Deshbandhu enters rice market
Deshbandhu Group has made a foray into rice milling in a bid to capture a portion of the huge domestic market with growing demand for the staple.
It has set up an automatic rice mill with an 8-tonne milling capacity an hour and aims to export aromatic rice to Europe.
"The domestic market for rice is very big," said Golam Mostafa, chairman of Deshbandhu Group, which is engaged in different businesses including sugar refining, garments, polypropylene woven bags and shipping.
Nearly 3.5 crore tonnes of paddy is produced in Bangladesh a year now. Of this amount, about 2.5 crore tonnes are traded. So there is business prospect, he said.
Mostafa said out of 3.5 crore tonnes of rice that are milled, a huge quantity of rice bran comes as by product. "We also want to make oil through rice bran by establishing another mill as there is immense potential."
The newly established rice mill by Deshbanhdu -- Sahera Auto Rice Mills Ltd -- makes its entry at a time when consumers are more interested in consuming rice milled in automatic mills because of the fine look and fewer broken quantities and inedible substances, such as stones.
In the past decade, several hundred automatic and semi-automatic rice mills were established in various rice producing zones, such as Naogaon and Chapainawabganj, raising competition for the thousands of small and medium husking mills.
In 2005, there were 200 semi-automatic and automatic rice mills. The number tripled to more than 600 last year, KM Layek Ali, convener of Bangladesh Rice Mills Association, told The Daily Star earlier.
Deshbandhu established its auto rice mill in Nageswari of Kurigram, a district in the north.
Farmers in the area produce huge quantities of rice but do not get fair prices. If they get fair prices, they will feel encouraged to grow more grains, said the chairman of Deshbandhu.
The group will market both coarse and medium grains, processed in the mill, to different parts of the country under the brand Deshbandhu.
The mill now uses a part of its capacity but aims to operate at its full capacity of 8-tonnes an hour after getting an electric connection.
Deshbandhu will market packed rice within packs ranging between one-kilogram and 50-kilogram.
We will open two showrooms in Dhaka so that consumers can buy directly from us, said Mostafa.
"But one of our main targets is to export to Europe," he said, citing a duty-free export opportunity offered by the European Commission to Bangladesh under the Everything but Arms (EBA) rule.
He said the duty-waiver will encourage importers from Europe to place orders with Bangladesh instead of countries such as Thailand.
European importers have to pay as high as $ 221 a tonne in duties to buy rice from Thailand.
So, buying from Bangladesh at the international market rate will be advantageous for them, said Mostafa.
However, the Bangladesh government has placed a ban on the export of rice. Mostafa said Deshbandhu will appeal for export permission and if it gets permission, it will import the amount that it will export from neighbouring countries. Ultimately, it will take advantage of the duty benefit.
“We will import an amount equivalent to the amount that we will be allowed to export to Europe," said Mostafa. "We will import that quantity in advance."
He said the duty benefit will be the major gain of the company after it imports the equivalent quantity of rice by importing from neighbouring countries.