Paddy processing: Government extends contract tenure to 15 years
A few private companies have informed the government that funding institutions, including banks, are willing to support the project only if paddy supply is guaranteed for 15 years.
CHENNAI: With the private players showing reluctance to establish integrated modern rice mills equipped with drying and storage facilities, the state government has extended the contract period for paddy processing from 10 years to 15 years. As per the proposal, each mill will be supplied with 1.5 lakh MT paddy a year.
After multiple meetings at the secretariat, a few private companies have informed the government that funding institutions, including banks, are willing to support the project only if paddy supply is guaranteed for 15 years instead of the initially proposed 10 years.
A senior official from the food department said, “The government has accepted the request of private companies. We have revised the tender criteria permitting paddy agreement for 15 years, and have reissued the invitation for bids.”
In a significant policy decision, Tamil Nadu Civil Supplies Corporation (TNCSC) proposed the establishment of modern rice mills through a Public-Private Partnership (PPP) in February this year. The move was primarily aimed at preventing paddy spoilage due to higher moisture and lack of storage facilities.
Besides, it also planned to address the complaints regarding bribery at the direct procurement centre and enhance the quality of rice distributed through the Public Distribution System (PDS). Once completed, the entire process from procuring paddy at DPCs to packaging rice in specified quantities of 5 kg, 10 kg, 15 kg, 25 kg, 35 kg, and 50 kg bags for supply through the PDS will be executed under the PPP.
Initially, the plan was to construct integrated rice mills with a capacity of 200 MT in Theni and six 500 tonnes units at Thanjavur, Cuddalore, Mayiladuthurai and Thiruvarur districts. The first tender was floated in February, but there was no response from private investors. After revising the tender norms, the TNCSC decided to set up five modern rice mills each with a capacity of 500 TPD (tonnes per day) at five locations in Thanjavur (2), Thiruvarur (2) and Cuddalore (1) districts.
The integrated rice mill will include a post-harvest dryer (600 MT per day), a parboiling unit (25 MT/hour), a milling unit (500 MT of paddy a day), state-of-the-art paddy storage facilities (with a warehouse capacity of 60,000 MT), an automated rice packing system, a warehouse capable of storing 3,500 MT of rice, and conveyors for transporting rice bags to trucks.
TNCSC’s average yearly procurement stands at 40 lakh MT, of which more than 5% of paddy suffers spoilage due to higher moisture and a lack of storage facilities. During the 2022-23 kharif marketing season, paddy procurement rose to 43.84 lakh MT, and this year it is estimated to reach 47 to 48 lakh MT.
However, storage facilities and paddy milling capacity have not been increased. Although the government provides incentives for drying, most farmers lack proper facilities, and as a result, they deliver their freshly harvested paddy directly to the DPCs for sale.
Currently, TNCSC’s rice mills and hulling agents lack adequate drying and storage facilities, causing paddy moisture levels to exceed the recommended 17%, resulting in widespread spoilage and reduced rice quality for the PDS. Official documents reveal that the TNCSC will designate 25 DPCs, each with a capacity of 100 MT a day, to be linked to a modern rice mill within a 50 km radius.
The operator will be required to set up a conveyor system, de-stoner, pre-cleaner, mobile paddy testing lab, weighing scale, and other infrastructure facilities at the DPCs and transport paddy from the DPCs to the rice mill. A senior official said, “For the first time, the government has decided to partner with private companies. This move will completely transform the operation of paddy procurement and rice supply through the PDS system.”