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Tamil Nadu
Inflation cuts into profit margin of rice mill owners
Karthik Madhavan
KANGEYAM: The paddy to rice journey has a new speed breaker: inflation.
Rice mill owners say cost of paddy, transportation and labour have gone up to only increase operation cost and shrink profit margin. The first problem that they say they face is shortage of paddy.
“As the minimum support price of paddy is low and no longer lucrative for farmers, acreage under paddy cultivation has decreased,” says K. S. Jagadeesan, advisor, Tamil Nadu Federation of Rice Mill Owners and Paddy, Rice Dealers, on the situation being faced by the owners and dealers these days. He says that the increase in minimum support price from Rs. 625 to Rs. 825 a quintal of paddy means an increase of Rs. 2 a kg.
Recovery rate
At 68 per cent recovery rate, it means the price of 680 grams of rice has gone up by Rs. 2. He adds that this is only one of the factors, and not the important one, for rise in prices. The decline in paddy cultivation has pushed the price upwards.
A year ago, the price of paddy at the beginning of procurement season was Rs. 9 a kg. At the end of the season it was Rs. 12.
“This year, the starting price is Rs. 11.50, and we do not know where it will end,” Mr. Jagadeesan says, commenting on the situation that is being faced these days.
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