The study was based on the observation of paddy processing systems used by bari (home) based firms and rural parboiling firm cum rice mills in the study area named Khawaza Nagar which belonged to the union of Gagati under the district of Kushtia. The objectives of this study were: (i) to pin-point the salient features of bari based paddy processing system; (ii) to comprehend the managemental systems of parboiling firm cum rice mill. The findings revealed that: (i) Small scale and labor-intensive paddy processing firms dominate the private rice markets in Bangladesh. (ii) bari based paddy processing system, the entire works from paddy soaking to products separation are managed by women and it is the main source of local employment in the study area. (iii) Every parboiling firm has two distinct parts: paddy parboiling firm supervised by three beparis (marketing functionaries) and rice mill administrated by miller himself though the proprietorship of total parboiling firm cum rice mill belongs to the rice miller. Activities of parboiling firm are contingent on the availability of paddy and rainfall distribution pattern of the study area as the technology and equipments used in the parboiling firm are very traditional in nature. The formation of bepari group depends on mutual trust and belief, honesty, dignity, hardwork and working capital. Each parboiling firm is highly generative of female employments. Some rice millers have access institutional credit from local commercial banks but beparis, farias, kutiats and retailers faced the rigid institutional difficulties in gaining access to benefits being distributed by the commercial banks.
On the basis of the findings the following recommendations are put forward for policy implications: (i) Institutional credit support should be given to a small group of like minded beparis, farias, kutials and retailers for the expansion of their business activities as well as for the improvement of technology and equipments used in the paddy processing system. It may reduce poverty ensuring household food security for the poorest of poor of the local area through the expansion of labor market. (ii) For the quality and ensured supply of paddy, contract marketing arrangement between paddy growers and parboiling firm or rice mill can be considered. In this regard, experience of the existing four major contract marketing arrangements in Bangladesh can be taken as guidelines for formulating an effective strategy to implement the contract marketing arrangement.