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

&

Xavier Institute of Management, Bhubaneswar

INDEXSl. No Contents Page

1 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

1

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.

Average area covered in Ravi

221412

124273

60759

36380

109704

19.24Qntl/Hec

14058

354866

179437

89395

76034

2112093

22.28Qntl/Hec

43343

(Source : DDA, Sambalpur)

2

2. Age of the ClusterThe 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 state’s 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 cluster’s proximity.

3. Nature of the ClusterAs 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: -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

3

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.

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.

4

(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 that employment growth has been steadily increasing except in the year 2001-02.

50100200300400500600700800900

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

Contribution of Cluster to export : 10 rice millers export to the tune of Rs. 130 crores 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 of engineering 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 crops i.e. Karif & Rabi.

(b) Location of the ClusterThe cluster consists of the rice mill units located mainly in Bargarh area with a few units falling in Sambalpur district. The geographical map indicating the location of the cluster in Orissa is as given below:

6

Bargarh – Sambalpur Rice Milling Cluster

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.Sl. No.

Year No of units

working

Production in Lac MT

Value 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

7

Spread of Rice Mills in Bargarh - Sambalpur Cluster

05

1015202530354045

Sam

balp

ur

Hira

kud

Bur

la

Dha

nkau

da

Man

esw

ar

Ren

gali

Bam

ra

Juju

mar

a

Bar

garh

Atta

bira

Bha

tli

Soh

ela

Bar

pali

Pad

ampu

r

Pai

kam

al

No. of Mills

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

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

8

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.

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

9

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

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

APEDA’s 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.

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

agencies including power Basmati rice in Punjab.

The APEDA’s 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.

10

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 to

the 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.

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

11

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

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

12

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

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.

13

1. Raw Rice/Parboiled Rice processing flow chart

14

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

2. Process flow chart for exporting

15

Rice produced by common rice mill

Silky unit

De stoning unit

Colour Sorting Machine

Grading

Weighment and Packing

9. ANALYSIS OF VALUE CHAIN

Sl.No.

Process Flow Process cost/Value (in

Rs./-qtl. Of rice)

Accumulated value

Remarks

1 Paddy (URS) 538 (URS: Under Relaxation System)

2 Transport 10 5483 Cleaning, loading, soaking, drying,

dehusking, polishing, grading, etc.20 568

4 Yeild(a) Raw rice @ 67% i.e. 67 kg. cost of

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

parboiled rice 100 kg

A- raw riceB – 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 brand–7%@ 500 35

10 Gross profit 112.94 (a)111.81 (b)

16

Analysis of Value Chain( as per FAQ standard)Process Flow Process

Cost / Value (in Rs/qntl)

Accumulated 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. (iii) The above practice would have been implemented but the practice is being considered by the administrative authority.

17

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 problemsThe 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 problemsTechnology 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 IssuesFinance is not a problem nowadays excepts some mills all other mills

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

f) Marketing IssuesAt 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.

18

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.

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.

19

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 Accountants

f) 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

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.

20

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 paddy’s 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 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 direct exports of rice. No unit in the entire cluster is ISO certified though both of these certifications are not mandatory but desirable for the mills.

21

APEDA Min. of Food Processing

Civil Supplies Deptt. CRRI

Engg. School & Colleges

ITI

Certification agencies

SISI & DICSIDBI & Banks

RMC/ MARKET YARDS

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

FOFWARD

LINKAGE

BACKWARD

LINKAGE

Transporters Spare parts Suppliers Export Consultants Chartered accountant Labor Contractor

BDS PROVIDERSMaintenance & Job Work Providers

RAW MATERIAL SUPPLIERS

CORE FIRMS

16. PRESENT CLUSTER MAP

SUPPORT INSTITUTIONS

PACKING MATERIALS SUPPLIERS

FARMERS

22

17. SWOT analysis : The SWOT analysis of the cluster in the following parameter.

1. Market2. Technology3. Input availability4. Innovation capability5. Human Resource / skill6. 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.

Traditional 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 unit to export

Available institutional support may be exploited.

Formation of consortium and

* imposition of taxes and levies in comparison to neighbouring states may further lead to closure / shift of industries to neighbouring

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making common brand for easy export.

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 Business environment

Ability of export segment to grow and meet international challenges.

Heavy taxes / levies and controlled trade has lead to closure / shift of events.

Tremendous growth potential with institutional support.

Imposition of taxes, 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

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

State Area in Million hectare

Yield (kg/hectare) % Coverage under irrigation

(1995-96)AP 3.5 2431 94.8

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Assam 2.49 1359 33.8Bihar 4.98 1362 40.2Gujarat 0.67 1550 55.6Haryana 0.91 2797 99.4J&K 0.28 1992 91.2Karnataka 1.38 2419 66.8Kerala 0.40 1636 49.9MP 5.40 831 23.7Maharashtra 1.48 1621 26.3Orissa 4.50 1380 35.5Punjab 2.28 3465 99.1Tamil Nadu 2.36 2987 92.0Uttar Pradesh 5.66 2148 62.3West Bengal 5.90 2243 27.2Others 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 4th in terms of area under cultivation for paddy, in terms of yield it stands only 9th 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

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 the modern facilities have reported better price appreciation even with the existing paddy variety.

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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.

Intervention proposed:

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 in the 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.

Intervention proposed:

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

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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.

Intervention proposed:

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 cluster’s 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: 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 developmental

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activities in the cluster. As such these vehicles of growth need to be strengthened for the long term growth of the cluster.

Intervention proposed:

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.

Intervention proposed:It is proposed that the SPV of the rice millers, which is coming up in the cluster due to the ongoing efforts under the GoO–UNIDO 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 cluster and 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 interventions envisaged.

20.1.2 Range of Outputs: About 50 mills would be able to cut down production costs by 10%, leading to better profit

margins About 20 mills would be able to go for exports About 50 mills would improve their capacity utilisation by about 10%

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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 motor

repairing 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 the

activities of the cluster who would have a long term action plan and would have contributed 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 with credit providing institutions like MFIs, NABARD etc

2. Study tours to other cluster 3. Association / SHG / NGO/ Network capacity building for workers of Rice Mills in

conservation of Energy 4. Exposure Visit for farmers5. Brochure preparation6. web-site launching7. Service of external consultants for export / other markets8. Miscellaneous developmental costs (translation, publications)

2nd Year1. 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 in

conservation of Energy 4. Exposure Visit for Rice millers5. Brochure preparation6. web-site launching7. Service of external consultants for export / other markets8. Miscellaneous developmental costs (translation, publications)

3rd Year1. Organisation of training programs on ISO Certification 2. Study tours for farmers demonstrations of technology / equipment 3. Conducting energy audit of Rice Mills 4. Exposure Visit for Rice millers5. Brochure preparation6. web-site launching7. Service of external consultants for export / other markets8. Miscellaneous developmental costs (translation, publications)

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