Business efficiency in rice mills-A comparative analysis of conventional and modern rice mills in davanagere District
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Date
2009
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UAS, Dharwad
Abstract
India ranks second in production of rice next only to China. Rice milling is the oldest
and the largest agro-processing industry of the country. The present study had made an
attempt to document investment pattern and financial feasibility, inventory management,
processing and marketing management, cost and returns in both conventional and modern
rice mills. Primary and secondary data were collected to evaluate the objectives of the study.
Ineffective management on the part of the processors has led to the failure or poor
performance of many rice milling units. Therefore the study focuses on the management
aspects and its managerial lapses in order to evolve appropriate policies for improving the
efficiency of the rice mills. Totally six rice mills in were selected in Davanagere district of
Karnataka. Further, they were categorized into conventional rice milling units and modern
rice milling units based on the technology adopted.
The results showed that the total investment on modern rice mills was ten times
higher (Rs.379.25 lakhs) as compared to conventional rice mills (Rs.36.97 lakhs). The Net
Present Value for modern unit and conventional unit was Rs.408.35 and Rs.27.55,
respectively. The capacity utilization was higher (68%) in modern units in comparison with
conventional units (44%). The total returns obtained from both rice milling and poha making
process were higher in modern rice units (Rs.1478) as compared to conventional units
(Rs.1381). This showed that the modern rice mills were more efficient than the conventional
rice mills. Procurement costs were lower when paddy was purchased directly from farmers
instead of purchasing commission agents. Thus, mills would benefit from strong contractual
arrangements with paddy growers.