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Sugarcane-based unorganised sector smells 'sweet' in UP

Virendra Singh Rawat  |  New Delhi/ Lucknow 

In the backdrop of all the hullabaloo over sugarcane State Advised Price (SAP), which sets the floor price for the procurement of the cash crop by 125 odd mills in Uttar Pradesh, the unorganised sector of gur and khandsari units that also depend upon cane goes unnoticed.

While sugar sector, which is the largest organised industrial sector in UP, is pegged over Rs 13,000 crore and is expected to breach Rs 15,000 mark this crushing season, the unorganised segment depending upon sugarcane is estimated at almost 20 per cent of this value, which would be over Rs 2,000 crore.

Since unorganised sector players pay upfront to farmers, growers prefer them when they need urgent money or require vacant field to sow the rabi crop of wheat.

There are about 350 khandsari and 1,000 gur making units in the state, mostly in the western and central regions. Their products viz gur (jaggery), khandsari (unrefined sugar), molasses ,etc cater to the needs of the local rural economy and even exported to other states, including Punjab, Rajasthan and some Southern and North Eastern states.

“The unorganised sector, which operates as micro and small enterprises, gets almost 50 per cent of the annual sugarcane drawl, which is massive,” retired sugarcane department official A K Sinha told Business Standard.

However, this must be borne in mind that sugar mills get nearly 50-55 per cent of the total cane crop for crushing, while 15 per cent is preserved to be used as seed for next season and 30 odd per cent is diverted towards gur, khandsari and local juice shops, besides personal consumption.

“Mollases produced in these units is also used to manufacture illicit liquor, while gur is exported in bulk to Southern states during festival time,” Kisan Jagriti Manch president Sudhir Panwar said.

Currently, the gur units are procuring sugarcane at around Rs 200/quintal, up from Rs 175/quintal about a fortnight back, following the announcement of SAP by the state government.

“The farmers normally sell their ratoon sugarcane crop to these units to empty their field for sowing wheat,” Pilibhit-based Puranpur sugarcane society chairman Shrikant Singh said.

In the election year, UP government has hiked cane price almost 20 per cent to Rs 250/quintal for early variety. SAP has been increased by Rs 35/quintal to Rs 240/quintal for normal variety, which accounts for over 60 per cent of the total cane production in UP.

Sugar millers have announced to move Allahabad High Court to challenge SAP, which they claim is unviable in present circumstances.

First Published: Mon, November 14 2011. 00:21 IST