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Bangladeshi buyers turning to newer mills elsewhere

Published on 13 April, 2006, Last updated at 01:06 GMT

13th Apr, 2006: DHAKA - Even as 20 to 25 rice mills are coming up in Barddhaman every year, the future of the industry looks bleak due to rising costs and diminishing market-size, according to the local Member of Parliament, Nikhilananda Swar, and the vice president of the Barddhaman District Rice Mill Owner's Association, Banshi Shyam.

There are approximately 350 rice mills in Barddhaman with an average output of 200 quintals of polished rice per day, per mill.

However, due to rising diesel prices, the establishment and transportation costs had begun crippling operations.

Output last year declined by 30 per cent, according to Shyam.

The captive consumption of energy produced by gassifying rice husk is an alternative to using diesel.

Using diesel entails a cost of Rs 8 per unit of power, while using a gassifier can cut down the cost to Rs 3.25 to Rs 3.50 per unit.

According to an industry source, about 100 rice mills in the district now use gassifiers.

During the same time, last year, the number stood at a mere 15.

Most of the new rice mills coming up were also implementing this technology, the cost of which is around Rs 10 lakh for a 200 kilowatt generator, but is cost-effective in the long run.

This system, however, has its pitfalls too, as the motors, used to run on diesel, do not function smoothly on the producer gas.

This, in turn, affects productivity, said Shyam.

Interestingly, the only method that guarantees sustained productivity, low cost of production and low minimum pollution are the old steam engine turbines that were used initially.

The steam turbines are not manufactured anymore and sell for as much as Rs 50 lakh for an old piece.

Around 50 to 60 rice mills see transfer of ownership every year, says Swar.

According to industry sources, ownership was mostly transferred to the non-Bengali trading communities, indicating a possibility of poor management.

A considerable number of new mills brought up are done so without any market research and just for investment purposes.

This matter is of concern to the survival and prosperity of the mills, since the supply of raw material and the end market has become limited due to the rising number of mills elsewhere.

The increasing number of mills within the district was not healthy either, as a saturation point had already been reached, claimed Swar.

The mills that had come up in North Bengal, Jharkhand, Bihar and Dinajpur had eaten into the market share and profits of the Barddhaman mills, complained Shyam.

The mills coming up in Medinipur are adding to the threat.

Bangladesh is the primary market for these new rice mills and they are replacing the Bardhaman mills.

Last year, due to the change in exchange rate of the Indian rupee and Bangladeshi taka, the amount of milled rice bought by the Bangladeshi market declined.

The exchange rate change also meant a lower income from conversion, says Shyam.

To Swar, the solution lies in reducing establishment cost and increasing the size of the mills, instead of the numbers.

However, industry insiders feel that even sheer size of mills is not enough to guarantee profit because the market size is decreasing day by day.

The only solution now, it seems, is the utilisation of waste material like rice husk and bran, in the best possible ways to sustain operations and generate additional profit.

More export or merchant sales of rice bran as cattle and poultry feed could help mill owners.

However, with only four mills in the district currently doing so, the future was still bleak, says Swar.


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