (the jaggery making units) pay for cane at the State Advised Price, which also has. In past years, barring at the beginning of the season, kolhus used to crush low-variety cane. This season, however, they’re competing with sugar mills for procurement. Consequently, jaggery producers are unwilling to sell below the cost of production.

Unseasonal rainfall at repeated intervals had disrupted harvesting of the matured crop, due to mud in the field. So, production of jaggery has been lower so far this season. “Production will intensify in the coming weeks, once the climatic condition stabilises, as cane output has been a bumper one across all major growing states,” said Bijendra Kumar Bansal, a Hapur-based trader.

Despite an early start to crushing, the inventory with traders and stockists is estimated at 217,000 gattas, compared to 344,000 at the same time last year.

Prices are going to soften on higher production estimates. Khandelwal believes high quality cane is currently being diverted by largely small and medium-size farmers, as kolhus pay the cane price upfront, unlike mills. Large farmers continue to supply cane to sugar mills. Normally, around 55 per cent of cane output is supplied to sugar mills and 30 per cent goes to kolhus. This year, there has been a big diversion to the latter.

India’s jaggery output is estimated this year at nine million tonnes, from 8.5 mt the previous year.