Can Myanmar Become The World’s Leading Rice Exporter Again?

Rice is the staple diet of over 3 billion people worldwide, close to half the global population, and over 11% of our planet’s arable land is given to rice cultivation. Rice is an essential part of Myanmar cuisine as well, and the country with its abundance of land, water and labor resources, provides the perfect rice-growing environment. Little wonder then, that Myanmar was the world’s top rice exporter between 1961 and 1963, a position it subsequently lost to Thailand, and today, is the 9th biggest rice exporter. As the sixth largest rice producing country, and a nation on the threshold of rapid development, getting aid and technical expertise from the most advanced economies, there are hopes of Myanmar becoming one of the top rice exporting nations in the next few years.

Myanmar’s largely agrarian economy has rice as one of its chief crops. Figures available for 2011, reveal that the rice industry accounts for 13% of the country’s GDP, and provides employment to 70% of the population. The current financial year has seen a 41% increase in rice exports with 530,000 tons of rice worth USD 196 million, being exported between 1st April 2014 and 15th August 2014.

The chief paddy growing areas include Irrawady, Sittuang and Chinwin besides the Ayeyarwady delta zone in the southern part of the country. The main rice ecosystems of the country include the rain-fed and irrigated lowlands and uplands. The largest part of the ecosystem include the rain-fed lowlands, the deep water rice growing areas include the Delta region and the Rakhine State’s coastal strip. Rain-fed rice is cultivated in approximately 60% of the Delta region, including the Yangon, Bago and Ayeyarwady regions in the lower part of the country. The uplands include the Manadalay and Sagaing states.

Position as leading rice exporter lost forever?

The rice sector in Myanmar is complex due to the interplay to various factors like the diverse ecosystems of rice cultivation, the varying skills and technologies used in different parts of the nation and lack of cohesive government policies.

Exports become important, since the world markets can absorb increased output which small markets with limited purchasing power of the population, cannot. The foreign exchange inflows become essential since this facilitates investment for modernizing processes and introducing efficient systems of production, and optimal allocation of resources.

Myanmar lost its position as the top exporter of rice due to the sequence of events that unfolded in the post World War II period. In a short period of time, rice production came down to half its previous levels. While the other rice-producing nations like Thailand, Vietnam, China, Philippines, Cambodia and India, mechanized processes, introduced modern systems of irrigation and cultivation, invested in research to produce high-yielding varieties and found solutions to damages caused by floods and droughts, Burma continued in the same traditional manner, with extreme interference and control of the government, without gaining any access to credit, modern equipment, infrastructure or irrigation facilities.

Additionally, paddy procurement prices were kept at low levels by the government and this severely discouraged investment in rice cultivation, and even more so in rice milling and storage facilities desperately needed to secure the ready crop. Low procurement prices for premium varieties like Basmati, deterred farmers from growing them. Though the total area under rice cultivation continued to expand, the expansion rate was so slow that even in the 1960s, it remained lower than pre-war levels. A major setback to rice production was due to the government banning private money lenders from funding farmer needs, which left the latter without resources to buy essential inputs, and the government also did nothing to meet their credit requirements for a long time. It was only in 1976 that the Myanmar Agricultural Bank was set up. Progress, if any, has been very gradual. This perhaps explains why paddy yield per hectare did not increase for nearly two decades since 1980. Technical advancement and introducing machinery and equipment to mechanize the rice-growing process are limited to very small areas, even today.

Rice exports continued to fall for a number of reasons. Myanmar’s currency valuation by the government made rice uncompetitive and unprofitable. Its interventionist policies also affected prices, supply and procurement prices offered to farmers. Farmers had to face adverse weather conditions and related problems like droughts or floods, and their low input use due to lack of sufficient availability, made yields lower than other countries. Moreover, the country faced the imposition of sanctions that led to a sharp fall in foreign aid. Exports, till five years ago, were erratic and inconsistent, since they were discontinued each time there was a shortfall for domestic consumption.

Myanmar today, faces tough competition from other exporters in the region like Thailand, Vietnam and Cambodia. Added to this is a higher demand for better quality rice, while Myanmar rice loses out on quality, partly due to lack of modern milling facilities, which lead to a 15-20% loss in both quality and quantity. The country is only able to focus on markets that accept lower quality rice, and unfortunately, demand for these varieties is declining. According to a World Bank study, rice price volatility is highest in Myanmar, out of all South East Asian nations.

Efforts to regain lost glory

Agricultural experts are convinced that Myanmar has the potential of doubling its rice production, and there is sufficient room for quality improvements. Since Myanmar rice is $10-20 cheaper than rice of equivalent quality from other countries, capturing a segment of the export market may prove easier, especially for its 25% broken, Emata variety.

At present, Myanmar exports rice in large quantities to Australia, Singapore Thailand, China, and India, besides having resumed exports to Japan after 45 years. The EU has opened its markets for duty free imports from Myanmar. The vast, relatively untapped market of Africa, has started importing Myanmar rice, and has the potential to annually absorb thousands of tons more. According to sources, a surge in demand for rice from Russia has helped in enhancing rice exports by 41% between April and 15th August, 2014, as compared to the same period last year.

Due to the interplay of previously listed factors, productivity of rice is low as compared with global producers. The average yield of rice is 3 tons per hectare, which is half of the 6 tons per hectare yield in Japan. The yield is adversely affected by wastage at post-production and pre-consumption stages. Uneven distribution of inputs and dated farming skills also has an adverse impact on production.

There is a fervent need to improve cultivation in existing fields, modernize existing irrigation infrastructure and build new facilities, convert more land for rice cultivation, provide farmers with agricultural credit and also help them procure essential inputs like fertilizers, pesticides and stronger seedlings from high quality seeds. The need for technical development is severe, and farmers need to begin proper crop management, and the government will have to invest in physical development by building access farm roads, provide harvesters, dryers, storage and milling facilities. This is imperative for an economy dependent so much on agriculture.

Successful initiatives and Myanmar’s potential

Myanmar may well succeed in regaining its top position in rice exports even though this target may take more than a decade to achieve. This is because it possesses the most favorable natural environment for rice cultivation with abundance of land, water and cheap labor that are the essential prerequisites for this crop.

Efforts to reverse the damage witnessed in the aftermath of World War II, began through multiple initiatives taken by the government to revive the rice industry. An attempt to introduce the high yielding variety seeds released by the International Rice Research Institute through imports in 1968-69 was not well received, since the short height of the plants made them inappropriate for the flooded rice fields of the country, and the taste was also not acceptable to local palettes. The government’s tractor scheme also failed since small sized farms could not afford to use them, both due to impracticality and cost.

Policy changes began in the 1970s which led to doubling of rice procurement prices, increase of  procurement levels, offering credit through the Myanmar Agricultural Bank, and establishing connections with the International Rice research Institute. The Township rice production program initially launched in Shwebo and Taikke in Upper and Lower Burma respectively, was highly successful due to the new technology introduced.

It was only in 2010 that the setting up of Myanmar Rice Industry Association has finally brought together producers, traders and millers and it now works in tandem with the Ministry of Commerce to manage rice exports. Serious efforts are being made to foster public-private partnership. The Department of Agricultural Research (DAR) is encouraged to maintain contact with international rice research institutes to gain access to improved high yielding variety seeds that are then transferred to the seed division, a subsidiary of the Myanmar Agricultural Service (MAS). The Seed Division then uses its 32 seed farms across Myanmar to reproduce these seeds on mass scale. Hybrid variety seeds have already been introduced in parts of Shan State and Nay Pyi Taw.

Non-governmental organizations are actively involved in educating farmers and contributing to enhancing farm output with a long term perspective. The principal idea has been to educate farmers about effective and optimal pesticide use, handling weeding problems, improving soil fertility, and use appropriate agricultural tools while protecting the environment.  A project funded by UNOPS-managed Livelihoods and Food Security Trust Fund (LIFT), and run by the Metta Development Foundation, has led to the setting up of 200 farm field schools in Shan and Kachin states to promote sustainable agricultural productivity. This has helped over 4700 rural households increase their rice production, which also translates into improved levels of earning and better living standards.

With earnest efforts in place, it is only a matter of time before the industry catches up with neighboring rice producing nations. The long and winding road to becoming a leading rice exporting nation will require a multi-pronged approach by the government, starting with improvements in infrastructure like, developing better port facilities, handling land ownership issues, introduction of easier credit facilities and assistance in use of technology for agriculture. On the finance front, it is important to change farm credit rules and permit other assets to be pledged as collateral for loans. Direct foreign investment in milling, warehousing and trading will bring the much needed foreign exchange to modernize the farm sector.

Myanmar is likely to see a part of the $80 million World Bank aid that the country received after a gap of 25 years in 2012, invested in agricultural infrastructure, which when combined with diverse farming techniques, is likely to push rice exports to 3 million tons by 2015, and 4 million tons by 2020.

Rice Facts

  • Rice is the staple diet of half the human race
  • Over 40,000 varieties of rice are grown worldwide
  • Rice originated in China and South East Asia in 10,000 BC
  • Only 5 % of the rice produced is exported, the rest is domestically consumed
  • Rice and rice products are considered healthier than wheat
  • Rice provides 20% of the world’s dietary energy supply

Some Myanmar Rice Industry Details

  • The Ayeyarwady regions is called Myanmar’s ‘rice bowl’.
  • Rice production has increased in the last decade due to increased area being used for summer rice production.
  • 80% of rice growing is done through transplanting, 20% through dry seeding and only a small amount by dry seeding.
  • In the last twenty years 228 large and small rural dams have been built to improve irrigation
  • 70% of land preparation through tillage is still done by using animal power. Only 30% is mechanized.
  • Nearly 100% threshing is done mechanically.