The Financial Express, 29 July 2012
Automatic rice mills are expected to dominate the local market over the next 10 years as investors make foray into the sector, lured by consumers’ demand, millers said.
The number of semi-automatic and automatic rice mills almost trebled in six year to 634 this year, according to the statistics of Bangladesh Rice Mills Association, the trade group.
Rising consumer demand for the rice processed at automatic mills is the main reason behind the interest of the investors in the area, the millers said.
Other factors behind the rise in investment in the sector include an increase in production due to a decline in broken grains, scope to make cooking oil by using rice bran and higher market price, they added.
Naogaon, Chapainawabganj, Dinajpur, Kushtia and Noapara of Jessore are some districts that have attracted investment in big automatic rice mills.
Industry people said that more investors are coming up to set up 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, convener of the 17,000 strong trade body told the FE.
“End users 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 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.
Mr Barua has planned to establish another automatic unit with a daily processing capacity of 500 tonnes.
He also said that the automatic mills will 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 and the extent of their control on the rice market will rise further due to its competitive advantages,” Barua added.
“Rice processed by the automatic crushers gives more full grains of rice by reducing the percentage of broken rice, thus increasing the overall quantity of rice production,” according to industry people.
They also said that 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,” executive director of Centre for Policy Dialogue (CPD), Prof Mustafizur Rahman told the FE.
However, the small husking mills are still the ones dominating the market. But their market share is shrinking, as many husking mills are pulling out.
Bikas Saha, a husking mill owner and trader in the northern district of Naogaon, says husking mills still have control over two-thirds of the market.
Bangladesh Economy 
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