Telangana’s KCR Government has allocated 25 lakh tonnes of rabi paddy to ten companies that competed in global tenders. With stocks from previous rabi seasons piling up and occupying godowns, the state sought global tenders to clear stocks and free up godowns for kharif arrivals.
There were 54 bids submitted by 11 different entities, with prices ranging from ₹ 1,618 to ₹ 1,732 per quintal. Following the opening of financial bids, the government distributed 25 lots (each lot containing one lakh tonnes) to the ten successful bidders.
Though the Government was successful in clearing the stocks and making room for the upcoming kharif stocks, it had to settle for returns that were less than what it paid farmers for the paddy.
The stocks were offered on an as-is-where-is basis and were divided into six lots, five with four lakh tonnes each and the sixth with five lakh tonnes. Bidders were required to have an annual turnover of ₹1,000 crore in the previous three years, and the auction was held on the State’s e-tender platform.
A few days after the State announced the global tenders, the Central government imposed restrictions on the export of parboiled rice, casting doubt on the State’s ability to hold the auction.
According to reports, the State received the Centre’s approval for the tenders and continued with the process.
The cause for the pile-up
Unlike paddy grown in the kharif season, rabi paddy yields less raw rice when milled. They would prefer to produce parboiled rice in order to reduce the percentage of broken rice. (Due to higher temperatures during harvest, the rabi grain becomes brittle.
Because the Centre stated unequivocally that it would only purchase raw rice, the State Government was forced to issue tenders in order to clear the mounting stocks.