The Rice Mill Industry of Bangladesh: Surviving throughout pandemic and bringing technological change
Corona virus has affected almost every spheres of life in the world including different businesses and industries where agricultural sector is not an exception. Rice is the most vital element of this agricultural sector. The average per capita rice consumption in Bangladesh stood at around 179.9 kg per year from 2016 to 2019, more than three times the world average. According to the USDA, approximately 500 million tons of rice were produced globally during 2019-2020. Bangladesh ranked fourth, contributing about 7% to the world production. Despite being one of the leading producers, Bangladesh cannot find a place among the top five rice exporters since its output is used to meet the domestic demand. Our domestic demand
has almost tripled since independence, causing us to somewhat dependent on imports to meet the demand.
Due to technological advancement and changing demands, the rice milling sector in Bangladesh has slowly shifted from the traditional “Dheki” or husking method of processing paddy to a more automated process. More than 12,000 husking mills had to shut down between 2012 and 2014 as they could not compete with the auto and semi-auto rice mills. Currently, 18700 public and private rice mills operate in Bangladesh, mostly in the North Bengal region. These mills broadly produce three categories of rice- Aus, Aman and Boro.
Since rice is a non-cyclical product, its demand is relatively inelastic. As such, the pandemic did not have much effect on the sector. Although the producers faced a temporary cash crisis during March and April due to the lockdown and limited banking hours, the situation improved from May and onwards. Handsome production and suitable government policies helped the producers to avoid any difficulty during the pandemic. Sales increased as people hoarded rice due to uncertainty, and different organizations procured rice for relief distribution. As a result, during the third quarter of 2020, the price of rice increased by BDT 5-7 per kg.
As technology advances, we need to use more modern technologies such as drones and field sensors in our farming process and adopt Climate Smart Agriculture (CSA) to boost our productivity. These need to be implemented almost immediately as we lose 1% of our cultivable land every year due to growing population demands. The government should also ensure proper financing and insurance facilities for the producers. Doing these will decrease our dependency on the RMG industry as our sole exporter and allow this industry to be a potential source of our export income.
Sushmita Saha
Assistant Manager
IDLC Finance Limited