The rice mill industry, over the last decade has become significantly competitive. Moreover, in the dawn of automatic rice milling systems the competition has increased further. Many of the husking mills are being upgraded to and replaced by the contemporary automatic rice mills. This is because the automatic rice mills have significantly higher production capacity and many facilities that the husking mills do not have. However, the technology of automatic rice mills is readily available with moderate amount of capital. As a result, the rice mills do not have any kind of competitive advantage regarding production facility. However, the procurement and sales of this industry are relationship-based that is the rice mills have good understanding with both suppliers and buyers. Moreover, the banks have financially supported the rice mills to expand or upgrade their facilities by providing term loans. As the rice mills are expanding their production capacities, their working capital requirements are also pushing upwards. Most of the times, these requirements are financed by the financial institutions, i.e.-banks. So, the banks and the rice mills also experience an intertwined profitability.
A good proportion of Bangladesh’s total paddy production is harvested in the northern part. As a result, this region has experienced significant growth in the rice milling industry. The Naogaon region, in particular, harbors a large number of husking mills and automatic rice mills. As a result, the competition is severe and is primarily dependent on the backward and forward networks of a rice mill.
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