As Myanmar emerges from decades of isolation
and oppression, it hopes to reclaim its nearly forgotten status as the
world's biggest rice exporter.
Source: Reuters
That's a tall order, but industry
and government officials have begun drafting plans to revitalise the
industry after years of neglect and military mismanagement.
No country's appetite is quite
like Myanmar's, which boasts the world's highest annual rice consumption
at 210kg per person. It makes up 75 percent of the country's diet,
according to government statistics.
That helps explains its economy.
Agriculture - including farms,
fisheries, forestry and livestock - accounts for 43 percent of gross
domestic product, a quarter of exports and 70 percent of employment.
Industrial production, including exports of natural gas, is about 20
percent of the $43-billion economy.
As Myanmar undergoes the most
breathtaking reforms in the former British colony since a 1962 military
coup when it was known as Burma, the government is looking for ways to
revive the rice industry and reclaim its nearly forgotten status as the
world's top rice exporter in the 1960s.
A top
priority is to give farmers better access to high-quality seeds by
encouraging investments from multinationals such as Monsanto Company and
DuPont Company’s Pioneer Hi-Bred seed unit.
“In China, every township has a
seed production company,” Tin Naing Thein, National Planning and
Economic Development Minister told Reuters. “The government will
encourage and support them here.”
A recent easing in US sanctions
could make that easier. DuPont Pioneer, for instance, is “looking
forward to exploring opportunities in Myanmar”, spokesperson Cookie Lo
said in an email.
Myanmar is predicting a big
increase in exports, projecting shipments of as much as two million tons
next year and three million by 2015, says Ye Min Aung, Secretary
General of the Myanmar Rice Industry Association. That's up sharply from
778 000 last year.
It expects exports to double this
year to 1.5 million tons. However, the US Agriculture Department attache
has forecast exports would likely tumble 23 percent in 2012, due to
increased supplies from other rice producers.
A new agricultural bank was set up two months ago to provide credit to small farmers, many of whom are struggling with debt.
Myanma
Agro-business Public Company has 76 shareholders, including agriculture
development banks (ADCs) run by local tycoons that specialise in
micro-credit. With an initial 16 billion kyat ($18-million) in capital,
it will publicly sell shares after its business license is approved,
says Myo Thuya Aye, managing director of Ayeyar Wun Trading Company Ltd,
an ADC.
The bank is similar to one set up
in Indonesia, whose political and economic reforms over the years
Myanmar is studying. Unlike the Indonesian bank, Myanmo Agro-business
will not be state controlled.
That could be a problem, says
David Dapice, an economist at Harvard University's Ash Centre, who
helped Bank Rakyat Indonesia build a network of small, profitable
outlets in the 1980s.
“In Indonesia, the government bank
was able to act like a private bank and did very, very well. Rural
credit became a profit centre,” he says. “I have nothing against private
banking going into rural areas. But I find they are generally reluctant
to do so when the rural areas are not prosperous.”
That's already happening. After
lending $100 million in 2010/11, the ADCs cut that back to $25-million
in the year to March, the US Agriculture Department attache says.
“To have farmers thrive, Indonesia
realised that the government had to invest in rural infrastructure and
provide a realistic exchange rate, not just provide credit. The pieces
are not yet in place in Myanmar,” Dapice said.
Mills
are another problem. About 80 percent are small-scale, antiquated
businesses that struggle to produce the white rice kernels expected by
international buyers. As a result, mill losses, measured mostly by
broken grains, are 20 percent higher than in Thailand and Vietnam, says
Ye Min Aung at the rice industry association.
Several rice exporters are
building large-scale mills that can handle as much as 200 tons a day,
says Tin Htut Oo, head of the new National Economic and Social
Development Advisory Committee, a body that advises the government.
“We can increase up to two million tons very quickly within one or two years,” he says of rice exports.
He also expects fertiliser sales
to boom. While Myanmar's farmland is similar in size to Vietnam and
Thailand, it uses two-thirds less fertiliser - just a million tons a
year. Expanding that, he says, could produce a big increase in yields.
“You can imagine in a few years'
time the use of fertiliser in Myanmar will at least double. I wouldn't
be surprised if it tripled. That is a big area of investment.”
Myanmar's total rice consumption
accounts for 11 million to 13 million tons per year, compared with
milled rice production of 14 million to 15 million, the rice industry
body says. Target export markets are Africa, Bangladesh, Indonesia,
Malaysia, the Philippines and East Timor.Source: Reuters