INTRODUCTION

In India agriculture has undergone spectacular technological changes during the last
four decades. These changes have been boon to farmers so far as agriculture output and
productivity are concerned. However, this has been unable to ensure stable income to
farmers. The benefits of new production technology will not sustain for a longer period
unless simultaneous efforts are made in improving the marketing system as a whole. The
basic function of marketing is not only to bring about synchronization between the
demand and supply of agricultural commodity but also to ensure reasonable prices for
both producers and the consumers. Marketing of agricultural commodities has assumed
a greater importance with gradual switching over from subsistence farming to
commercial farming. No incentive to increase production will attract the farmers without
improving marketing system. Only stable farm prices, better returns and attractive terms
of trade would motivate farmers to produce more and promote larger proportion of
their produce to the market.

Steep rise in production cost and wide fluctuation in the prices of agricultural
commodities are the two major factors affecting the income levels of farmers. The price
elasticity of demand for and supply of agricultural commodities being fairly low and
demand for these commodities rising steadily, their price instability is largely attributed
to the changes in their production and the consequent changes in the market arrivals.
The price instability is more pronounced in the case of 1 commercial crops like
groundnut, sunflower, chilly and sugarcane. The minimization of fluctuation in the prices
of commodities over space and time through adequate processing, transportation,
storage, government policies and other facilities not only stabilizes the income of the
farming community but also synchronizes the demand for and supply of farm products.

The scope for stabilization of income of the farming community is more in those crops
where the produce can not be hold back by the farmers for a longer period without
proper processing and storage facilities. Sugarcane is one such crop which offers wide
scope for processing before it reaches the final consumer.

Sugarcane is grown extensively in India. The crop occupies over 44 lakh hectares (about
1.80% of the total cropped area) in the country with a production 273.93 million tones
(2008-09), of which 66 per cent is concentrated in the northern part of the country

In Karnataka the sugarcane crop is being cultivated over an area of about 4.00 lakh
hectares in four command areas, with a production of about 312 lakh tonnes of cane
and stands third in India regarding area coverage next only to Uttar Pradesh and
Maharashtra. In the recent past there has been an increase in both area and production
of sugarcane. As a result, excess cane is available for jaggery production. Some of the
important sugarcane growing districts in Karnataka state are Belgaum, Bagalkot,
Mandya, Bellary, Raichur, Chitradurga and Bijapur.

Sugarcane in India is processed into sugar, gur and khandasari. Sugarcane undergoes
considerable weight reduction through processing. The methods of converting
sugarcane and manufacturing of sugar, gur and khandasari are different. In the process
of manufacturing sugar, gur and khandasari from sugarcane, a great value is added to
 these consumable final products, further offers a great opportunity for employment to
millions of people in the country. Gur is prepared in all most all parts of the country
whereas sugarcane is grown extensively. It is known by different terms in different parts
of the country like Gur, Jaggery, Vellum, and Bella.

The National Commission of Agriculture (1976) estimated that per capita consumption
of sweeteners would increase to about 40 kg per head per annum from current level of
approximate 25 kg per head per annum and the country's population may go up to 1360
millions by 2020 AD at present growth rate of 1.6 per cent per annum.

1.1 NUTRITIONAL AND MEDICINAL VALUE OF JAGGERY The acceptable taste and
nutritive value of jaggery has attracted many since ancient times. “Susruta Sanhita”
compiled about 2500 years ago have mentioned in 45th Chapter, 146 sloka that
slightly old gur purifies the blood, prevents rheumatic infections and disorder of bile
and possesses nutritive properties of high order (Roy, 1951). Jaggery forms an
important item of Indian diet for its high nutritive value and as a sweetening agent.
About 383 calories of energy is derived from every 100 gms of jaggery. White sugar
contains only sucrose 3 (99.70%), whereas jaggery has sucrose (51.00%), protein
(0.25%), glucose (21.20%) and minerals (3.40%). In addition to trace amount of fats,
iron, calcium and phosphate, jaggery is proved to be superior product in terms of
vitamin contents and medicinal value (Bengali Babu and Singh, 1993).

Dietaiy sucrose (sugar) is mixed blessings which makes food more attractive and appetizing but
excessive consumption often leads to various kinds of pathological conditions like., Dental curies,
coronary thrombosis, ischemic heart disease, diabetes, acidity, depression and obesity etc.,
Some studies have also shown that high sugar intake leads to higher cancer risk. Jaggery which is
an alternate sweetener from sugarcane crop is health friendly. In Ayurveda jaggery is considered
to be the best of all the sugarcane preparations.

1.2 EXPORT POTENTIAL Per capita consumption of sucrose in India is much lower (15 kg)
compared to that in developed countries (50 kg), Major share (above 75%) of
sucrose consumption in rich countries has been through manufactured foods. But,
excessive sucrose consumption leads to a variety of problems such as dental curies
and coronary thrombosis. To over-come these problems many of these countries are
serious by looking for alternative sweeteners from sugarcane crop. India has one of
such eco friendly sweetener, jaggery and contributes more than 70 per cent to the
production of the world. It is being exported to many countries like, Bangladesh,
Great Britain, Canada, Chili, Egypt, Fizzy, Iran, Iraq, Kuwait, Malaysia, Nepal and USA.

Being a health friendly sweetener quality jaggery and its value added products such
as jaggery chocolate and confectionaries made of various combinations of cereals, it is possible to
significantly increase export of jaggery in solid powder and liquid forms. Jaggery produced using
chemicals has lower export potential. Hence, there is a need to popularize scientific and eco-friendly
methods ofjaggery production.
 1.3 JAGGERY - A COTTAGE INDUSTRY The jaggery industry has been considered as one of
the small scale and cottage industries in India. From the time immemorial, the
sugarcane crop has been known as cash crop for Indian cultivators and so also the
preparation of jaggery. As much as 45 to 50 per cent of sugarcane crop has been
processed annually in to jaggery or khandasari. The production of jaggery ranges
between five million tons and seven million tons. It is estimated that two third of the
sweetening requirement in rural areas is met by jaggery. The jaggery industry in the
country has thus, been continued to be an industry of great importance and
relevance. The economy of the country is closely associated with this industry.

The Sugar Committee of the Imperial Council of Agricultural Research recommended for a study
on existing conditions of jaggery with a view to improve the jaggery preparation process in the
year 1937. There after it was indeed, a matter of great surprise that in spite of the significance of
the industry in the economy no attention, worth mentioning, has been paid to this industry until
recognition has been realized that by organizing jaggery industry on a systematic and scientific
basis a good deal of national wealth could be saved from being lost and ameliorate the
conditions of Indian farmers. This is particularly true in view of the enormous problems being
faced by sugar industry in the country.

In recent years the Indian sugar industry has found itself entangled in a complex web of
problems of high stocks, low prices, poor profitability, high raw material cost, financial crunch,
and weak international competitive edge. During 2007-08 sugar seasons, the Indian sugar
industry started sugar production even though it has a stock of over 112 lakh tonnes. The sugar'
mills are expected to produce another 300 lakh tonnes of sugar during the season against an
annual consumption of about 200 lakh tonnes. As a result sugar prices have hit a low of Rs 1,220
per quintal and sugar prices do not cover the raw material and cost of production of sugar. This
has resulted in delayed and low payments to the farmers for their sugarcane.

Jaggery industry has undergone several changes over the years, Kolhus used for crushing
sugarcane have been replaced by power crushers in many parts of the country. This has helped
improving the efficiency of the industry by way of enhanced extraction percentage of juice from
cane. The process of preparation of jaggery has also undergone considerable changes. As a
result of these changes the jaggery industry is offering a stiff competition to sugar industry for
sugarcane. The sugar industry claims that the discriminatory policies of the government have
helped diverting large portion of sugarcane towardsjaggery industry, especially in times of sugar
shortage.

It is clear from the forgoing discussions that no systematic efforts have been made to improve
the jaggery industry which is so vital from the point of view of its importance in the economy
and greater employment potential. There has been a steady increase in the demand for jaggery
in view of the fact that the jaggery is not only the chief source of sweetening agents for rural
masses but has considerable forward linkages in the economy. The production of jaggery has not
been able to keep pace with increasing demand for it. As a result, the prices ofjaggery have been
raised sharply in recent years. Hence, there is an immediate need for a detailed inquiry in to the
various aspects of production and marketing ofjaggery. The study of this kind would help
identifying the extent of profitability in jaggery production, the methods and problems of
marketing besides identifying various constraints in production and marketing of this product.
 1.4 PROBLEM SETTING

Karnataka is one of the leading producers of jaggery apart from sugar. Large number of
jaggery production units are operating in the state which has a greater employment
potential. In India, Uttar Pradesh and Maharasthra are producing good quality jaggery of
export quality only hence these two states have specialized centers for jaggery
production. But in Karnataka we do not have such jaggery research centre for quality
jaggery production.

Jaggery being an important sweetener next to crystal sugar, having good nutritive and medicinal
value, there will be a lot of demand for quality jaggery both in traditional areas and for export.
Even though jaggery is having more scope in human health, it is a neglected sector in Karnataka
because of lack of research background on quality jaggery production.

During 1999-2000 there were 8950 jaggery units and 38 sugar industries which were sufficient to
crush total quantity of cane produced without affecting the interest of cane growers. At present,
number of jaggery units is drastically reduced to 850 and which is mainly attributed to non
profitability of this industry due to higher cost of jaggery production, lower price of jaggery in
the market because of poor quality, non-availability of sufficient labour force and security for
their investments.

In view of the said constraints, it is very much essential to look into the present position of sugar
and jaggery industries in Karnataka that farmers are losing their interest on sugarcane
production and which ultimately affects the economic status of cane growers and economy of
both state and nation where sugarcane is considered as one of the most important valuable
commercial crops of India. Hence, interference of research, extension and the policy making at
this juncture will help the farmers in building the confidence on sugarcane crop for sustainable
production. Hence the present study is undertaken in Karnataka with following specific
objectives.

1. To estimate the cost and returns ofjaggery production.

2. To examine the employment potential and pattern in jaggery processing units.
3. To identify the marketing channels and estimate the price spread in the marketing of jaggery
4. To analyse the pace and pattern of prices and arrivals ofjaggery.
5. To work out the export competitiveness ofjaggery. 6. To identify the constraints in production
and marketing to suggest corrective measures for improvement in production and marketing of
jaggery.

1.5 HYPOTHESIS

With these objectives in view, the following hypotheses have been framed to test and
make the study in a proper manner.

1. Jaggery production is profitable to the farmers.

2. Jaggery producers face various problems in production and marketing.
3. There is a lot of employment potential in jaggery cottage industry.
4. There is distinct seasonality in arrivals and prices ofjaggery.
 1.6 SCOPE OF THE STUDY

There is a vast scope for development ofjaggery industry there by improving

employment opportunities in rural areas. The present study focuses a clear idea about
the investment costs and returns of the jaggery processing units. It also helps in
understanding the existing marketing practices and defects if any and also identifies the
problems in production and marketing ofjaggery in study area. The study would be
useful to institutions of financing, marketing and other policy framing for further
development ofjaggery industry.

1.7 LIMITATIONS OF THE STUDY

The present study has its own limitations. The primary data was collected from the respondents
based on their recall memory as no farm records were maintained by them. So, the information
would definitely have a bias though steps were taken by frequent cross checking to minimize the
error on recall basis. The period of data collection was also too short to generalize and draw
conclusions.
The secondary data was collected from more than one source and gaps in one source were filled
by referring to other sources. There may be some discrepancies if the data are not correctly
reported by the referred sources.

1.8 ORGANIZATION OF THE STUDY

The present study is organized into six chapters.

Chapter-I : It deals with introduction, importance of the study, objectives and hypothesis
are listed and scope and limitations of study were explained.

Chapter-II : Deals with the review of earlier works pertaining to the present study. The
literature reviews on cost of jaggery production, marketing channels, employment
potential and problems in jaggery production and marketing and theoretical works
related to the study.

Chapter-Ill : The detailed methodology of study is explained in this chapter, main

features of the study area, nature and source of data, analytical techniques employed,
the terms and concepts used in the study are presented in this chapter.

Chapter-IV : In consonance with the objectives of the study, the data collected from
different sources were subjected to various statistical tools and techniques. The main
findings of the study are summarized in this chapter.

Chapter-V : The discussion relating to the results of the study are presented in Chapter-
V. The results are discussed under different subheadings viz., general characteristics of
jaggery producers, cost and return structure in sugarcane. Returns to investment in
jaggery processing, marketing of jaggery, pace and pattern of prices and arrivals, export
competitiveness of jaggery and problem in production and marketing ofjaggery.

Chapter-VI : Brief summary of findings, conclusion and suggestions are included in this
chapter.