Punjab rice mills in the red as milling season stretches

A severe space crunch for storage agencies in the state is making matters worse

Rice mills in Punjab are losing money owing to lack of storage space for custom-milled rice (CMR). CMR is paddy procured by government agencies and given to the mills for processing. The rice is distributed via the public distribution system.

Punjab has 3,960 registered rice mills, of which about 3,800 are operational. These mills are concentrated in four districts - Sangrur, Patiala, Moga and Ludhiana. Millers claim the milling season should be over by March 31, because the rise in temperature in April affects the quality of grain.

According to Tarsem Saini, the president of the Rice Millers' Association of Punjab, "The ideal moisture content in paddy is 16 to 17 per cent, but in summer it comes down to 12-13 per cent. The 'driage' loss, which leads to loss of weight, then increases from 25 per cent to about 35-40 per cent. A driage loss of up to 25 per cent is compensated by the central government. Anything beyond this is a loss to the miller."

According to Saini, the paddy crop starts arriving in October and the milling should be over by March. In the past few years, owing to increasing paddy yields in the eastern states and some other states becoming self-sufficient in wheat and paddy production, the movement of grain from Punjab has slowed down.

This has created a severe space crunch for storage agencies in the state. Paddy can be stored in the open but wheat has to be stored in covered areas. The milling of paddy is, therefore, deferred to accommodate wheat.

A senior official from the Food Corporation of India (FCI) confirmed that wheat production in Punjab has almost doubled in the past five years (from 6.7 million tonnes in 2007-08 to 12.5 million tonnes in 2011-12). The FCI is short of staff, which has affected the streamlining of paddy storage, as wheat needs immediate attention.

The high cost of power and rising wage rates have already affected the bottomlines of SMEs in Punjab. The stretched milling period has come as the last straw on the camel's back for rice mills, said M R Gupta, a miller from Patiala.

Gupta added that paddy processors in Punjab have the capacity to process 10,000 tonnes of paddy per hour, and the entire paddy harvest can be processed in three months. However, due to the space shortage, slow movement of grain and government agencies' lack of manpower, the process stretches to nine months.

This adds to the cost in terms of labour, power, storage and handling. "We have to incur a cost of Rs 10 per bag for lifting, carrying, loading/unloading for the old stock, which is reassessed by the government agencies for quality and weight. The mills are running single shifts and labour has to be retained at any cost," he said.

The additional storage space created can solve the problem only if the demand from consuming states increases. The government is planning to add additional storage space under the private entrepreneur guarantee scheme, but since the state's own consumption is low, this is a short-term solution.