Karachi: To help weak and leaning rice milling industry of Sind, an upgradation/BMR package has been devised by combining Kibor subsidy facility already being offered by Sind Enterprise Development Fund SEDF with State Bank of Pakistan’s ongoing Refinance Scheme.
Chairman Sind Board of Investment Zubair Motiwala in a statement on Wednesday said this is the first phase for 100 mills to create win-win solution for the rice milling industry because if this industry falls completely, it may be almost impossible to pick it back up.
‘State Bank of Pakistan SBP will extend credit finance to commercial banks for onward lending to rice millers at 6.25% payable to SBP, while 2.75% will go to banks as service charges/bank spread. SEDF will deposit 30% of the principal amount with SBP as credit guarantee and will earn a profit as well. Out of this, SEDF will pick up 6.25% due to rice millers and payable to SBP to support rice millers,’ he elaborated. Rice millers, he adds, will only end up paying principal amount and 2.75% charges.
It is worth adding that the scheme has been approved by the Board of Directors of SBI in its 6th meeting followed by a meeting of the appraisal committee.
‘A range of benefits is expected from this scheme, as the income of farmers will increase by 20%. Other benefits include foreign investment, better repute in the world market, capturing of untapped products like the rice bran oil, end of miller dependency, strengthening of rural economy and so on,’ he added.
It pertinent to mention that over 800 rice mills in Sind are providing direct employment to 50,000 individuals with deep backward linkages with half million 0.5 million growers. The industry however is facing two serious challenges; bad conditions and old technology.
Mill owners on average make Rs.2500 per 100 pounds because millers can only do periodic maintenance rather than upgradation. This is resulting in narrow margins for them because of high costs, efficiency loss 30% breakage ration and the profiteering of middlemen in the form of a dozen or so exporters based mostly in Karachi.
The breakage ration is unprecedentedly high because of dilapidated mills and poor quality hybrid seeds being imported from china. Millers are in the clutches of a vicious cycle, and since they operate on the margins, they are particularly vulnerable to adverse external shocks like recent floods and other natural disasters.
“’Rice milling industry desperately needs a support package to be able to escape this vicious circle. A rice mill can be upgraded completely with the injection of Rs.7 to 10 million using a combination of Chinese and Pakistani made components. ,” said Chairman SBI.
Three types of rice plants exist in Sind: husking mills rice paddy fed and husk removed from grain with some polishing; reprocessing mills rice from husking unit fed and further processed for export quality rice; and parboiling plants rice paddy fed directly and boiled at different temperatures according to rice varieties and then processed to create a yellow-colored, high quality, nutritious rice.