How to Start Rice Business (Husking & Polishing Mill) in Pakistan

There are a number of different varieties of rice produced in Pakistan, major varieties include the Basmati and IRRI of which the world renowned Super Basmati is only produced in Pakistan. The proposed unit would be providing husking and polishing services to rice producers. Additionally, the unit would also be purchasing Basmati and IRRI rice paddy for de-husking and polishing the rice to sell it into the market. The husking unit would operate 7 months in a year and polishing unit works all year round. The project is proposed to be set up in any of the rice planting areas and big cities of Punjab and Sindh and some parts of Baluchistan and KPK. The business legal status of the proposed project can either be sole proprietorship or partnership. However, this pre-feasibility assumes the legal status to be Sole Proprietorship.

Rice is grown on irrigated areas of all the four provinces of Pakistan. Rice crop is sown in the months of June / July and harvested in September / October. The crop needs fertile land and fertilizers for good yield. There are a number of different varieties of rice produced in Pakistan, major varieties include the Basmati and IRRI of which the world renowned Super Basmati is only produced in Pakistan. Rice production in Pakistan has increased greatly in the past 3-4 years. There is immense potential for value addition in the rice sector in post-harvest processing, such as quality polishing and packaging. Branded rice is becoming popular in both domestic and international markets. Basmati rice is renowned and has a huge market world over, due to its taste, aroma and nutritious value. This segment offers opportunities in rice processing and marketing of branded rice.

The proposed unit has an installed capacity of 8,736 tons of rice husking and 9,984 tons of rice polishing annually on 16 hours per day operational basis. The unit will operate at 65% of the installed capacity during first year of operation with a gradual increase of 5% in subsequent years to achieve the maximum capacity utilitarian. This production capacity is estimated to be economically viable & justifies the capital as well as operational cost of the project.

The estimated total cost of the proposed rice husking and polishing unit is Rs. 93.37 million out of which Rs. 71.41 million is the capital cost and Rs. 21.96 million is for working capital. The project is to be financed through 50% debt and 50% equity. The project NPV is around Rs. 52.18 million, with an IRR of 29% and Payback Period of 4.3 years. The project will provide direct employment opportunities to 18 people including owner manager; additionally, seasonal worker will also be engaged.

Rice Husking in Pakistan

Husking is the process of separating the rice from the husk. Rubber roll and hullers are used to shatter the paddy to produce rice. The husking of paddy produces different products, which include 55% Head Rice, 9% Broken Rice, 3.5% Powder Rice, 31.5% Husk and 1% Waste and Dust Particles. Different processes are used for separation of head rice, broken rice, rice powder, dust and bran. The husking unit operates seven months in a year.

Rice Polishing in Pakistan

Polishing is the process of cleaning and polishing of brown rice (head / broken rice) to produce different value added rice products such as silky and non-silky rice. In this process various types of cleaners / polishers are used to give shine and silkiness to rice. In the current industrial practice, both the husking and polishing units are not operated at the same time due to certain reasons. After the husking operation, the brown rice requires a time of six to ten weeks for drying and conditioning. So, the brown rice is stored for a period of at least two months before taking it to the polishing process.

The proposed unit would polish (process) in-house rice obtained from the husking process and the remaining capacity would be used to provide rice-polishing services to other rice suppliers. The processed rice (both brown rice and polished rice) would be stored during the first few months of harvesting season, as the prices are generally lower due to oversupply of rice in the market.

The proposed project would mainly provide husking and polishing services to rice producers who do not own a husking and polishing unit. It is assumed that 90% of the husking machinery capacity would be utilized in providing husking services, while the remaining 10% of the capacity would be used to process the paddy rice purchased / bought by the entrepreneur himself.

Similarly, major portion of polishing service capacity will be used to cater for the polishing requirements of other companies, whereas, remaining capacity of the polishing machine would be utilized to process the rice obtained from husking of the purchased rice paddy, which is assumed as only 7% of the total polishing unit capacity. Two main varieties of rice paddy, namely Basmati and IRRI, would be purchased for husking and polishing.

The products produced from the husking unit include: Head Rice, Broken Rice, Powder and Husk. The head rice would be processed further by the polishing unit and the broken rice, powder and husk are sold into the market. The head rice obtained through the husking process is further processed in the polishing unit.

Factors for Success of Rice Mill in Pakistan

Following are the factors critical for the success of this business venture:

  • Complete adherence to best agronomic practices is critical to the success of this project; therefore, technical knowledge & experience of the entrepreneur in the field of food processing technology / business is absolutely necessary.
  • Selection of quality paddy rice on the basis of best analysis of cost and revenues for a given season; cost efficiency through better management.
  • Appropriate logistics and transportation of paddy rice to the processing unit.
  • Brand positioning and enhancement of production of rice may widen national and international market for the product.
  • Organic rice produced with the use of bio-fertilizer, bio insecticides and pesticides has a good domestic and international market.
  • Efficient recovery of by-products and their utilization may improve operational performance.
  • Properly trained seed staff should be engaged and comprehensive staff training programs to be adopted for capacity building.
  • Careful selection of good location and purchase of land at competitive price.
  • Effective marketing and distribution of the product particularly to the retailers.
  • Increasing regulatory pressures (e.g. Tax Regulation and various other regulations from government departments).

As per current agricultural practices, rice cultivation is mainly concentrated in upper Punjab and Sindh and in some parts of South Punjab, Baluchistan and KPK. Keeping in view the varying geographical locations for rice cultivation, it is recommended that the project may be preferably located in the vicinity of urban areas of Punjab and Sindh for easy access and availability of the high quality paddy rice.

Following areas could be the most appropriate locations for the proposed unit: Sialkot, Gujrat, Jhang, Mandi Bahhauddin, Hafizabad, Gujranwala, Narowal, Sheikhupura, Okara, Kasur, Bahawalnagar, Kashmore, Larkana, Dadu, Jacobabad, Jafferabad, Naseerabad, Mardan,etc.

Potential local target market for the produced rice will be the general public of upper-middle income group of urban cities, who generally prefer to buy rice from super markets and big departmental stores. Taking that into consideration, all the major metropolitan cities as well as urban and semi-urban cities across Pakistan would be the potential local target markets for the proposed business. Besides that, following segments of clients in all the major cities of Pakistan will also be the potential target customers for the proposed business venture:

  • Departmental / Super Stores and Retail Chains
  • Traders, Suppliers and Exporters of Rice
  • Hotels, Restaurants and Banquet Halls

Operational Capacity & Space Requirement for Rice Mill in Pakistan 

The husking unit would have a processing capacity of 48 tons rice paddy per day, operating 7 months a year. The rice-polishing unit would have a processing capacity of 32 tons rice per day and would operate for 12 months in a year. The project would initially run at 65% production capacity in year 1 and eventually reach 100% production capacity over the years. The unit would operate for 16 hours per day at 100% capacity, working in 2 shifts of 8 hours each.

The most important factor for setting up a rice unit is accessibility to raw material. Therefore, the unit should preferably be set up in areas, where rice is grown. Total land requirement for proposed project is 8 kanals. It is suggested to purchase land for setting up this project as the investment required for infrastructure and other costs is high and it is not advisable to invest a huge amount on leased or rented area. Total estimated land cost is taken at 1 million per kanal.

Machinery & Equipment Requirement for Rice Mill in Pakistan

Majority of the machinery required for husking and polishing unit is manufactured locally apart from few items, for instance Polishers SM and Polishers NF Machines, which are mainly used for refining of the rice. Machinery can also be imported from China at cheaper rates compared to those from Japan or Korea. Major machinery components of the Rice Husking & Polishing Unit are manufactured in the local market of Daska, Jallalpur Bhattian, Gujranwala and Lahore. Amongst the foreign suppliers, China is considered to be more competitive than other countries. For the purpose of this pre-feasibility study majority of machinery is considered from local suppliers except the few ones, which are assumed to be China make and will be purchased from local suppliers.

List of plant machinery and equipment required for the proposed unit is as follow:

Husking Plant Machines

  • Pre cleaner PH 40 type 5’x10′
  • Paddy Husker (Pneumatic)
  • Husk Cleaner
  • Husk Blower 7’
  • Pre Cleaner Half Portion
  • Paddy Separator 90 Comp
  • Husking Polisher SM-18 (China Made)
  • Husking Polisher NF-14 (China Made)
  • Rice grader 3 stage 5’ x 10’
  • Length Grader
  • Width Grader
  • Elevator 10″x 30′ Comp
  • Elevator 10″x 25′ Comp
  • Pipe Line 18, 22 Gauge
  • Steel Structure with Wooden Platform
  • Dust Blower with Ducting
  • Cyclone 3.5′ Dia
  • Blower for Bran 25″ Impeller
  • Fitting Charges

Rice Polishing Machines

  • Combi Cleaner with Blower
  • Paddy Separator (China made)
  • Width grader
  • De-Stoner (Satake Type with Blower)
  • Polisher SM-18 (China Made)
  • Polisher NF-14 (China Made)
  • Water Polisher (with Auto Sensor & Blower)
  • Rice Grader 3 Stage 5’x10′
  • Length Grader (28″x 100″)
  • Elevator 10″x36′
  • Pipe Line 18, 22 Gauge
  • Steel Structure with Plat Form
  • Dust Blower 25″ with Pipe Line
  • Blower for Polishers Bran 25″
  • Blower with Aspiration Screen (for Color Sorter)
  • Holding Bin 10′ x 10′
  • Feeding Tank for Color Sorter
  • Feeding Tank
  • Cyclone
  • Cyclone
  • Fitting Charges

Investment Required For a Rice Mill in Pakistan

The estimated total cost of a rice mill (husking and polishing unit) is Rs. 93.37 million. All the figures in this financial model have been calculated on the basis of rice husking capacity of 48 tons per day and rice polishing capacity of 32 tons per day at 16 hours production two-shift basis. The capacity utilization during year one is worked out at 65% with 5% increase in subsequent years up to the maximum capacity utilization of 100%.

A detailed financial model has been developed to analyze the commercial viability of Rice Husking and Polishing Unit. Various costs and revenue related assumptions along with results of the analysis are outlined in this section. The projected Income Statement, Cash Flow Statement and Balance Sheet can be studied in the pre-feasibility study of rice mill business in Pakistan by SMEDA.

One Comment

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Related Articles