The jaggery making from sugarcane is one of the traditional process industries contributing to the local employment and entrepreneurship opportunities to the rural population. Jaggery is a condensed form of sugarcane juice produced by evaporation of moisture. Bagasse which is internally generated during juice extraction from sugarcane is used as the fuel for evaporation in a jaggery furnace. Any efficiency improvement in the thermal performance of a jaggery furnace leads to bagasse saving which provides additional revenue for the jaggery manufacturer. A procedure for thermal evaluation using mass and energy balance for a jaggery furnace is proposed to establish furnace performance and loss stream analysis. The proposed method is used to investigate a four pan traditional jaggery furnace in India. The loss stream analysis indicates that the theoretical energy required for jaggery processing is only 29% of total energy supplied by bagasse combustion. The major loss is associated with heat carried in flue gas and wall losses. The air available for combustion depends upon the draft created by chimney in natural draft furnaces. The oxygen content in the flue gas is a measure of degree of combustion. A controlled fuel feeding based on the oxygen percentage in the flue gases is proposed and demonstrated. The traditional practice of fuel feeding rate is changed to control feeding rate leading to reduction in specific fuel consumption from 2.39 kg bagasse/kg jaggery to 1.73 kg bagasse/kg jaggery. This procedure can be used for evaluation of jaggery furnaces for identification and quantification of losses, which will help in improving thermal energy utilization.