Material Insights · Understanding the Material World

Rice: Extraction

From flooded paddy to polished white grain

What this tab covers How it is mined, drilled or grown, and processed into a tradeable form: the main methods compared, their unit economics, by-products, and the companies that do this work globally and in India.

Most rice grows in flooded paddies across monsoon Asia, with irrigated crops in the US South, California and Egypt and rain-fed upland rice in Africa. Seedlings are transplanted or seeded directly, and the tropics allow two or three crops a year. Harvested paddy is dried, hulled to brown rice and polished to white. Grades are set by the share of broken grains, so 'Thai 5%' means 5% broken. Morgan counted more than eight thousand varieties, from sticky short-grain japonica to fragrant basmati (pdf p. 401). Flooded paddies emit methane, and the crop is thirsty for water.

Almost all rice is grown in Asia on small farms. The main division is water. Irrigated lowland paddies, flooded for most of the season, give the highest and steadiest yields and supply most of the world's rice. Rainfed lowland fields depend on the monsoon and give lower yields, as in north-east Thailand and eastern India. Upland and deepwater rice are small. Planting is shifting from hand transplanting to direct seeding as farm labour gets scarce. After harvest, paddy is milled to white rice or first parboiled, and the milling out-turn decides how much saleable rice each tonne of paddy gives.

Methods compared

MethodShare of supplyTypical scaleRecovery / efficiencyBy-productsUnit cost
Irrigated lowland, transplanted (puddled) riceabout three-quarters of world rice output (IRRI, indicative)farms typically 0.5-3 ha in Asia; much larger in the US and Australiapaddy yields 2024: China 7.15 t/ha, Vietnam 6.15, Egypt 9.13, US 8.68, Australia 11.9 (FAOSTAT)straw (often burned in north India), husk, branIndicative: common paddy MSP Rs 2,369/quintal for 2025-26 with a quoted 50% margin over A2+FL cost implies about Rs 1,580/quintal of paddy (CCEA, May 2025); the 2026-27 MSP of Rs 2,441 at the same 50% margin implies about Rs 1,630 (Cabinet, 13 May 2026)
Rainfed lowland ricen/a smallholdings in eastern India, Bangladesh, north-east Thailand, Myanmar, Cambodiapaddy yields 2024: Thailand 2.98 t/ha, India 4.31 (national average, mixed systems), Bangladesh 5.29 (FAOSTAT)straw, husk, brann/a
Direct-seeded rice (DSR), mechanisedn/a large mechanised farms in the US South, California, Australia; growing in north-west IndiaUS paddy yield 8.68 t/ha in 2024 (FAOSTAT)straw, husk, brann/a
Milling and parboilingapplies to almost all ricemodern mills 4-20 t paddy per hour; many small hullers in South Asia (indicative)FCI out-turn ratio 67% for raw rice, 68% for parboiledhusk (fuel, about a fifth of paddy weight), bran (rice bran oil, feed), broken rice (ethanol, brewing, feed)n/a

How each method works

Irrigated lowland, transplanted (puddled) rice

Fields are levelled, flooded and puddled to seal the soil, then seedlings from a nursery are transplanted by hand or machine. Standing water suppresses weeds. Canal or tubewell irrigation allows two or three crops a year in China, Vietnam, Punjab and Egypt.

High, stable yields; heavy water use (falling water tables in Punjab) and methane emissions.

IRRI Rice Knowledge Bank (indicative); FAOSTAT 2024; CCEA kharif MSP decisions (May 2025, May 2026) Rainfed lowland rice

Bunded fields fill with monsoon rain rather than irrigation. Farmers often grow traditional or fragrant varieties such as Thai Hom Mali. Floods and dry spells can both cut yields.

Low cash cost and premium fragrant grain; weather-exposed and low-yielding.

FAOSTAT 2024 Direct-seeded rice (DSR), mechanised

Seed is drilled into dry or wet soil, skipping the nursery and puddling. It saves labour and water but needs good weed control. It is standard in the US, Australia and much of Brazil, and is being promoted in Punjab and Haryana.

Cuts labour and water use; weeds and uneven stands can lower yields.

FAOSTAT 2024 Milling and parboiling

Paddy is cleaned, dehusked to brown rice and polished to white. Parboiling soaks and steams paddy before milling, which hardens the grain, cuts breakage and keeps nutrients. Colour sorters grade by broken share. India's FCI pays millers to deliver custom-milled rice at fixed out-turn ratios.

Out-turn and broken share decide profit; bran oil and husk power add value.

FCI custom milling norms; industry practice (indicative) Unit economics are indicative ranges from the sources named; costs vary widely by deposit, region and year.

Who does it: global

CompanyCountryActivityVolumeYearSource
Olam AgriSingaporerice origination, milling and distribution in Asia and Africanot published 2025Rice volumes not found in public sources checked
Louis Dreyfus CompanyNetherlands/Francerice merchandisingnot published 2025Rice volumes not published separately
Vinafood 2 (Southern Food Corporation)Vietnamstate-owned rice exporternot published 2025Volume not found in public sources checked
Loc Troi GroupVietnamseed, farming contracts, milling and exportnot published 2025Volume not found in public sources checked
Asia Golden Rice and CP IntertradeThailandleading Thai exporters (white, parboiled, Hom Mali)not published 2025Volumes not found in public sources checked
Sinograin (China Grain Reserves Group)Chinastate reserve stockholdernot published 2025Reserve volumes not published; USDA puts all China rice stocks at 105.5 Mt (end 2025/26)

Who does it: India

CompanyCountryActivityVolumeYearSource
Food Corporation of India (FCI) with state agenciesIndiapaddy procurement at MSP, custom milling, PDS, open-market and ethanol sales72.07 Mt paddy procured in kharif KMS 2025-26 (about 48 Mt rice at the 67% out-turn); KMS 2026-27 target 70.86 Mt paddy KMS 2025-26GKToday summary of Food Ministry figures (Mar 2026)
KRBL (India Gate)Indialargest basmati miller and exporternot published FY2026Volume not found in public sources checked
LT Foods (Daawat)Indiabasmati and specialty rice, India, US and Europenot published FY2026Volume not found in public sources checked
Ethanol distilleries buying FCI riceIndiagrain ethanol for E20 blending6.35 Mt FCI rice sold to distilleries, June 2025-June 2026 (Rs 14,597 crore, about 40% below acquisition cost) 2025-26Moneylife citing Government reply, 2026 (source page could not be re-checked in Oct 2026)

India is the largest grower (26.6% of world paddy in 2024, FAOSTAT) and the largest exporter (33.6% of 2024 export value; 22.0 Mt in 2025/26, USDA). It curbed exports from September 2022 to October 2024, which lifted Thai 5% prices to $660/t in January 2024 (World Bank).