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Rice Mill Section

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RICE MILL SECTION

History and Background

T.S.S Rice mill has commenced its activity from 09-05-1965 near about 54 years ago as a prominent and needy service to farmers residing in its area of operation. As the members of the society thought of adding such a service in the best interest of the members', the then president late S.R.Hegde kadave and management decided to take initiative in that direction.

1. Beneficiaries of rice mill

  1. Honourable members of the society.

  2. Members of primary co-operative societies.

  3. Paddy growing community at large.

  4. Society.

2. Rice mill activities and objectives

  1. Conversion of paddy into rice at reduced charges.

  2. Stock of members' paddy produces.

  3. Avenue to sell paddy crop.

  4. To create demand for members produce.

  5. For grant of crop loan.

  6. To safeguard members crop.

  7. Non-profit motive.

  8. To motivate paddy production. 

  9. Growth of society. 

1. Conversion of paddy into rice at reduced charges

The prime activity of every rice mill is  conversion of different types of paddy into edible rice. There are different types of polish to be made to rice as per customer specification. Such as full polish, medium polish, low polish etc., different variety paddy requires certain type of polish as the rice must be of good quality. A minimum of two bags required for hulling and this is called 'job milling'.

While the private organizations charging to customers in different modes, society charging uniformly and usually 'less' compared to private mills. Say, Rs 50/- per bag is prevailing w.e.f. 1-1-2018. since 1-1-2017 it was Rs 40/- and before that charges were Rs 35/- per bag. Management takes decision regarding price changes with the passage of time. Many rice mill owners charge per quintal/ kg of paddy milled. Such as Rs 1.00 per k.g or Rs 80/- or 90/- per quintal. And many others charge based on the total bags processed. For first 5 bags of 75kg Rs 60/- per bag and for 5-10 bags of 75 kg Rs 55/- per bag and above 10 bags Rs 50/- for each bag. Again several mill owners receive hulling charges in two or more modes considering the paddy variety, customer, trader, investment, and other factors. People who are price, quality, convenience and time sensitive think of choosing our rice mill as they get benefit in 3-4 ways.

Following are the major locally grown crop varieties brought for hulling by growers. Such as Sindhu, Hemavati, Padmarekha, JJL sona, Amansona, Shriramsona, BPT sona, Alursanna, Parimalasanna, Mysore sanna,Madrassanna, Ratnachuda, Rajkamal, Mysore Mallige, Rambha, Ambika, Jyoti, Bhagyajyoti, Bhasumati, Hegge, Niraity, Neervatiga, Burma, Intan, Ondukaddi, Saviradaondu, 1010, and the like varieties.

2. Stock of members paddy produces

Even though a nominal rate of go-down rent is charged every month for the bags in stock for the purpose of maintenance of go-downs and pay off rent, members feel satisfied as they can get their paddy converted into rice as and when they wish. Members usually convert two or three bags at one time as it is sufficient for domestic use. Secondly, they save in the form of vehicle rent as they need to bring every time two or more bags for milling purpose which tends to be costly affair. Due to improper road conditions members feel difficult to bring their paddy to rice mill during rainy seasons. Hence, stock of their produce in our go-down is a boon to them. The go-down rent structure at present is as under:

upto 3 months: Rs 2/- per bag, from 3-8 months: Rs 3/- per bag

from 8-12 months: Rs 4/- per bag and

13th onward: Rs 8/- per bag per month is charged.

The above mentioned rate is came into effect from 1-04-2018 before that it was as under:

upto 3 months: Rs 1/- per bag,3-8 months: Rs 2/- per bag

8-12 months: Rs 3/- per bag and

13th onward: Rs 5/- per bag per month is charged.

Go-down rent also depends on availability of go-down and stock pressure from members side and management empowered to make necessary changes as required.

3. Avenue to sell paddy crop

Members of the society and public at large is benefited in this respect. A considerable number of paddy buyers are available in our rice mill. They purchase the paddy stocked in our go-downs and from outside. Those members who stored in our premise can sell their paddy bags in excess to their domestic consumption to them for a satisfactory rate. TSS also buys paddy and rice from members and sell it in super market. Hence, it reduces their time and stress of selling. They easily get sales amount also. The purchasers in rice mill as they purchase from outside increases the milling and consequently revenue too.

4. To create demand for members produce

Always there prevails a habit among agriculturists to sell their produce for a higher and satisfactory price. The rate of many commodities are highly fluctuating in nature due to operation of demand and supply elasticity. As a member can store his produces up to one or two year in our go-down definitely he can take advantage of this fluctuating price. He can sell when price is high and store when price is low.

5. For grant of crop loan

Many member co-operative societies (PACS) as they lack go-down facility, they insist their members to store paddy in our mill. Based on the stock inward receipt provided by our society they tend to provide crop loans based on prevailing market rates and rules.

6. To safeguard members crop

One of the biggest problem confronted by paddy growers is protecting or safeguarding their crop. In our mill members paddy bags are taken care of. members feel happy to stock their produces here due to insufficient space in residence and problem of rain, rat, snake and other creatures. If bags get damaged due to deterioration in quality over the period of time, their produces are put in new bag at the society expense.

 

7. Non profit motive

Another striking point catching the eyes of members is rice milling service is non-profit motive. With very less/low profit margin this service being run by society in the interest of members. As quoted earlier, we charge very less for milling.

8. To motivate paddy production

Now a days maximum number of paddy growers lost interest in cultivating land as it tends to be loss to them due to less price, increasing labor costs and fertilizers and uncertain rain. In such a situation society by providing assistance in getting good quality seed, advice on scientific method of cultivation, selling chemical and organic manure, pesticides comes to help growers. By providing loan at the required time it support their activities. Storage facility and purchase of rice are also added advantage. Members gathering in rice mill discuss about rice varieties and total yield. Seminars and workshops were conducted on the subject. Agri experts in the society providing valuable advice to grow more with little land and medicine to different diseases affecting crops.

9. Growth of society

When society provides above mentioned services, it is likely to be accepted by the public as it is benefiting them. As more customers approach us for their needs and satisfied with quality service of the society, profit accrues to society in the following ways:

1). a) Increased milling and husk revenue

     b)Increased go-down rent income

     c)Increasing members

     d)Increase in super market profit as it buys rice from members and sells in super market.

 3. Risk and uncertainty analysis

   In the present environment the factors affecting rice mill operations are broadly classified into two categories:

         1. Internal factors

         2. External factors

I Internal factors

 Following are the internal factors concerned with rice mill management

          1. Manpower management

          2. Stock management 

          3. Cost volume profit analysis

          4. Go-downs and maintenance

          5. Husk and bran sales

          6. Machines, spares and repairs

          7. Software

 

II External factors

Following are the external factors affecting smooth running of rice mill

         1. Government laws and levy

         2. Competition

         3. Natural calamities

         4. Technology changes

         5. Paddy producing community

         6. Marketability

         7. Associations

         8. Other factors

I Internal factors

 Following are the internal factors related to rice mill management

1. Manpower management

Presently 7 staff members are serving in the said business. Among seven four are permanent and three are trainees. They are paid satisfactorily. Two mill drivers, one section head, one billing assistant, one inward outward in-charge, two for stock and go-down in charge. Four workers are serving to handle paddy bags and packing activities. They are paid on piece rate basis.

The General Manager's salary is not apportioned to this section. As the section requires trained mill operators, currently section is equipped with experienced working staff. But availability of trained mill operators is not so easy as it is a rare business. Secondly, work is done continuously from morning 7.00 a.m to late night during seasons. Hamalies doing jobs currently are people from down-ghats having capacity to tolerate dust and capable of working throughout day. In the absence to such working class it tends to be difficult to manage work in rice mill business. While private rice mill owners employ less labour and pay less compared to society. Hence, in future man power management seems to be not easy as it is now.

2.Stock management

Keeping stock of paddy bags became a difficult task due to following reasons:

       A. Increasing stock due to less domestic us.

       B. Migration of family members to cities.

       C. Interest over high quality and lack of demand for local variety.

       D. Low paddy rates increasing stock in anticipation of high rate.

       E. Lack of proper go-down facility provided by APMC.

       F. Anna-Bhagya scheme of Government reduced demand for local brands.

        G. Change in consumption pattern and style. (variety of snacks, like pani puri, manchuri, corns etc).

      H. Go-down construction difficulties – high investment low income profile.

      I. Replacement of old and damaged bags and warfare is burden to society.

      J. Problem of rat, birds, heat, dust, snake attack. Water leakage in go-downs.

      K. Negligence by members to society instruction to clear stock in time.

3. Cost volume profit analysis

At this stage, there is an absolute need of following this technique. In the past rice mill has been run as auxiliary service to protect members interest. And to promote members towards increased paddy production. But, now orientation has been changed and members switching over from paddy to areca and pepper. Paddy producing land has been substantially encroached by areca, banana, maize, coconut and other crops due to several reasons. Secondly, due to increase in income many members got constructed new residence, sheds, go-downs, to keep their produces safely. They take their paddy to nearest mill for hulling purpose. Hence, paddy milling tend to decrease.

Increasing expenses like salary, electricity charges, hamali maintenance, repairs and spares, rent, tax and insurance etc. and in contrary to this declining revenue due to reduced stock and milling, less quantity of husk and lack of demand, cause losses to accrue.

4. Go-downs and maintenance

While the construction of go-down for storage of paddy now a days is a dreamy affair, lack of availability of go-downs in APMC premises for stock of members areca-nut and paddy calls for some calculation. The method of counselling, contacting over phone, sending letters informing them to clear old stock etc, methods are employed due to insufficient space for storage. Every year number of go-downs provided to paddy decreased as main objectives of the society and profitability is get affected due to heavy stock of paddy. Heavy stock of-course, results in increased milling revenue but warfare hamali expenses, refreshment expenses, go-down rent damage bags charges too increases simultaneously. Working in heavy dust also cause adverse effect on health.

5. Husk and bran sales

The cover or wrapper over paddy when separated is called husk. It is like a by-product of milling activity. Separate go-down need to maintained for storing husk and bran. Husk is used for heating water in lodge (boiler). It also used to make mud bricks. Bricks of mud are usually made during winter season. During that time only husk get high demand and sold up to Rs 3000/- per tonne. During rainy and summer it loses demand and sold for Rs 1200/- to 1500/- per tonne. If a rice mill's profit and loss account is showing any profit it is because of revenue generated by husk sales. Hence, it is breathing air to run this business. Bran sales poses highest threat to rice mill industry. No one asks for bran. This is dust can be put over paddy land and not useful for any other purpose. Many a times to dispose off bran institution incurs out of pocket expenses.

6. Machines, spares and repairs

To say about machines adoption in rice mill, earlier Dandekar model machine was installed. Later in 2016 machine developed by Suri Engineers Hyderabad was installed. In the year 2017 Rs 9.00 lakh was invested over three major machines. One is paddy cleaner cum destoner bought from Chennai, second is paddy separator from Bangalore and the last was sifter/grader from Hyderabad. This indicates that for different machines, spares and for repairs we need to approach people outside the state. Now a days we can easily access the same via internet. But in the past it was very difficult. For purchase of spare parts like bearings, pipes, fans, etc., we need to travel 150-200 k.m as they are not locally available . Timely repair, availability of trained repairer and their service charges are beyond our control. Machine repairs, spares, rubber also constitute a major item of expense.

Another major problem confronted in case of machinery is new and improved fast performing machines emerging day by day producing quality rice and no or lack of demand for old machine.

The machines installed and the paddy conversion process is as under.

 Paddy Conversion process:-

The sequential order of paddy passing through different machine to get converted into rice is as follows:

        1. Dropping paddy in gauge

        2. elevator-1

        3. paddy cleaner cum destoner

        4. elevator -2

        5. rubber sheller

        6. elevator 3

        7. separator tray

        8. elevator 4

        9. whitener

       10. elevator-5

       11. polisher

       12. sifter/grader

       13. elevator-6

       14. rice bag

 

7.Software

We have adopted software developed by 'excellent computers' for rice mill activities. It consists of cash and credit billing options, stock reports, arrivals and milling reports, financial reports, debtors and creditors report, husk sales registers and many other program as required for smooth operation and decision support information.

 

II External factors

 Following are the external factors affecting smooth running of rice mill

1.Government laws and levy

For smooth operation of the rice mill industry in the present scenario following laws have considerable influence

      A. Food and safety Act.

      B. Insurance Act- fire and stock.

      C. Labor laws and labor welfare Act.

      D. Weight-and measurement Act.

      E. GST, Income Tax,

      F. APMC license and professional tax, etc.,

Government as it declared “Anna-Bhagya” scheme of providing rice to poor people at Rupee one per k.g demanding to supply certain quantity of rice. And also certain quantity of paddy to be get milled for low rates which is loss to us. In the year 2014 society paid to Government Rs. 272000/- in the form of levy which is absolute loss to society. Like this many laws affect smooth operation of rice mill industry. 

2.Competition

Rice mill business even-though rare business, but not monopoly in nature . we can see monopolistic  competition among rice mills operating in a taluk place. Our rice mill competitors are:

       A. APMPC rice mill in APMC yard sirsi

       B. Nehru rice mill

       C. Sagar rice mill

       D. Neernally rice mill

       E. Kanasur two rice mills

       F. Janmane rice mill

       G. Islur rice mill

       H. Ekkambi rice mill

       J. Bandal rice mill etc.

our rice mill faces competition from above mentioned rice mills in rate, quality, stock and in operational expenses.

3. Natural calamities

Natural calamities not only threaten paddy growers but also rice mills. We know heavy rain, no/low rain, fire catches, heavy heat, flood, earthquake, cyclone, etc., resulting in decreased yield do cause rice mill profitability to decline.

4. Technology changes

Many improvements are taking place day by day in different models and machines used in milling activities. Performing speed, quality, durability, cost, after sale service etc, Suri Engineers Hyderabad, Perfect equipment chennai, Rice Tech Machineries ltd, MillTec machinery ltd, Bangalore, and many more companies engaged in manufacture of rice mill machineries and spares. These technical developments of-course, required, but in rice mill industry, when once machines have been installed, then sudden changes are not easy to adopt and loss to company.

5. Paddy producing communities

In our surroundings as we have watched and can draw conclusion based on the observation that paddy producing area is reducing every year.we can quote following reasons as to why paddy growing community is declining today.

          A. Un -timely rain at the time of harvesting.

        B. Lack of availability of agri-labours and heavy coolie demand.

        C. Wild animals destroying crops.

        D. Increasing cost of fertilizers, transportation etc.

        E. Low productivity due to infertility.

        F. Lack of proper irrigation facility.

        G. Reduced income and increased work in paddy compared to other crops.

           i) low paddy rate, migration of villagers, etc.,

6. Marketability

As in villages they grow thousands of variety of paddy in their little land in small quantity, a single mass variety is not available to supply regularly in the market. marketability tend to be difficult Both from farmers and organization point of view. Customers get accustomed with consumption of a particular brand don't immediately switch over to new variety and does not wish to instantly change to a new one. Farmers themselves lack interest in marketing of few bags of paddy with them. Secondly, organization due to insufficient quantum of paddy availability, less marging and stock holding capacity take less initiative. Private vendors too does not go in for any king of marketing activities. In another sense, advertisement regarding milling services are not undertaken properly. It has been run as a public needy service.

7. Associations

Associations play dual role in influencing rice mill activities. Information regarding technology changes and milling and husk rate discussions are taking place frequently over phones but, private mill owners see society mill as rival firm due to very low milling charges decided by society Board. All eleven rice mills operating in Sirsi taluk acting as member to association. Every year one or two meetings were held to discuss related matters. Sirsi taluk rice mill owners association is constituted for sirsi taluk and North Canara District rice mill Association is constituted for our district. Every year “kutumba mela” of North Canara District rice mill owners will be conducted in one of the taluk of district.Associations expect the milling rate of the society to be increased as customer turn toward them.

8. Other factors

Neighbour objections about dust encroaching their terrace and noise disturbing them are commonly facing problems.

  Sources of revenue

            1. Milling charges

            2. Hamali collection

            3. Go-down rent receipts

            4. Husk sales

            5. Miscellaneous income

 Source of funds

           a) Share capital

           b) Term loan from banks

           c) Subsidy and working capital loans

           d) Members deposits

           e) Retained earnings


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