Punjab millers hit by slow pace of rice procurement

Once a seasonal business, rice processing has now become an annual occupation

Punjab's rice mills, mostly small and medium-sized units, are running at far below their full capacity, with entrepreneurs attributing this state of affairs to the government's policies. Low levels of rice procurement by the Central and state government agencies are forcing them to operate at low capacity, entrepreneurs complain.

Punjab, which contributes a large share to the Central pool for the public distribution system (PDS), has a total of about 3,050 small rice processing mills. These mills process non-basmati rice procured by the Central and state government agencies meant for the PDS. The millers are paid processing charges and also get the by-products of paddy, such as paddy husk and bran.

The president of the Rice Millers Association of Punjab, Tarsem Saini, told Business Standard that Punjab's mills have the capacity to process one lakh tonnes of rice a day, but the government agencies have been lifting only 50,000 tonnes daily across the state, forcing the mills to operate at half capacity.

"The slow movement of grain from the mills makes us slow down the processing. While we can finish the entire stock of 12.5 million tonnes by February 28, we have to stretch it to August," said Saini.

He added: "We met senior government officials to apprise them that due to the rise in the moisture content after February, the grain starts deteriorating and that is a loss to the millers. But we did not get any relief. Some affluent millers have installed sortex machines (machines that can segregate damaged and coloured grain from healthy grain) but very few can afford this."

Sushil Singla of Lakshmi Rice Mills, Samana, lamented that there has been no upgradation in the assessment method for rice, which is done manually. Last year, a substantial chunk of rice was rejected by Food Corporation of India officials, on grounds of "pinpoint damage". Even the Panjab Agriculture University, Ludhiana, has found through studies that pinpoint-sized black spots on rice (or pinpoint damage) are evidence of excess iron and not signs of damage. But there is no clarity from any government agency on this.

Due to the annual hike in the power tariff and the consistent rise in wage rates, costs are steadily going up, but there has been no revision in processing charges for the past eight years. It is still Rs 15 per quintal, Singla added. The millers bear an additional maintenance cost of Rs 7-8 per quintal due to delayed processing.

Millers in the state speculate that as a result of the growing paddy acreage in the Eastern states - Orissa, West Bengal and even Chhattisgarh - rice-consuming states are now less dependent on Punjab. So, from 2010-11 on, the rice off-take from Punjab has slowed down. The shortage of staff in FCI is also, according to the millers, slowing the movement of rice from Punjab.

The millers remained on strike last month, to make the government aware of issues relating to rice processing. They resumed operations only early this month after an assurance from the state government.

Rice processing used to be a seasonal business, but has become an annual occupation due to lack of correct policies.

Gurdeep Cheema, the president of the Patiala Rice Millers Association, hopes that this is only a phase and that business will revive soon. The implementation of the Food Security Act, recently passed by Parliament, will trigger higher demand for food grain, and paddy processing in Punjab will see its fortunes restored, he hopes.