Cheap imports force rice mills to close


Feb 6, 2018-

More rice mills in the Parsa-Bara area are at risk of going belly up as they can’t compete with cheaper Indian products. In the past four years, 250 of the 300 rice mills here have shut down. Half of the remaining 50 are also in the red, said traders. 

Many rice mills in Parsa and Bara are doing brisk business by repackage rice imported from India and selling it under their own brands. However, domestic rice mills are operating at a loss.

According to Binay Shah, a rice mill owner at Prasauni, out of about 300 rice mills that existed seven years ago in these two districts, only 50 are still in operation. He said that more than half of them were incurring losses and would be forced to shut down soon. Shah said, “Rice factories in these districts have to pay higher prices for domestically grown paddy compared to Indian paddy.”

Rice is imported from India through legal channels as well as through illegal border crossings. Some transporters deliver cheaply priced rice up to retail shops. The higher price of rice milled in Nepal has lured consumers to cheaper rice imported from India. 

According to the statistics of the customs office in Birgunj, rice worth Rs998.1 million has been imported through the border point in the first six months of this fiscal year. In the same period of the last fiscal period, imports were valued at Rs888.3 million. 

In 2011, India lifted export restrictions on rice other than the Basmati variety. Imports of Basmati rice have continued to surge in subsequent years.

Industrialists here cannot import paddy due to the export quota set by the Indian government. The customs office charges an agricultural improvement fee of 8 percent on rice imported from India. Entrepreneurs have long been asking that the rate be increased to 10 percent. 

The customs office also charges 5 percent agricultural charge on paddy imported from India. Rice factory owners complain that if the customs office cannot increase fees on imported rice, the office can at least reduce fees for paddy. Either of the two options would help entrepreneurs compete with milled rice imported from India, they said. 

Rice entrepreneurs have demanded that exports of Nepali basmati rice be promoted. The government has so far blocked rice exports to India and other countries. He said, “Red Basmati in Nepal has a richer aroma compared to other Basmati varieties in the world. If we can export this rice to other countries, both farmers and entrepreneurs will profit.” 

Gupta contends that exporting Nepal’s Basmati rice could break the dominance of Basmati varieties produced in India and Pakistan. 

Gupta said, “About 10 rice mills in the Parsa-Bara Industrial Corridor and altogether 50 mills across the country are capable of producing rice that can be sold at the international level. There is a huge demand for Basmati rice in the US, Europe and the Gulf countries.”

Published: 06-02-2018 08:41

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