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Paddy Processing Industry in Naogaon: a Study on Structure, Conduct and Performance

S. A. Sabur
Department of Cooperation and Marketing, Bangladesh Agricultural University, Mymensingh, Bangladesh.

S. M. S. Rahman
Department of Cooperation and Marketing, Bangladesh Agricultural University, Mymensingh, Bangladesh.

M. M. U. Molla
Department of Cooperation and Marketing, Bangladesh Agricultural University, Mymensingh, Bangladesh.

S. M. K. Rahman
AERS, Bangladesh Agricultural Research Council, Farmgate, Dhaka-1215, Bangladesh.

M. Hussain
Department of Cooperation and Marketing, Bangladesh Agricultural University, Mymensingh, Bangladesh.

Abstract/ Executive Summary:

This study analyzes the structure, conduct and performance of rice processing industries of Naogaon district in Bangladesh. Forty-five rice mills and some Aratdars were interviewed from sadar Thana of Naogaon. The low and declining sellers' concentration indicated that the competition in paddy processing industry is clearly 'atomistic' where no seller is large enough to control the market. Regarding buyers concentration, the rice markets of study area are highly concentrated in Dhaka market. There was no evidence of product differentiation and observed no barrier to entry in rice milling industry. No collusion was observed among the millers and the price was set by the interaction of supply and demand. Product policy and sales promotion policy was not adopted by any miller. All the mills were running below capacity. The capacity utilization of small rice mills was found the highest of 56%. Miller's share in retail price was found satisfactory. Small mills earned the highest marketing margin because of their lower purchase cost and higher sales price.

Keywords: Paddy, Paddy processing, Structure, Conduct and performance, Rice processing, Paddy processing industry,

Location: Naogaon Sadar, Sultanpur, Desherkandi and Noahata thana of Naogaon district.

Start Date: 00-07-1997

End Date: 00-12-1997

Program Area: Postharvest and Agro-processing

Commodity: Rice

Objectives:

To know the Structure, Conduct and Performance of the Paddy Processing Industry for the betterment of the rural people.

Methodology:

The study is based on data collected from Sadar Thana of Naogaon district. From Naogaon Sadar Thana, Sultanpur, Desherkandi, and Noahata areas were selected; Numbers of millers were selected randomly on the basis of total number of mills (small, major and automatic mills) in an area i.e. on the basis of population size. Stratified random sampling technique was followed in this study. Twenty samples were taken from Sultanpur, where the concentration of processing units was found high. Five and twenty samples were drawn from Desherkandi and Noahata areas respectively. Besides, a number of Aratdars and wholesalers were interviewed in the study areas. Primary data were collected during the period of July-December, 1997. Producers share in consumers' price = Producers price / Price paid by consumer/retail price x 100. Basically the large rice mills are characterized by equipment of several decades old. The industry is virtually stagnant in respect to the growth of new firms as well as modernizing and expansion of existing ones. On the other hand the husking machines scattered throughout the country demonstrate a tremendous rate of growth and expansion over the past years. The increased number of husking machines is the evidence of progress in small milling industry.

Source of Information: Bangladesh Journal of Agriculture, Vol. 26 No. 1 & 2 January to December, 2001, ISSN 0253-5408

Article Link (Online Journal):

Funding Source:

1. Government

Budget:

Total Budget (Tk.) :

Achievement/Findings:

The basic tools of this study were the Bain's analytical framework of market, structure, conduct and performance. In the study area, the largest four firm concentration showed a declining trend. The values of concentration ratio indicate no significant control of the largest four or eight firms over the market. The result of concentration ratio created a scope to say that the rice milling industry was running within a competitive environment. It was observed that the millers sold their produce to Dhaka market in a large volume either directly or indirectly. The estimated share of Dhaka market in purchasing milled rice was found to be 65.27 per cent and we can infer that Dhaka market buyers controlled the rice market in the study area. The low efficiency of millers was to some extent due to various problems they confronted in the process of transaction. Improvement of roads and ferry services, availability of quick modes of transports and development of other market infrastructures would go a long way to facilitate the business activities of the millers. Effective measures both at public and private levels, aimed at removing the obstacles confronted by the millers and other intermediaries would improve the performance as well as increase the overall efficiency of paddy/rice marketing system in Bangladesh.

Knowledge Management: Journal