I met a young rice farmer during my recent trip to Myanmar. He has a tiny plot of land on the outskirts of the irrigation system and could harvest only one rice crop a year. Even if he worked hard, and the weather was at its best, he produced only enough rice to feed his family for 10 months. During the last two months of the rice-growing season, he would walk around his village, a small plastic cup in his hands, and ask neighbors if he could borrow some rice. This would happen year after year.
Unfortunately, this story is not uncommon. A majority of Myanmar’s laborers work in agriculture. A third of them live below the poverty line and depend on rice for survival.
Improving agricultural productivity and promoting rice exports are top priorities for the Myanmar government. Despite its ambitious plan to export four million tons of rice by 2020, the actual rice export reached only 1.3 million tons annually over the last few years. In contrast, the country was shipping rice in the same or slightly higher quantities per year in the 1950-1960s, when Myanmar was the largest rice exporter in the world.
Over the past decades, the country has been producing mostly low-quality rice (that means that more than 25% of the grains are broken) and selling it to Africa. This is not a viable strategy anymore. It generates insufficient earnings for farmers and the global demand for this low-quality rice is decreasing. Myanmar should set its eyes on higher value markets in the European Union, China, Singapore, and Malaysia.
To rethink its rice export strategy, Myanmar doesn’t have to look far. Experience from Cambodia and Vietnam shows that modernizing the milling sector is one of the most vital steps to take. Some of the Myanmar rice mills are more than 100 years old and run on steam engines. This attracts more tourists than it draws in farmers or serious investors. In addition, nearly 20% of the quality and quantity are lost during the milling process of an average rice mill. Upgrading these mills requires long-term credit, technical and managerial know-how, and low-cost, reliable electricity. These are not available in Myanmar today.
In a new report, produced by the World Bank and Livelihoods and Food Security Trust Fund (LIFT) of Myanmar, about the opportunities of rice exports in Myanmar (full disclosure: I'm part of the team who authored it), the World Bank recommended the government to open its milling, warehouse, and trade sectors to direct foreign investments. In addition, it should allow local banks to give longer-term credit to more than 12 months. This is a particularly urgent call because top Thai rice exporters are relocating their investments in Myanmar to Cambodia, due to the uncertain and unconducive investment climate.
Although many barriers to agricultural trade have been abolished recently, the private sector remains cautious about the government’s actions. The private sector still believes that the government may reintroduce ad hoc export bans when domestic prices rise above levels that are considered politically unacceptable
Policymakers need to understand that the milling sector and exporters need a conducive policy environment, without any anti-export bias, to ensure that their performance is internationally competitive
Rice in Myanmar is not only food- it’s at the center of their creation story. There’s a local legend about the gods giving rice seeds to the first people and directing them to Myanmar, a land where rice could grow well
Myanmar undoubtedly has a favorable agricultural potential. The country has abundant land, water resources, and a good climate for rice growing.
Higher rice exports could indeed stimulate agricultural growth and reduce poverty. Exporting rice goes much beyond increasing volumes. It should be seen and treated as an impetus for inclusive growth in Myanmar in the coming decade.