Date:14/01/2005 URL: http://www.thehindubusinessline.com/2005/01/14/stories/2005011400611000.htm

Back Gur factor may hit sugar output this year

Harish Damodaran
Mamuni Das

The kolhus are paying growers Rs 120-130 per quintal for cane, which is more than the Rs 107-112 per quintal rate being given by sugar factories as per the SAP.

New Delhi , Jan. 13

LARGE-SCALE diversion of sugarcane for making gur (jaggery) may bring down sugar production in Uttar Pradesh to 38-40 lakh tonnes (lt) in the current 2004-05 crushing season (October-September), as against 46 lt in 2003-04 and 56.51 lt in the 2002-03 season.

The present projected all-India sugar production of 120 lt for the current season is based on the assumption that output in U.P. would hover around the levels of the 2003-04 season. If mills in the State end up producing only 38-40 lt, it would correspondingly drag down the country's production further, from 138 lt in 2003-04 and 201.45 lt in the 2002-03 season.

According to industry sources, the main culprit in bringing down sugar production in U.P. this time would be the kolhus or gur manufacturers.

There are around 6,000 kolhu units in Western U.P. alone and another 7,000 in the rest of the State.

The kolhus are paying growers Rs 120-130 per quintal for cane, which is more than the Rs 107-112 per quintal rate being given by sugar factories as per the State Government's `advised' price.

The kolhus are able to pay higher cane prices partly because gur prices are now ruling at about Rs 1,300 per quintal, compared to Rs 1,000 per quintal at this point of time last year. The firming up of gur prices, in turn, has been linked to higher sugar prices, which have propped up demand for alternate sweeteners.

But a more important reason for higher gur prices, the source said, has to do with increased demand from makers of illicit liquor. Gur manufacture basically involves boiling cane juice in open pans and refining and bleaching it using hydrosulphide chemicals. The juice, when boiled, becomes harder and sticky, after which it is moulded in a platform and mashed into small pieces.

"Gur is, in a sense, nothing but refined molasses. To obtain molasses, one just has to melt the gur in butter and this can be further fermented into liquor," said Mr C.B. Patodia, Advisor to the Birla Group of Sugar Industries. No wonder, a large part of gur, apart from being consumed directly as a sweetener, also finds its way into illicit distilling. In fact, a big chunk of gur purchases from UP is actually destined for Gujarat, where liquor is officially prohibited.

But this time apparently, there is a huge demand for gur not only from Gujarat, but interestingly also from Haryana, Bihar and Jharkhand - States scheduled to hold assembly elections next month.

And with molasses prices skyrocketing, there is an added impetus for the liquor trade opting for gur as a basic fermentation feedstock this year.

"The best thing about gur is that, unlike molasses, it requires no permit for trading. Neither is its movement, whether inter-State or intra-State, subjected to controls.

A trader can buy unlimited quantities of gur and claim that it is being used for direct consumption, even if it is actually utilised for illicit distilling," according to Mr R.K. Panpalia of Bajaj Hindusthan Ltd.

While U.P. currently bans kolhus, other than those established by growers processing their own cane for captive family consumption, this policy is followed only on paper.

The current season has seen an explosive growth in the number of kolhus operating in U.P. The investment cost in a kolhu is said to be hardly Rs 20,000, which can easily be recouped with the present spurt in gur prices.

Traders say that a lot of gur is being hoarded in the expectation of prices going up further in the coming months.

In the Muzaffarnagar mandi alone, some 30,000 tonnes of gur are now lying in surrounding godowns.