The country’s leading rice exporting districts of eastern Tarai are on the verge of becoming importers as production has been unable to meet local demand.

There were a large number of rice mills until few years ago, but most of them have now closed down and the remaining have transformed themselves into packaging plants. The packaging industries import rice from India and sell them here under different brand names. 

According to industrialists, customs charge for imported paddy is 8 percent, while that for rice is 5 percent. Due to the difference in customs charge, they import rice rather than paddy.

“Some of the popular rice mills have converged into packaging industries,” said Pawan Kumar Sharda, President of Morang Merchant Association. “Not just local rice mills, farmers too have been impacted by growing imports of rice.”

Similar is the situation for wheat. Rising flour imports have put local mills on the verge of collapse. The customs charge for wheat and flour is same.

According to industrialists, there should be at least 15 percentage points difference between customs charges. “If this is done, local mills will survive,” said Shrawan Agrawal, a member of the association. 

There are more than 100 rice mills in Mechi and Koshi zones. Most of them are involved in importing and packaging rice under different brands. There are seven big flour mills in Koshi. 

Laxman Tapadia, a rice mill operator, said rising rice imports have hit local mill operators. 

Krishna Prasad Upreti, another rice mill operator of Kakarvitta, Jhapa, said they used to export rice to bordering Indian towns until a few years ago. “However, due to weak government policy to promote Nepali produce, almost all local mills are on the verge of extinction.” 

According to the Mechi Customs Office, rice imports amounted to Rs463.36 million last fiscal year, while imports of paddy amounted to Rs105.77 million. In the first five months of the current fiscal year, imports of rice through Mechi customs have been recorded at Rs463.32 million. 

Production of paddy has increased significantly in the eastern region this year. The output in 16 Tarai districts in the eastern region is expected to grow by an additional 300,000 tonnes this year. Last year, these districts had produced 1.38 million tonnes.