The Rice Processing Industry in Nepal: Constraints and Opportunities

A rice mill survey covering diverse rice processing companies in terms of their milling output, type of technology and year of establishment was conducted to understand the current situation of the rice milling industry and to identify enablers and barriers to its growth in Nepal. Coarse rice varieties dominate Nepal’s rice processing industry, with a 42% share by total weight, followed by medium rice (34%) and fine varieties (less than 7%). Polished white rice (Arwa) was the dominant rice type in Nepal in the survey, followed by parboiled and steamed rice. The price and profit margins increased from coarse to fine rice varieties and from Arwa to parboiled and steamed rice. The cost of milling also followed a similar trend. The rice milling industry in Nepal largely influences the adoption or non-adoption of any specific type of rice variety by dictating specific brands in the market and this has important implications for rice research and development. The key finding of the study is that the rice processing industry of Nepal was unable to compete with the Indian rice milling industry because of: 1) low profit margins due to the high cost of rice production and procurement, 2) a lack of economies of scale, 3) a lack of milling technologies for long and extra-long and steamed rice in the country and a lack of investment to modernize rice milling technology, and 4) unavailability of paddy throughout the year locally. Millers were willing to upgrade their rice milling technology to include high throughput parboiling, steamed rice as well as long and extra-long grain rice. This will be a strategic decision in counteracting the ever-increasing rice imports in Nepal. We believe that the findings of the study will be vital for formulating an appropriate rice research, development and rice processing strategy for Nepal to achieve food and nutritional security and the Sustainable Development Goals.