Friday, August 10, 2012
As Myanmar emerges from decades of isolation and oppression, it
hopes to reclaim its nearly forgotten status as the world's biggest rice
exporter.
"You can
imagine in a few years' time the use of fertilizer in Myanmar will at
least double. I wouldn't be surprised if it tripled. That is a big area
of investment."
Source: Reuters
That's a tall order, but industry and
government officials have begun drafting plans to revitalize 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 210 kg (460 lb) per person. It makes
up 75 percent of the country's diet, according to government
statistics.
That helps explain its economy.
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.
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.
A top priority is to give farmers better access to high-quality seeds
by encouraging investments from multinationals such as Monsanto Co. and
DuPont Co.'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," spokeswoman Cookie Lo said in an e-mail.
Myanmar is predicting a big increase in exports, projecting shipments
of as much as 2 million tons next year and 3 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 ton. However, the US
Agriculture Department attaché has forecast exports would likely tumble
23 percent in 2012, due to increased supplies from other rice producers.
Credit reform
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 Co. has 76 shareholders, including
agriculture development banks (ADCs) run by local tycoons that
specialize 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 Co. 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, Myanma
Agro-business will not be state controlled.
That
could be a problem, says David Dapice, an economist at Harvard
University's Ash Center, 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 center," 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 attaché says.
"To have farmers thrive, Indonesia realized 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.
Antiquated mills
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 fertilizer sales to boom. While Myanmar's farmland is
similar in size to Vietnam and Thailand, it uses two-thirds less
fertilizer – just a million tons a year. Expanding that, he says, could
produce a big increase in yields.
Source: Reuters
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