Big groups move into rice milling business

Big corporate houses are investing in rice milling and marketing, encouraged by demand from a growing population in the country, insiders said.
ACI, City Group, Pran-RFL Group and Bashundhara Group are among the companies that are preparing to set up automatic rice mills along with processing and marketing of the parboiled rice in the local market.
"Our rice will hit the market by the end of this year," said Kamrul Islam, business manager of ACI Ltd. The diversified conglomerate has business in sectors such as retail, agribusiness, food items and pharmaceuticals.
He said his company will invest Tk 390 million (39 crore) to set up the mill.
Mr Islam noted that his company would bring "high quality" rice under its ACI Pure brand.
City Group has also taken an initiative to set up a large automatic rice mill, its officials said.
"We are now in talks with a European machinery company to set up the mill. This is going to be one of the biggest in the country," general manager of City Group Biswajit Saha told the FE Wednesday.
"We want to mill and market all types of rice- aromatic or coarse. If everything goes accordingly, the mill will start operation within 2016," he added.
"Presently, we process and sell flour, cooking oil and sugar. That's why, we want to get into rice business so that we can fulfill the needs of a kitchen," Mr Saha said.
Indrojit Kumar Mahalanabish, head of plants division of Bashundhara Group's Bashundhara Food and Beverage Ltd, said his office is in discussion with different suppliers to get machinery for the planned mill.
"Discussion is going on regarding rice milling. This is now at the planning stage," he said.
"Bangladesh is a country of 160 million population. As rice is a staple food, there is a clear business prospect," said Mr Mahalanabish.
However, some of these business groups will enter the market through food processing giants such as Square and Deshbandhu Group while other players will do marketing on their own.
Currently, around 500 automatic and semi-automatic rice mills along with 17,000 husking mills are engaged in parboiling, drying and crushing paddy bought from farmers.
Of the mills, more than 350 operators market rice under their own brands mainly in the fine rice segment, said Md Layek Ali, general secretary of Bangladesh Auto, Major and Husking Mills Association, which has around 17,000 members.
According to Mr Ali, the association-linked mills process and market at least 60 percent or 30 million tonnes of 50 million tonnes of paddy produced a year in the country. Farmers keep the rest of the produce for their own consumption.
Mr Ali, however, was worried that the milling capacity might exceed the annual production of paddy if new companies go into operation.
"The market will be saturated and competition will intensify. As a result, many small and medium husking mills will not survive, rendering many workers jobless," he said.
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