- Damage relaxation applies only to farmers; millers still bound to strict recovery norms
- Scarce, low-grade paddy forces mills to operate defensively rather than profitably
Punjab rice millers are bracing for one of their toughest milling seasons in recent years as a large share of the paddy procured during the 2024–25 kharif season is arriving damaged and discoloured beyond the earlier permissible limit of 5%, according to major mills.
The average proportion of damaged or discoloured paddy ranged between 4 – 5%, yielding an average rice recovery of around 67%, in the past, however, in CY25, there has been a sharp rise of between 8-100% in the share of damaged or discoloured paddy, while the estimated rate of rice recovery has dropped to between 60 – 62%.
Although the Centre has allowed procurement agencies to accept paddy with up to 10% damaged, discoloured, sprouted or weevilled grains after heavy rains and flooding in August and September, the relaxation has not been extended to millers. They remain obligated to deliver two-thirds rice recovery to the Food Corporation of India under the public distribution system, despite the lower milling efficiency expected from degraded grain.
Quality-compromised paddy strains mill operations and margins
The relaxation came late in the procurement cycle, with most farmers already having faced value cuts on the minimum support price of ₹2,369 per quintal due to quality deductions. For millers, the continued requirement to meet standard recovery benchmarks despite the inferior raw material has raised concerns over elevated breakage, reduced head rice output and higher rejection risk at FCI. Industry operators caution that rice produced from low-quality paddy may fail uniform specifications, leaving them with inventory they cannot pass on. Mills are indicating that sub-standard paddy continues to arrivive at mill compounds, making capacity utilisation a matter of risk management rather than efficiency.
Competition for limited supply keeps millers silent
Punjab has procured around 156 lakh tonnes of paddy this season, against an estimated 180 lakh tonnes target, after production fell nearly 20%. The supply shortfall has intensified competition among millers to secure their allocated quota, muting public criticism of existing norms. Industry representatives say millers are absorbing the pressure quietly, as challenging the policy environment could jeopardise allotment in a tight procurement year.
Mills brace for cuts in profitability
With procurement specifications and rice delivery obligations misaligned, mills expect lower recovery, higher operational losses and a season defined less by throughput and more by damage control. Millers privately acknowledge that staying operational and fulfilling FCI obligations may take precedence over margins this year, as quality-related productivity loss threatens to erode profitability across the state.
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