As the name suggests, the rice paddy grows the rice crop. However, the rice crop can only be found in humid locations during the main campaign and is never available during temperate or desert missions.
The unique part of the rice paddy is that all tiles must be on full grassland. If any tiles try to be placed on grassland with less than perfect water table access, they will not be placed. This can cause a farmhouse to become inefficient and grow less if a farmhouse does not have full coverage.
Rice can grow in plentiful supply. Three farmhouses growing only rice will usually supply enough food for the entire city, with enough left over for any requests or gifts.