Rice Processing Industry in Punjab: Problems and Their Remedies
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Ind. in. ofAgri. Econ. Vol. 58, No. 3, July-Sept. 2003 Rice Processing Industry in Punjab: Problems and their Remedies M.K. Sekhon, P.S. Rangi and Manjeet Kaur* The agro-industry provides the crucial farm-industry linkages which helps accelerate agricultural development by creating backward linkages (supply of credit, inputs and other production enhancement services) and forward linkages (processing and marketing) adding value to the farmer's produce, generating employment opportunities and increasing the farmer's net income. This in turn motivates the farmer for better productivity and further opens up possibilities of industrial development. The agro-industry generates new demand on the farm sector for more and different agricultural output which are more suitable for processing (Srivastava, 1989). The agro-processing industries in India account for 19 per cent of the total industrial output and provide employment to the extent of 19 per cent of the total industrial workers and account for 18 per cent of gross national product (GNP). Among agro-industries, rice-processing industry is the biggest industry in India because India is the second largest rice producer of the world. It has to convert huge quantum of paddy into rice before consumption. Thus, rice processing industry in the country has been the largest ago-based industry with about 1,38,000 units consisting of about 91.28 thousand hullers, 4.54 thousand shellers, 8.38 thousand hullers-cum- shellers and 35.08 thousand modern rice mills. Recognising the importance of agro- industry in general and rice processing in particular in the national economy, the present study was undertaken to examine the following issues in detail: (i) Growth of rice processing industry in India and the State of Punjab, (ii) Economics of commercial rice processing units in the State and (iii) Problems of rice milling industry and suggest solutions for the same. Growth ofRice Processing Industries in India India produces about 128 million tonnes of paddy annually and the milling industry not only mills rice but it also carries out many other essential functions such as procurement, drying, storage and utilisation of by-products. The major concern of milling paddy is to get maximum out-turn of better quality rice, with minimum broken and without damaging usable by-products. * Department of Economics, Punjab Agricultural University, Ludhiana-141 004 (Punjab). RICE PROCESSING INDUSTRY IN PUNJAB:PROBLEMS AND THEIR REMEDIES 545 In the initial years, after independence hand pounding method of rice shelling was encouraged because of large employment potential in this method of converting paddy into rice. But during sixties when India faced food shortage, the need of modern rice mills was realised. The modernisation includes scientific dripping, storage, parboiling and milling of paddy with rubber-roll-shellers. Consequently, the rice milling industry took a new turn and the Government of India decided to import seven modern rice mills. Modernisation is much more capital-intensive procedure, the government decided to provide credit and other facilities to the private millers as well, so as to encourage them to modernise their rice mills. There has been tremendous growth in the number of rice mills with increasing production of paddy in the country. The number of modern rice mills increased from 6 during the 1970s to about 35,000 in the country during 2001 (Table 1). There has been about 136 per cent increase in total rice mills during 1970 to 2001. The highest increase was in the case of modern rice mills. The seventies was the decade when the maximum growth in all types of mills was observed. Out of these, hullers are still constituting 67.5 per cent of the total rice mills. The state-wise number of rice mills shown in Table 2, indicates that maximum modern rice mills were installed in Andhra Pradesh followed by Karnataka and Kerala at 12,995, 3,674 and 2,533 respectively upto 2001. The number of shellers were less as compared to all others but their number is also highest in Andhra Pradesh. In relation to the production of paddy, it was observed that in the states where total production of paddy is higher, the number of rice mills was also higher. The number of modern rice mills has increased consistently in different states of India over time. TABLE 1. RICE MILLS IN INDIA OVER TIME Year Hullers Shellers Huller-cum- Modern mills Total shellers (1) (2) (3) (4) (5) (6) 1970 51,880 2,302 4,832 6 59,028 1975 80,007 3,676 7,210 346 91,239 1980 73,306 4,283 8,065 5,071 90,725 1985 79,197 4,484 6,654 17,826 1,08,161 1990 86,007 4,447 7,859 29,614 1,27,927 1995 90,091 4,237 8,362 33,557 1,36,247 2001 91,287 4,538 8,385 35,088 1,39,298 Source: Ministry of Food Processing Industries, Government of India. 546 INDIAN JOURNAL OF AGRICULTURAL ECONOMICS TABLE 2. STATEWISE NUMBER OF RICE MILLS IN INDIA UPTO 2001 Hullers Shellers Hullers- Modern/ Product- Total Product- Sr. State cum- modern- ion/rice mills ion (lakh No. shellers ised rice mills tonnes) mills (1) (2) (3) (4) (5) (6) (7) (8) (9) 1. Andhra Pradesh 4,609 1,776 2,364 12,995 414.44 21,744 90.14 2. Assam 431 14 2,133 242 1,202.12 2,820 33.90 3. Bihar 4,749 63 9 51 1,362.88 4,872 66.40 4. Gujarat 1,890 159 67 1,045 261.62 3,161 8.27 5. Haryana 807 - 990 1,027.82 1,797 18.47 6. Himachal Pradesh 890 1 3 222 99.46 1,116 1.11 7. Karnataka 9,131 462 1,103 3,674 210.44 14,370 30.24 8. Kerala 13,664 - 13 2,533 58.79 16,210 9.53 9. Madhya Pradesh 3,918 201 262 1,761 -966.40 6,142 58.39 10. Maharashtra 8,199 273 541 1,759 237.43 10,772 25.63 11. Orissa 6,398 125 289 552 845.46 7,364 62.26 12. Rajasthan 152 2 6 193 334.27 353 1.18 13. Tripura 1,030 6 8 1 445.93 1,045 4.66 14. Uttar Pradesh 5,707 562 150 1,215 1,357.47 7,634 103.63 15. West Bengal 9,554 3 72 926 88.72 10,555 118.97 Source: Ministry of Food Processing Industries, Government of India. Rice Processing Industry ill Punjab The quantity and quality of processed rice, its conversion cost and the use of by- products are of vital importance for the economy. With increased production and consequently higher market arrivals of paddy in Punjab, the techniques used have changed from hand pounding - the simplest indigenous method of removing husk by means of a wooden pestle worked by hand to the integrated rice mills having the facility for most economical use of all the by-products like straw for paper, bran for edible oil and cattle feed, husk for furfural and briquettes and rice for human consumption. It was observed that the number of rice shellers was 399 in 1975-76 of which 78 were modem rice mills and the remaining were shellers and shellers-cum-hullers (Table 3). The total installed capacity was 475 tonnes/hour. The number of mills increased to 887 in 1978-79 and further to 1,204 in 1982-83. It may be added that the additional number of mills after 1970 comprised mostly the modem ones as the government allowed the establishment of only such mills in the State. During the year 1999-2000, the number of mills stood at 1,585 which was less than during 1989- 90 (counted only working mills). The reason might be that these units are not economically viable. Obviously the installed capacity increased from 475 tonnes/hour during 1975-76 to 2,898 tonnes/hour during 1999-2000, representing six-fold increase during this period. RICE PROCESSING INDUSTRY IN PUNJAB:PROBLEMS AND THEIR REMEDIES 547 TABLE 3. NUMBER OF WORKING RICE MILLS AND THEIR INSTALLED CAPACITY IN PUNJAB, 1975-2000 Year Number of working Installed capacity Number of rice mills (tonnes/hr) hullers (4) (1) (2) (3) 1975-76 399 475 2,800 1978-79 887 1,235 4,000 1982-83 1,204 1,793 4,333 1983-84 1,469 2,215 4,435 1985-86 1,531 2,362 4,171 1989-90 1,655 2,843 3,300 1999-2000 1,585 2,898 2,815 Source: Department of Food and Civil Supply, Punjab. The number of hullers also increased from 2,800 during1975-76 to 3,300 (maximum) during 1989-90 and after that decreased to 2,815 during 1999-2000. It is important to point out that these hullers were of little commercial use except modern hullers and are operated locally to meet the local demand which is not high. So during the last two decades, the rice milling industry flourished at much high rate in the state so as to meet the increasing demand for rice processing in the wake of higher production of rice. The increase in the number of mills was 397 per cent while the installed capacity rose by 610 per cent during the period mentioned. The average installed capacity per mill also witnessed an increase from 1.19 tonnes per hour in 1975-76 to 1.54 tonnes per hour in 1985-86 and further to 1.83 tonnes per hour in 1999-2000 indicating an increase in the size of mills.