cluster_rice dsr by dept of industries orissa

8/6/2019 Cluster_rice Dsr by Dept of Industries Orissa

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REPORT ON

DIAGNOSTIC STUDY OF

RICE MILLING CLUSTER OF BARGARH & ADJOINING AREA

ByEr. Pitambar Parida

&Er. Epari Dharma Raju

Cluster Development ExecutiveDeptt. Of Industry, Govt. of Orissa, Bhubaneswar

Prepared as a part of curriculum during training programme for Cluster

Development Agents (17-26th

Aug, 2005) at Bhubaneswar

Organised by

United Nations Industrial Development Organisation

Cluster Development Programme

&


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Xavier Institute of Management, Bhubaneswar

INDEX

Sl. No Contents Page1 Introduction 2

2 Age of the Cluster 3

3 Nature of the Cluster 3

4 Industry Scenario 3-4

5 Cluster Details 4-8

6 Structure of Cluster 8-12

7 Evolution of Cluster 12

8 Production process - description of value chain 12-15

9 Analysis of Value Chain( as per FAQ standard) 16-17

10 Analysis of Business operations 18

11 Presence of support institutions 19-20

12 Business Development Service Providers 20

13 Infrastructure analysis of Cluster 20

14 Credit analysis of the cluster 20

15 Social and Environmental Conditions of the Cluster 21

16 Present Cluster Map 22

17 SWOT analysis 23-24

18 Vision for the Cluster 24

19 Key Problem Areas & strategic interventions proposed 24-28

20 Expected major outputs 28-29

21 BROAD ACTION PLAN 29

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RICE MILL CLUSTER OF BARGARH & ADJOINING AREA .

1. Introduction :

Bargarh & adjoining areas are the adjacent district having population of 22.75

Lakhs. With commissioning of Hirakud Dam Project, a green revolution started

after 1960. As a result of which Bargarh & adjoining areas became rice bowl of

Orissa. The main economic activities of the region is agriculture and main crops

raised are paddy. Following table would give an idea regarding the land in

Bargarh & adjoining areas.

Land Utilisation Pattern (2000-2001)

Particulars of Area Sambalpur

(in Hectres)

Bargarh

(in Hectres)

A)

Forest Area

Misc, tree, permanent pasture, land put

to non agricultural use, barren and

uncultivable land.

Cultivable Waste

Current Fallow (04-05)

Other Fallow (04-05)

Net Area SOW

% of Forest Area of district to state

152574

55000

20489

671

27392

193349

152574

80490

54000

15392

22

6119

348725

80490

666293 583200

B) Agricultural Land (04-05)

Total Cultivated Land

High Land

Medium Land

Low Land

Average area covered in Khariff

(Paddy)

Approx. Paddy production in Khariff.

221412

124273

60759

36380

109704

19.24Qntl/Hec

354866

179437

89395

76034

2112093

22.28Qntl/Hec

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Average area covered in Ravi 14058 43343

(Source : DDA, Sambalpur)

2. Age of the Cluster

The Bargarh & adjoining areas has a paddy growing area traditionally and

hence looking to the raw material availability and the ready market, rice being

the staple food for the states population, rice milling became a natural choice

for traders keen on investing. Thus the milling activity started in the area almost

50 years ago. Since then the number of units have grown to 150 units in the

area as estimated presently. The growth of the units in the cluster can also be

attributed to the influence of the neighbouring rice mills in Chhattisgarh with

similar paddy cultivating areas. In fact, due to the ongoing purchase support

from FCI, the number of milling units increased from 96 to 150 during the

period 2001-2005. As such the cluster is a naturally evolved cluster having

proximity of raw material, i.e. paddy which in turn enjoys regular water supply

from the Hirakud dam located in the clusters proximity.

3. Nature of the Cluster

As mentioned in the preceding paragraph, the rice mills are mainly spread

around Bargarh with a few units also being located in nearby district of

Sambalpur. In all there are about 150 rice mills in the region up to 2004-05.

These mills are of various capacities ranging from 2 tons/hr to 10 tons/hr, the

older units usually being that of low capacities while the comparatively new

units of higher capacities reflective of the growing investment in the sector.

These units buy 75% of the total requirement of paddy from the market yard at

the minimum support price and 25% is purchased directly from the cultivators

of the region. The average turnover of these units ranges from Rs. 3-4 crores in

case of lower capacities to about Rs. 6-8 Crores in case of the higher capacity

units. The cluster is organised on horizontal lines and the overall turnover of the

cluster is about Rs.1000 Crores and it comprises of small to medium size units.

4. Industry Scenario: -

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a. World: In the international market Thailand, USA & UK have gone

ahead in rice production. These countries are basically producing short

grain non-basmati varieties. Besides Europe and UK also procure brown

Basmati Semi processed rice from India and finally process further as

per their requirements. The Milling Industries of these countries mainly

employ automatic advanced technology of processing, professionally

human resource and well managed organizations having concepts of

TQM, appropriate and modern technology and continuous R&D

activities. In non Basmati rice India faces top competition with Thailand,

Philipines and Vietnam whereas in Basmati rice India stands topmost in

the world as far as value structure is concerned. World produces 397.2

million tons of paddy (2001). It is estimated that about 800 million tons

( FAQ) of rice will be required by 2025 A.D.

b. India : - Rice milling units prevails mainly in the state like U.P.,

Uttaranchal, Punjab, Haryana, Orissa, W.B., A.P., Tamilnadu, Bihar,

Assam, Karnataka and Kerala at National level. The states produce rice

of both Basmati and non-Basmati variety. The Basmati varieties are

mainly produced in Punjab, Haryana, U. P. and Uttaranchal. As far as

exports of fine quality Basmati rice from the country is concerned 75% of

it is exported from state of Haryana only and is followed by Punjab.

Hence, the few bench marking cluster in the country is considered as

Haryana and Punjab, which are rich in production, exports, quality and

technology.

Few fully automatic plants from world top manufacturers i.e.

stacke Japan sorting machine imported from USA, UK & Japan have

also installed by few units of Karnal (Haryana), Kalady (Keral), Rudrapur

(Uttaranchal). Some of the units of Bargarh cluster have installed colour

sortex and silky plant. The paraboiled produced by these units may

compete in national and international market.

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5.Cluster Details:-

There are about 150 rice mills in Bargarh & adjoining areas, out of which

one is coming under large sector. The processing/milling capacity of these

units ranges from 2MT / Hour to 8MT/Hour. The units are located in various

blocks and villages of Sambalpur and Bargarh districts.

(a) Critical Mass

The cluster broadly consists of 150 mills spread mainly around Bargarh & adjoining

town. The average turnover of these units ranges from Rs. 3-4 crores in case of lower

capacities to about Rs. 6-8 Crores in case of the higher capacity units. Thus the

overall turnover of the cluster is about Rs.1000 Crores.

The growth on the basis of number, turnover and employment in Bargarh cluster can

be seen from following data provided by the association of the rice milling cluster:

The following data gathered from the cluster from various sources reveals thatemployment growth has been steadily increasing except in the year 2001-02.

6

Growth of Rice Mills Cluster in in Bargarh & adjoing town

0

20

40

60

80

100

120

140

160

2000-01 2001-02 2002-03 2003-04 2004-05

YEAR

NOOFMILLS

EMPLOYMENT GROWTH IN CLUSTER

0

2000

4000

6000

8000

10000

12000

2000-01 2001-02 2002-03 2003-04 2004-05

YEAR


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Contribution of Cluster to export : 10 rice millers export to the tune of Rs. 130crores approximately through Agents.

Importance of the products in terms of its linkages with other products / sectors:The product has primary linkage with packaging industry, machine suppliers ofengineering cluster of Cuttack-Bhubaneswar & Rourkela.

Special features of the cluster in terms of seasonal / mainstay activities /dependence: In this cluster paddy is a seasonal product mainly grown in two cropsi.e. Karif & Rabi.

(b) Location of the

ClusterThe cluster consists ofthe rice mill unitslocated mainly inBargarh area with a fewunits falling in

7

0

100

200

300

400

500

600

700

800

900

1000

RS IN CRORES

2000-01 2001-02 2002-03 2003-04 2004-05

YEAR

GROWTH OF RICE MILL CLUSTER ON THE BASIS OF TURNOVER

Bargarh SambalpurRice Milling Cluster


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Sambalpur district. The geographical map indicating the location of the cluster inOrissa is as given below:

Within the cluster the fashion in which the rice mills are located in different villages /

towns of Bargarh and Sambalpur districts is shown as below:

As such this becomes quite evident form the above given spread that the cluster has a

strong influence on the local economy of the region, affecting the lives of people from

paddy farmers to casual labour employed in the mills, the technical support of repairs

etc. provided by the local smaller units and the other economic spin-offs for the service

sector of the region.

A comphrensive status of the units of the cluster indicating investment,

capacity & employment is given below.

8

Spread of Rice Mills in Bargarh - Sambalpur Cluster

0

5

10

15

20

25

30

35

40

45

Sambalpur

Hirakud

Burla

Dhankauda

Maneswar

Rengali

Bamra

Jujumara

Bargarh

Attabira

Bhatli

Sohela

Barpali

Padampur

Paikamal

No. of Mills


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Sl.

No.

Year No of

units

working

Production

in Lac MTValue in

Crores

Installed

capacity

in Lac MT

on single

shift basis

Employment Nos. Exports

(Direct &

indirect)

Investment

in

Machinery

Regular contract

1. 2001-02 96 3.79 354.40 6.91 1920 4050 -- 76crores

2. 2002-03 110 4.32 411.30 7.92 2200 3300 -- 88crores

3. 2003-04 135 5.30 504.61 9.72 2700 4050 120Crors 108 crores

4. 2004-05 150 5.80 600.00 10.60 3000 4000 180crores 242crores

Growth trend of the rice milling industry in the last four years has been on

positive side. With 96 nos. of units in the 2001-02 in the cluster, their number

increase in 110 in the year 2002-03 registering growth of 19.5%. This figure

further increase to 135 in the year 2003-04 with another rise of 22.73% with

respect to the figure of the year 2002-03. Accordingly the rice production in

terms of quantity and value has also raised substantially.

6.Structure of Cluster :-

I. Rice Milling Industry :-as stated above 150 units are functioning in

the district of Sambalpur and Bargarh. Out of these 10 nos. of units

have installed colour sortex machine. They have started exporting

standard parboiled rice to Bangladesh and Indonesia through an

agent.

44% of the units have their installed capacity of rice milling to

the tune of 2MT/Hour and 36% of the units are with the capacity of

3MT/Hour. The state of Orissa including units mainly in Sambalpur

and Bargarh, Cuttack and Ganjam etc accounts for 75% of the total

mills of Orissa.

The units in SSI sector have installed low productive non-

automotive machines and mainly work for a period of 5 months with

effect from October to February linked with the Khariff Paddy

season. Due to irrigation facility in these two districts the units get

paddy for milling in Ravi season i.e for another three months. The

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rest of the season is called off season and units are mostly un-

operational.

II. Industry Associations : The rice milling industry in the district is

established in various blocks of districts but main industry

associations are functioning is Bargarh Rice Mill Association.

The above rice milling association mainly look after the

interest of the rice mills of their respective area covering the entire

industries, members and rice dealers. This association is operating

mainly in the office of the factory of the President of the Association.

No separate association level executives has been engaged /

employed by the district / regional level association. Neither any

separate staff for the association activities has been appointed nor

any magazine / periodicals or regular data / information flow among

existing members. Besides this these associations also do not

undertake developmental activities for their members except for

policies issue. Their activities are mainly directed towards changes in

the policy matter which are taken up with respective Government or

respective Agencies from time to time.

III. Controlling and Direct Promotional Institutions:

a) Ministry of Agriculture, Govt. of India.

b) Civil Supply Dept., Govt. of Orissa.

c) APEDA Agriculture & Processed Food Products Export

Development Authority, Ministry of Commerce and Industry, Govt.

of India.

d) Food Corporation of India & State Procuring agencies.

e) Ministry of Food Processing, Govt. of India.

f) Standard Certification Agencies.

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a) Ministry of Agriculture, Govt. of India : In order to protect interest of

farmers to get them minimum support price of paddy and avoid their

exploitation by intermediateries, Govt. of India under its policy every year fixes

the minimum support price of various crops including paddy. The state

Government is directed to watch and monitor the price stabilization and incase

the price found lowering than MSP, various states designated agencies take up

the bulk purchase of paddy as per the specification and thereby maintain the

minimum support price.

b) Civil Supply Department., Govt. of Orissa :-The state civil supply

department on the policy directions of Govt. of India to invoke and maintain

minimum support price of paddy for farmers.

c) APEDA: - It is an agricultural and processed food products export

development authority of ministry of commerce and industry and engaged in

augmenting, promoting and monitoring the exports of agro products including

rice. It also provides financial assistance to the merchant and industrial

exporters and has formulated the various schemes approved by Govt. of India.

APEDAs scheduled products category include cereals, Basmati and non-

Basmati rice. The other major services of APEDA includes the following:

i. Formation of Agricultural Export processing zones. AEZ entail export

promotion with partnership of farmers, processors, exporters, central

and state govt. agencies and flow of information and data.

ii. Intervention in fiscal issues like rebate in excise, custom, sales tax,

mandi tax and state and central Govt. level for the units falling in the

zone.

iii. Financial assistance and grant in Aids and reduction in interest on

credits by banks.

iv. Legal, administrative tariff and non-tariff related issues.

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APEDA has so far established 32 AEZs with approval of state Govt. and

agencies including power Basmati rice in Punjab.

The APEDAs assistance also includes carrying out exports inspection

passing on trade enquiry received from importer and financial cum grant in

assistance in infrastructure development, ISI-9000, TQM Certification

assistance in participation in international trade fairs and training etc.

e) Ministry of Food Processing formulates and implements the policies for food

processing industries with in overall national priorities and objective as well

facilitates the environment for healthy growth of food processing industry. The

major activities related to rice milling industries are as stated below:

i. Technologies up-gradation/modernization of food processing industries

ii. Setting up of food processing and training center.

iii. Creation of infrastructure facility for running degree/diploma courses

and training programmes for food processing.

iv. Training programmes.

v. For quality assurance and safety concept codex standards, R&D

including TQM, Bar coding, ISO 9000, ISO14000 and good hygienic

practices (GHP), Q.C. Laboratory.

vi. For schemes for backward and forward integration and other

promotional activities.

Under backward linkages in procuring units ensure that high quality

seeds, fertilizers, pesticides and technical know how is provided tothe farmers in time.

Under forward linkage to ensure regular market by establishing

linkages with market and assistance in market, surveys test

marketing and land building etc.

For general advertisement to built awareness among the customer.

For promotional activities like organizing seminars / workshops /

symposium / studies / surveys / feasibility reports.

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For participation in National / International exhibitions / fairs.

For strengthening Industry Association by compilation analysis,

publication of statistics and dissemination information.

For food fortification i.e. for dietary diversification and food

fortification using simple technologists by supplementing micro

nutrients.

Scheme for infrastructure development:

To develop food path for infrastructure and common facilities for

use by small and medium enterprises, which enhance value addition.

To develop packaging center to promote new technologists of

packaging.

For value added centers to enhance self-life, higher realization

integrating value change and information flow and trace ability.

f) Standard Certification Agencies :- various national and international

standard certification agencies play active role in product and process

standardization, packaging and sampling standardization. The other part is

quality management system / TQM, ISO 9000, 14000 certification etc. the

following agencies assists in this regard.

Bureau of Indian standards.

About 38 international certification agencies providing certification

in ISO-9001-2000 & ISI-14000.

7. Evolution of Cluster:

The first rice mill namely M / s Hanuman Rice Mill, Sasan, Sambalpur

came up with an investment of Rs. 75,000 /- during 1953 in the cluster.

Of course the modern rice mill having parboiling dryer and sortex have

been introduced 3 years back. The no. of such mills will be around 10. The

cluster region is covering under western part of Orissa. It carries an extreme

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climate which is favourable for production of Paddy. Canal from Hirakud Dam

irrigate major area of the district. Rice mills in this cluster area are 50 years old

hence traditionally skilled man power are available to operate the mills. It is well

connected by road to Raipur (Chhattisgarh) and Rourkela for better business

avenue.

Where the modern machinery are little bit costly and production cost is

slightly high still the rice produced out of the modern machinery have got more

demand in open market.

8. Production process - description of value chain :-

Here in this rice milling cluster procurement of paddy by FCI and state

procuring agencies are so to say nil. Last year only civil supply corporation and

MARKFED have purchased some quantity of paddy from market yards. In the

usual process the farmers are supplying URS (under relaxation specification)

quality of paddy at market yard. The millers used to buy URS quality paddy at

specific rates fixed by Collector i.e Rs.403.50 per 75 Kg bag. The sequence of

activities carried out in this cluster from raw materials to final product is stated

below :

The Collector, Civil Supply Officer, Tahasildar and RMC authorities have

a committee to decide the quantity of paddy to be purchased by a rice mill from

a separate market yard. The farmers having received identity card from local

tahasildar can only be eligible to bring paddy to the market yard. The farmer

has to pay 1% market fee on URS price while selling paddy to the millers. The

millers will take away the paddy to the respective mills after payment to the

farmers by their own trucks or trucks supplied by truck union.

The milling process are as follows :

Introduction of Mechanical dryer is a value addition over manual sun

drying process. Herein in mechanical drying system steam is being used and it

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is a continuous process takes 6 to 7 hours for drying paddy. Advantage is that

the mill can run during rainy. Inclusion of parboling with mechanical dryer has

been considered as modern rice mill in Kerala. Rest other process are common

in this area.

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1. Raw Rice/Parboiled Rice processing flow chart

16

Paddy

Cleaning

Mechanical

drying

Shelling Unit

Soaking Steaming Sun drying

Cleaning Dehusking Separator

Paddy Broken rice

Polishing unit

Separator

Rice grader

Quality rice

Weighment

and packing

Bran yard

Broken rice,

smaller size rice

& impurities


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2. Process flow chart for exporting

17

Rice produced by common

rice mill

Silky unit

De stoning unit

Colour Sorting Machine

Grading

Weighment and Packing


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9. ANALYSIS OF VALUE CHAIN

Sl.

No.

Process Flow Process

cost/Value (inRs./-qtl. Of

rice)

Accumulated

value

Remarks

1 Paddy (URS) 538 (URS: Under

Relaxation

System)

2 Transport 10 548

3 Cleaning, loading, soaking, drying,

dehusking, polishing, grading, etc.

20 568

4 Yeild

(a) Raw rice @ 67% i.e. 67 kg. cost of100 kg raw rice

(b) Parboiled rice @ 68% i.e 68 kg.

parboiled rice 100 kg

A- raw rice

B Parboiled rice847.76 (a)

835.29 (b)

5 Cost of bags (2 nos.) 20 867.76 (a)

855.29 (b)

6 Transport 20 887.76 (a)

875.29 (b)

7 Sell price 965.70 (a)

952.10 (b)

8. Net profit 77.94 (a)

76.81 (b)

9. Sell of rice brand7%@ 500 35

10 Gross profit 112.94 (a)

111.81 (b)

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Analysis of Value Chain( as per FAQ standard)

Process Flow Process

Cost / Value

(in Rs/qntl)

Accumulate

d value

Remarks

1. Paddy (Gd-A)

2. Mktg. Fee 1%

3. Cleaning loading,

4. Misc. 1.5%

5. Total 2.5%

6. Drying

7. Dehusking & polishing

8. Grading

9. Yield

a. Raw rice @ 67% i.e. 67kg.

- Cost of 100 kg. raw rice

b. Parboiled rice @68% i.e

68kg

- Cost of 100 kg. parboiled

rice

10. Custody & maint. Charges

11. Cost of gunny bags 2 nos.

12. Transportation

13. Sale price

14.Net profit

15.Sale of rice bran(7%)

16.Sale of husk (19%)

17.Overall gross profit

560.00

14.00

9.00

20.00

2.00

12.00

20.00

20.00

500.00

50.00

560

574

583

603

605

902.98(a)

889.70(b)

914.98 (a)

934.98 (a)

921.70 (b)

954.98 (a)

941.70 (b)

90.30 (a)

88.09 (b)

35.00

9.50

134.80 (a)

132.59 (b)

(a) raw rice

(b) boiled rice

Charges to be

paid by

CSC/agencies

N.B.: (i) This gross profit is excluding over head and administrative expenses.

(ii) For an average production of 100 kg rice 150 kg of paddy required.

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(iii) The above practice would have been implemented but the practice is being

considered by the administrative authority.

10. Analysis of Business operations:

a) Raw material procurement and its quality cost etc.

Paddy is the basic raw materials for rice mills. Ministry of agriculture

Govt. of India fixes up the minimum support price of different crops including

paddy by way of policy to protect the farmers from exploitations. It is observed

in our diagnostic study that no farmer is able to supply standard quality paddy.

As such they are not getting minimum support price. This is one of the major

problem.

b) Production process related problems

In the process of parboiling water affluent is generated and is harmful.

The rice millers are getting problem to store it.

Rice husk is the cheapest fuel for generating steam but the waste

product fly-ash is another headache for disposal for the millers.

c) Design related problems

The rice mills working in this cluster are of very old technology. Electrical

consumption is very high. Here in this technology electricity consumption is

very high compared to modern rice mills.

d) Technology related problems

Technology is changing day by day. The technology adopted by the rice

millers here in this cluster is occupying more space, consuming more energy

polluting air and water and it is time consuming. As a whole the cost of

production is high for the technology.

e) Credit Issues

Finance is not a problem nowadays excepts some mills all other mills

have availed term loans and working capita from different commercial banks.

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f) Marketing Issues

At present marketing of rice is not at all a problem because FCI is

purchasing 75% of the total production against levy quota. Open market has

the demand for consuming rest 25% of the production. If the levy system will be

out then marketing will be the major problem.

11. Presence of support institutions :-

APEDA, minister of civil supply deptt., Agricultural Deptt., Govt. of

Orissa, Central Rice Research Institution, Cuttack, Indian Council for

Agriculture Research, Agricultural Universities, National Productivity Council,

CIDBI, National Commercial Bank, NABARD, DIC, SISI, Certification Agencies,

Testing Laboratories, Engineering College, Engineering School, ITI, RMC.

i. Ministry of Agriculture : Ministry of Agriculture declares minimum

support price of different food grain including paddy and rice,

ii. Civil Supply Department : playing major role in this cluster. fixes

the maximum target of purchasing paddy for the rice millers through

specific market yard.

iii. Agriculture Deptt. of Orissa :- The Deputy Director of Agriculture

provides seeds to the farmers. They also have a agricultural lab. at

Sambalpur, which in turn informs the farmers about seeds suitable

for their local soils.

iv. CRRI, Cuttack : It is an inter-national level rice research center

institute produces new variety of paddy suitable to local climatic

condition.

v. OUAT : Orissa University of Agricultural Technology has a branch at

Chiplima, Sambalpur.

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vi. NABARD : It is an agricultural developmental bank providing

infrastructural assistances as well as conducts training and

awareness programmes for benefit of the farmers.

vii. SISI : Training and SSI programme, like EDP, MDP etc., export

marketing and provide technical appraisal report on demand.

viii. DIC : It is a promotional agency and the path finder for setting of SSI

units. Besides above project profiles, schemes and survey reports

are being prepared by DIC.

ix. Bank : It provides financial assistance to entrepreneur anon demand.

x. ITI / Engineering school / Engineering College : Generates

technical professionals. It may be proposed to introduce rice mill

operators short time course at ITI level.

12. Business Development Service Providers : (BDS)

The following are the basic BDS providors :

a) Farmers

b) Packing materials suppliers.

c) Transporters

d) Labour Contractors

e) Chartered Accountantsf) Export Consultants

The R&D and other institutes like ICAR, CRRI, OUAT, standard

certificate agencies, APEDA, CDP, SISI etc are in existence but rarely

approached by the industry except a few organized units who have been

benefited. There is a need to make the industry aware of various services

available and provided by these institutions.

13. Infrastructure analysis of Cluster

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Most of the units have been established on both the sides of NH6. A few

rice mills are established in the interior. But roadways are available. Railway

connections are there for both the districts. Electricity facilities are available.

Transporters are available for providing vehicle on hire basis.

14. Credit analysis of the cluster:-

Most of the mills have been financed by State Banks and other

nationalized banks. They are happy with the credit operations by the priming

stake holders.

15. Social and Environmental Conditions of the Cluster-

The first and foremost stakeholders of the cluster are the paddy cultivators linked to

the mills. These operate through the purchase agents/ traders and also through the

Regulated Marketing Committee (RMC) Centres located across the entire region. It is

estimated that about 2221797 hectares of land is cultivated during the Kharif crop thus

supporting a large number of farmers. The Rabi crop is mainly for preparing the seeds

for the commercial cultivation of paddy during Kharif season. Several small time

agents and traders coordinate the paddys movement to the mills from the farms.

Though there prevails a Minimum Support Price (MSP) for the rice grown in the area,the small lots of paddy cultivated by individual farmers lets them operate through these

traders who act as middlemen between the mills and the farmers in most cases.

The mill owners are usually the Marwaris who have migrated several generations

earlier into Orissa in pursuit of business opportunities and thus have almost traditional

experience of operating a rice mill. The younger generation of these business families,

after getting good education has started looking after the family business and have

started experimenting with different ways of growing the business. This has become a

good feature for the cluster. These units y have good relationships with the local

banks and approximately Rs.4-5 lakhs is the annual income of the owners.

However, the workers in the rice mills are not very highly qualified and most of the

workers get a sort of on-the-job training in the rice mills, the seniority and the

continued loyalty ensuring the promotion of the skilled worker to a supervisor level and

then into the day-to-day shop floor management of the mills is taken care of by these

persons. As such skilled manpower for the mills is an issue in the cluster. The daily

wages of the workers are estimated to be in the range of Rs.40-50/- per day.

Further the working conditions in a rice mill are not hygienic due to particulate

emission inside the work place and improper planning at the shop floor level. Since

rice husk contains high level of silica, the workers are susceptible to silicosis and

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related ailments such as asthma etc. The workers operating at shop-floor level are

generally not covered under medical insurance schemes and thus health hazards to

the workers may be an important area of concern. None of the rice mills of the area

are having HACCP certification and this limits the capacity of the mills to go for directexports of rice. No unit in the entire cluster is ISO certified though both of these

certifications are not mandatory but desirable for the mills.

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APEDA Min. of Food

ProcessingCivil Supplies Deptt. CRRI

Engg. School & ITI

Certification

agenciesSISI & DICSIDBI & Banks

RMC/ MARKET

10 MT RICE MILL-1

8MT + 10 MT +

SORTEX -10

6,4,3 & 2 MT RICE MILLS-

1219

CENTRAL POOL/AGENCY

EXPORT MARKET

DOMESTIC MARKET

FO

F

W

A

R

D

L

I

N

K

A

GE

B

A

C

K

W

A

R

D

L

I

N

K

A

G

Transporters

Spare parts Suppliers

Export Consultants

Chartered accountant

Labor Contractor

BDS PROVIDERSMaintenance & Job Work Providers

RAW MATERIAL SUPPLIERS

COREFIRMS

16. PRESENT CLUSTERSUPPORT INSTITUTIONS

PACKING

MATERIALS

SUPPLIERS

FARMERS

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17. SWOT analysis :

The SWOT analysis of the cluster in the following parameter.

1. Market

2. Technology3. Input availability

4. Innovation capability

5. Human Resource / skill

6. Business Environment.

This analysis identifies the strong and weak areas as well as opportunities and

threats envisaged in the cluster.

Sl.

No.

Parameter Strength Weakness Opportunity Threat

1. Markets Market support

available under

levy/custome milling

rice policy.

Most suitable

climatic environment

All rice mills depend

upon the levy supply

taken up by FCI.

Tremendous national

market is there.

Institutional

support is available

All the units

having sortex

machine may be

clubbed off for

common brand and

export

Strong

competition

from Asian

Countries.

2 Technology Low cost

fabricated machines

Technological

infrastructure

available.

High

production/ automatic

plant very costly &

mostly imported

beyond reach of SSI

sector.

Entrepreneur

not aware of sources

of low cost imported

automatic plants and

appropriate

processing

techniques.

Locally

fabricated plant are

unstandardised & low

productive.

potential for

productivity.

Cost reduction

and quality

enhancement by

use of appropriate

technology/QMS.

Tradi

tional

technology,

standard

and non-

professional

MS leading

to high cost

may retard

the industry

both at

domestic /

international

market.

3 Inputs

availability

Local resource Controlled minimum

support price(MSP) of

paddy at compulsion of

levy rice supply.

Large

domestic

/international

market available

Potential for

non-exporting unitto export

* imposition

of taxes and

levies in

comparison

to

neighbouringstates may

further lead

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Available

institutional support

may be exploited.

Formation of

consortium and

making common

brand for easy

export.

to closure /

shift of

industries to

neighbouring

states..

4 Skills Traditional operators

available no skill

upgradation training

Increased technical

and managerial

awareness and

trainings may lead to

productivity, quality

and efficiency

Skill base

needs

upgradation

to adopt

latest

technology

and

management

systems.

5 Businessenvironment Ability of exportsegment to grow and

meet international

challenges.

Heavy taxes / levies andcontrolled trade has

lead to closure / shift of

events.

Tremendous growthpotential with

institutional support.

Imposition oftaxes, levies

in

comparison

to

neighbouring

states may

taper down

the industry.

18. Vision for the Cluster

THE VISION OF SAMBALPUR-BARGARH RICE MILLING CLUSTER IS TO

ESTABLISH AND SUSTAIN AS MOST EFFICIENT. MODERNISED AND

EXCELLECE MODEL IN QUALITY RICE PRODUCTION AND PARTICULARLY

WITH EYE ON GROWTH IN EXPORT MARKET TO SETUP A CONSORTIUM BY

CONTRIBUTION FROM THE MEMBER UNITS. THE CONSORTIUM WILL WORK

ON NO PROFIT AND NO LOSS BASIS UNDER THE ADMINISTRATIVE CONTROL

OF RICE MILLING ASSOCIATION. THE CONSORTIUM WILL ESTABLISH AND

LOOK AFTER THE CFCs LIKE TESTING LABORATORY, OIL REFINERY,

TRAINING CENTRE, GUIDANCE CELL AND SPARE PARTS STORE.

19. Key Problem Areas & strategic interventions proposed :-

Detailed diagnostic study of the cluster has already been conducted by the Directorate staff

in technical collaboration with UNIDO. The detailed diagnostic study is attached with the

proposal.

19.1 Low output volume & quality of paddy

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The following table shows the state wise yield of rice across all the states of the country:

State Area in Millionhectare

Yield (kg/hectare) % Coverageunder irrigation

(1995-96)AP 3.5 2431 94.8

Assam 2.49 1359 33.8

Bihar 4.98 1362 40.2

Gujarat 0.67 1550 55.6

Haryana 0.91 2797 99.4

J&K 0.28 1992 91.2

Karnataka 1.38 2419 66.8

Kerala 0.40 1636 49.9

MP 5.40 831 23.7

Maharashtra 1.48 1621 26.3Orissa 4.50 1380 35.5

Punjab 2.28 3465 99.1

Tamil Nadu 2.36 2987 92.0

Uttar Pradesh 5.66 2148 62.3

West Bengal 5.90 2243 27.2

Others 1.23 -- --

All-India 43.42 1895 50.1Source: Website of Ministry of Agriculture, Govt. of India

Thus it would be evident from the table that while Orissa stands 4 th in terms of area under

cultivation for paddy, in terms of yield it stands only 9 th and this is because in terms of

irrigation it is 10th, lagging behind a number of states. This cluster lies in the catchment area

of Hirakud dam; it has a much higher portion of cultivable land under irrigation than the state

average. However, the quality of the paddy cultivated in the area is of a coarse and

unscented variety and thus yields very low margins to the paddy growers as well as the rice

millers. As such the cluster would grow if the quality and yield from the fields could be

increased through technical interventions.

Intervention proposed:

It is proposed that with the effective use of the expertise of CRRI (Central Rice Research

Institute) Cuttack and other such technical institutions, interventions would be done to

improve the yield and quality of the paddy of the region through active involvement of the

farmers of the region. The activities could be:

Testing of high yield-high quality paddy types and then adoption of the same in the region

Support for better farming practices to improve yield

Awareness building activities for the farmers on such issues and improve their linkage

with NABARD and similar institutions for support to their activities

Converge with various institutions engaged in agricultural development activities for joint

activities

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19.2 Low technology level

Though some of the mills of the area have modern facilities such as SORTEX and SILKY,

the poor quality paddy and the levy system of purchase have deterred most of the mill

owners to go for technology upgradation in their mills. Some of the mill owners who have themodern facilities have reported better price appreciation even with the existing paddy variety.

As such with improved paddy quality, the output from the mills would increase and the

enhancement of productivity would yield better returns. The low technology levels in boilers,

the lack of facilities of re-use of the boiler heat and some technical gaps in the milling

technology itself have led to low output, high percentage of broken rice and other related

issues.


It is proposed to enable the mill owners adopt better technologies in their mills, riding over

the availability of better quality paddy from the farmers and thus the following are proposed

for improving the technology level in the mills:

Exposure visit to other rice milling clusters/ technical institutions etc. to cull out best

practices of rice milling

Technical audit by suitable consultants to help the mills understand their technical

upgradation needs

Interactive seminars/ workshops with institutions such as CRRI, APEDA and other

sectoral technology institutions etc.

Visit and interaction of various machinery suppliers and other technical input

providers to the cluster

19.3 Inefficient boiler operation and other productivity issues

The energy survey in the cluster has been carried out by NPC consultants. It is found that

low thermal efficiency of the boiler leads to an effective use of only about 40-50% of the total

energy available. During the study it has been observed that the boiler operators do not have

the required certificate from Directorate of Boiler, Govt. of Orissa. The owners very often

engage unskilled people for operation of boiler and technical items as a result of which boiler

explosions take place quite often. Thus skilled work force is necessary for further growth inthe industry. The female workers are fully unskilled. Improvement in these practices and

optimisation of the boiler design may lead to substantial improvement in the energy

conservation area and thereby the profitability of the cluster.

Further the overall efficiency of the units in terms of low broken percentage of rice and

utilization of the by-products from the milling process are also important considerations for

interventions.


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It is proposed that the following activities may be carried out to improve the overall

productivity of the mills of the cluster:

Energy audit and energy conservation steps

Exposure to suitable milling technologies to reduce the broken percentage & other

productivity enhancement issues Training of work force on boiler operations and certifications of some senior boiler

operators from requisite certifying institutions

Assessment of possibility of utilising the by-products of the rice milling process for further

augmentation of incomes of the mills

19.4 Limited Market Outreach

The cluster produces substantial amount of rice but it has been simply been

complacent with its 75% production being taken up at levy prices fixed by FCI. Varying

Industry standards for the different qualities of rice is also posing issues; FCI standard is 2-

3% broken rice, in open market broken rice is acceptable up to 1-2% only. As per the FCI

guidelines, though there is an annual quota fixation for the district for lifting rice depending

upon the mill size, this levy amount is not mandatory and if the mills wish they can refuse and

sell in the open market. However, most of these traditional mill owners do no tend to leave

this assured market even if it turns out to be low paying due to less stringent quality

requirements and other such issues. Thus the low capacity utilization, inefficient techniques

and machines for production all get adjusted against the assured markets and the internal

dynamics of the trade. In this fashion, the cluster has not been able to penetrate into other

consumer markets and has a limited growth aspect as of now.

The limitation of marketing is also due to the fact that the rice millers do not go for

any further value addition, or diversification of their end products. Though there is a good

potential for making puffed rice and other such value-added products, the tendency to

restrain only to rice milling has been due to the poor quality paddy and inefficient milling

itself. As such, if the back-end activities would improve, then the overall product range of the

cluster could be diversified and thus provide a much larger market base to these units.


The following interventions are proposed to overcome the issues of limited market outreach:

Awareness building on HACCP certifications, ISO certifications and their market utility

Facilitate certifications of some units for ISO 9000, HACCP etc.

Buyer Seller Meets with good quality rice produced by the clusters units

Hiring of marketing consultants for tie-ups with end use industries across the country

Facilitate the upgradation in value addition activities in some units for puffed rice and

other such ready to use products

19.5 Lack of active associations:

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The existing association at Bargarh had been dormant for quite some time and only due to

the pilot level activities that were initiated during the study phase; some energisation of the

association has taken place. They have got into the mode of commonly planning some

activities and thus they need to be further strengthened to take up the developmentalactivities in the cluster. As such these vehicles of growth need to be strengthened for the

long term growth of the cluster.


The activities proposed to strengthen the association and the formation of the special

purpose vehicle (which has already started taking shape in the cluster) are as follows:

Placing one secretarial staff (NDA) with the association to help in daily activities

Coordination of meetings of the SPV formation and association

Formation of consortia and other types of groups in the cluster to improve its social

capital

Interaction of the associations with other rice miller associations for information exchange

etc.

Regular handholding of the association and the groups created in the cluster

Entrepreneurship and motivation training programmes for the rice millers

19.6 Common Testing Facility:

Regarding testing quality of rice, there is no unit of govt in this cluster. But Central Rice

Research Institute is located at Cuttack, where quality can be tested. Testing of motor,

instruments along with their calibration is an area where collaboration is a possibility. A

common facility centre is required in this sector.


It is proposed that the SPV of the rice millers, which is coming up in the cluster due to the

ongoing efforts under the GoOUNIDO Cluster Development Initiatives, would be further

strengthened and supported to take up the work of setting up of a common testing and other

facilities under a PPP mode in the cluster.

20. Expected Major Outputs

The major outputs that can be expected from the proposed interventions are as follows:

20.1 Firm level

20.1.1 Number of beneficiaries

This need based intervention programme would initially target the top 50 firms of the clusterand then build upon the cadre of interested and willing partner mill owners to about 100 units,who would be targeted directly during the programme for the various interventionsenvisaged.

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20.1.2 Range of Outputs:

About 50 mills would be able to cut down production costs by 10%, leading to better profitmargins

About 20 mills would be able to go for exports

About 50 mills would improve their capacity utilisation by about 10%

About 10 mills would go for various certifications such as HACCP, ISO 9000 etc.

Training to unit owners in the field of 5S, TQM and benchmarking, ISO 9000 etc.

Training to workforce on ISO 9000, cost reduction technologies, packaging etc.

About 50 firms for paid business development services.

20.2 Cluster Level

Setting up of common testing facilities for paddy, rice husk, water, common motorrepairing etc. under PPP mode

Overall increase of turnover of the cluster by 20%

Increase in the share in the domestic market by 30% and in export markets by 15%

Increased employment in the cluster by 10%

Improvement in the status of the farmers of the area by cultivation of better quality &better yield rice and therefore better price appreciation

Improved environment conditions by use of the by-products from the rice mills

Strengthening local associations of the cluster and their effective contribution to theactivities of the cluster who would have a long term action plan and would havecontributed by about 50% to the initiatives under the proposed project

21. BROAD ACTION PLAN :-

1st Year

1. Networking with CRRI for improving yields of existing varieties of paddy &introducing new varieties including training to farmers, linkages of farmers withcredit providing institutions like MFIs, NABARD etc

2. Study tours to other cluster

3. Association / SHG / NGO/ Network capacity building for workers of Rice Mills inconservation of Energy

4. Exposure Visit for farmers

5. Brochure preparation

6. web-site launching

7. Service of external consultants for export / other markets

8. Miscellaneous developmental costs (translation, publications)

2nd Year

1. Organisation of training programs on HACCP

2. Study tour for farmers to learn different practices

3. Association / SHG / NGO/ Network capacity building for workers of Rice Mills inconservation of Energy

4. Exposure Visit for Rice millers



7. Service of external consultants for export / other markets

8. Miscellaneous developmental costs (translation, publications)

3rd Year1. Organisation of training programs on ISO Certification

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2. Study tours for farmers demonstrations of technology / equipment

3. Conducting energy audit of Rice Mills

4. Exposure Visit for Rice millers



7. Service of external consultants for export / other markets8. Miscellaneous developmental costs (translation, publications)

cluster_rice dsr by dept of industries orissa

Documents