HOW TO START A RICE MILLING BUSINESS: ALL YOU NEED TO KNOW

  1. Introduction

Rice milling is simply the process of removing the hulls and brans from paddy grains (raw rice), polishing  it and removing impurities such as stones, thereby producing rice that is polished, free of impurities, and suitable for human consumption.

Rice is the seed of the grass species Oryza glaberrima (African rice) or Oryza sativa (Asian rice). As a cereal grain, it is the most widely consumed staple food for a large part of the world’s human population, especially in Asia and Africa.

  1. Industry Analysis

Rice is the fastest growing staple food in Sub-Saharan Africa, with annual per capita consumption of 27kg/year.

In Nigeria, rice is one of the major staple foods, consumed across all geo-political zones and socioeconomic classes. As at 2011, rice accounted for 10% of household food spending, and 6.6% of total household spending.

Given the importance of rice as a staple food in Nigeria, boosting its production has been accorded high priority by the government in the past 7 years. Significant progress has been recorded; rice production in Nigeria reached a peak of  about 8 million tonnes in 2021, more than double what the 3.7 million tonnes in 2017.

There is high demand for rice in Nigeria. With a population of over 200 million people and an estimated national population growth rate of 2.56% per annum, an average economic growth rate of 2.50% per annum in the past ten {10} years, Nigeria has a large and growing market for rice.

As it stands, the current producers of good quality rice in the country cannot even meet up to 50% of the current demand. This is the reason why the market is flooded with poorly produced and low quality rice.

New entrants into the rice milling industry that can produce good quality parboiled rice will have an evergreen market waiting to be sold to in Nigeria in particular, and in Africa in general.

  1. Raw Materials Requirement

The basic raw material for the production of parboiled rice is paddy rice. Paddy rice is the whole rice grain with the hulls, or simply unmilled rice.

Nigeria is the largest producer of paddy rice in Africa with an average production volume of 8 million metric tonnes. As of 2019, Nigeria ranked as the 14th largest producer of rice in the world with China being the top producing country.  Paddy rice is produced in large quantities in states such as Kebbi, Benue, Taraba, Niger, Kaduna, Katsina, Kwara, Kogi, Ekiti, Abakaliki, Edo, etc.

Other raw materials that will be needed in a rice production business are water and packaging materials.

  1. Machinery & Equipment Requirements

The major equipment needed in a small scale rice production plant are: Parboiler, Dryer, Husker/Polisher, Destoner, Weighing Scales and Sealing Machine. Below are some of the machinery and their current

EquipmentFunctionPicturePrice
ParboilerFor parboiling paddy riceN1,800,000
DryerFor drying parboiled paddy riceN1,600,000
Blower PolisherThis machine dehulls and polish paddy riceN850,000
DestonerFor removing stone and other solid impurities like metal, etcN550,000
Grader (Optional)For separating broken rice from full grain riceN2,500,000
Colour Sorter(Optional)For removing dark to black coloured rice present in finished productsN9,000,000
Bucket Elevators5 UnitsFor connecting one machine to another.N750,000 per unit
Weighing ScaleFor weighing productsN100,000 Per Unit
Sealing MachineFor sealing final products in bags.N50,000 Per Unit

Notes: The above prices are applicable as at the time of writing this report.

  1. Production Process

Typically, when paddy rice comes into the mill, it is first per-boiled and dried, and then goes through the following steps:

A. De-husking or De-hulling

Brown rice is produced by removing the husk from the paddy rice. The husk is removed by friction as the paddy grains pass between two abrasive surfaces that move at different speeds.

B. Polishing

White rice is produced by removing the bran layer and the germ from the paddy. The bran layer is removed from the kernel through either abrasive or friction polishers.

C. De-Stoning

The hulled/husked and polished rice is passed through a destoning machine where it removes all stones, sands and other impurities from the rice.

D. Packaging

The Head/full grain rice and broken rice are packaged in 50Kg bags, while the husk and bran are all packaged in 100Kg bags.

Note: Most small scale rice milling factories do not have a grader and colour sorting machine. However, for a factory set-up that has a grading and colour sorting machine, the production process further passes through the stages of:

E. Grading: After hulling, polishing and destning, the final rice is separated into Head/full grain rice and broken rice by a grading machine. The full grain rice is normally about 80% of the total produced rice. Full grain and broken rice are packaged and sold separately with the full grain rice selling at a premium price.

F. Colour Sorting: The final product is passed through a colour sorting machine which removes the little quantity of brown-black coloured rice in the final product.

  1. Profitability

The profitability of rice production largely depends on the cost of the primary raw material, paddy.

  • As of the time of writing this report, the average cost of paddy is N287,500 per ton. Depending on the quality of paddy, an average of 13 bags (50Kg) is obtainable from processing 1 ton of paddy.
  • The average factory price for rice is twenty seven thousand naira  (N27,000) per bag of 50Kg.

This implies that a revenue of N27,000 X 13 = N351,000 is obtainable from processing 1 ton of paddy.

Gross Profit is calculated by subtracting the cost of production from the sales.

Gross Profit = N351,000 – N287,500 = N63,500

Assuming operating expenses (including cost of packaging) takes 30% of profits, profit realisable from processing 1 ton of paddy will be forty four thousand, four hundred and fifty naira (N44,450)

If for example you setup a rice mill that has the capacity of processing 20 tons of paddy per day. This will translate to a profit of N44,450 X 20 = N889,000 per day.

If the factory works at 50% (10 tons per day) of its capacity and for 25 days per month, this will translate to a profit of N11,112,500 per month.

  1. Capital Requirements

Depending on the scale and sophistication of the rice mill you want to setup, you can get started with budget of about forty million naira (N40,000,000) upto about two hundred million naira (N200,000,000). This includes the cost of factory building, machinery procurement and installation, staff training, and working capital. 

You can also setup a basic, small scale rice milling plant at just about six million naira.

NOTE: We help in setting up rice milling plants of various capacities. Our service include machinery procurement, fabrication, installation and training of workers.

You can reach out to us via Call/WhatsApp: 09097085685 for enquiries regarding setting up your rice milling plant.

Get The Rice Milling Sample Business Plan

We have prepared a sample business plan on rice milling which you can easily edit and make your own.

The business plan is ideal for existing or aspiring entrepreneurs who want to maximize their chances at securing a loan or investment.

The plan will have:

✔️ 3 years production forecast

✔️ 3 years sales forecast

✔️ 3 years gross profit forecast

✔️ 3 years OPEX forecast

✔️ Net profit analysis

✔️ Customer segmentation

Etc

Click the button below to get the sample business plan today at a discounted price of N2,000 only

Leave a Reply

Your email address will not be published.