More investments in auto rice mills likely

Automatic rice mills are expected to dominate the local market over the next couple of years due to more investment in the sector.

Investors have started making foray into the sector mainly due to its better quality, cost effectiveness and less involvement of human resources, traders and millers said.

According to them, rising consumer demand for the rice processed at the automatic mills is also another reason behind the increasing interest of the investors in the area.

Besides, other factors include an increase in production due to a decline in broken grains, scope to make cooking oil by using rice bran and higher market prices, they added.

The number of semi-automatic and automatic rice mills in the country almost trebled in six years to 634 this year, according to the statistics of the Bangladesh Rice Mills Association, a trading group.

Dinajpur, Kushtia, Naogaon, Chapainawabganj and Noapara of Jessore are some districts that have attracted investment in big automatic rice mills.

Industry circles said more investors are coming up to set up semi-auto and automatic rice mills.

"The share of the automatic rice mills is increasing as husking mills are losing out to competition as demand for automatically processed rice is increasing," KM Layek Ali, leader of the 17,000 strong trade body told the FE.

"Consumers want better quality rice, a longer shelf life, less broken quantities and rice that is almost free from inedible substances, such as stones which are easily possible to ensure if processed by an automatic mill," he added.

"More investment will come and the automatic mills will dominate the market in the next 10 years," owner of Papua Automatic Rice Mill Nishad Kanti Barua said.

He also said the automatic mills improve efficiency, help cut unit costs of paddy processing, increase percentage of unbroken rice and reduce post-harvest losses.

"Within a couple of years, the share of automatic-rice mills will be half of the total mills. The extent of their control on the rice market will rise further due to its competitive advantages," Mr Barua added.

Ajmal Hakim, a trader said, people now do not want to see any inedible substances like stone in rice and prefer better quality rice with less broken quantities which lured them to trade in rice processed in semi-auto or automatic rice mills.

"People do not hesitate to pay two to five taka more against each kilogram of rice, but they want to have the better one," he added.  

According to Mr Hakim, prices of rice processed in automatic rice mills are around five taka higher than that of manual traditional mills.  

Millers said the quality of the grains from the automatic mills is better because of drying, parboiling and crushing through machines, thus reducing wastage and workloads.

On the other hand, husking mills require manual involvement in parboiling or drying in the sun before milling.

However, experts warned about the risks of an oligopoly (a situation where a particular market is controlled by a small group of firms) in the rice processing market unless the number of automatic rice mills is increased.

"Control over the rice processing market by a few large mills, however, leads to a monopoly and price control, which may go against the interests of both farmers and consumers if the mill owners do not follow ethical business practices," former advisor to the caretaker government Dr. A B M Mirza Azizul Islam told the FE recently.

However, the small husking mills are still the ones dominating the market. But their market share is shrinking, as most of these mills are pulling out or turning to automatic ones.

However, according to association sources, husking mills still have control over two-thirds of the market.