Myanmar: Rejoining Asia’s rice bowls

• May 19, 2017

Rice is one of the major sectors prioritised by the Myanmar National Export Strategy. The Strategy was designed to fuel the country’s sustainable development through export promotion and was first launched in March 2015 under the previous administration.

At one time, the country was the top rice exporter internationally until the Second World War. Subsequently, for a long period of time, with the exception of 1997 and 2001, the country was unable to export more than one million tonnes per year.

From 1997 to 2001, the government entities under the Ministry of Commerce directly bought paddy from farmers and were responsible for processing rice, selling to the military and civil organisations and also exporting to other countries.

Situated between the two most populous countries, China and India, Myanmar has a vast potential to develop its rice exports. The paddies covering large areas of the country also means that it can produce a lot of rice beyond domestic consumption. The question, however, is how the potential can be unlocked.

Myanmar is expected to export two million metric tonnes of rice this fiscal year with a target of three million metric tonnes exported by 2020, according to the Myanmar Rice Federation.

Improving quality standards and qualifications of rice and paddy is an important part in achieving the target. The entire quality control system, including standards and specification of Myanmar rice industry, is still very weak, said Charles Schneider, senior operations officer at the International Finance Corporation (IFC).

“We need to introduce a specific reform and improvement plans.

“This is also in line with our medium-term target for Myanmar Rice Federation: to upgrade and update the improvement measures for the entire quality-control and management process, for the common good of farmers, millers, traders, consumers and all stakeholders in Myanmar’s rice industry,” he said.

Charles Schneider said that the IFC is placing more emphasis on the agriculture sector and has invested over US$3 billion last year alone in the global agriculture supply chain.

“Improving quality means a greater market access, higher value and more benefits for farmers, millers and everyone involved in the value chain. For rice this means improving the standards of rice and paddy, enhancing market potential and value. As we all know, rice is an important export, since Myanmar is expected to export about US$700 million in this coming year with a target of three million metric tonnes by 2020,” he explained.

The Myanmar Rice Network 2017 is the first of its kind in Myanmar and promises to bring together key industry stakeholders from around the world to help strengthen the country’s growing rice market.

“The Rice Trader [TRT] is honoured to host this important seminar as a recognition towards Myanmar’s rice and importance in the global rice trade,” said Jeremy Zwinger, TRT president.

“This meeting is a timely gathering that looks at how Myanmar will set its course towards growing exports and the value from these rice exports,” he added.

Deputy commerce minister U Aung Htoo said during the event that domestic rice consumption has grown to 88 percent of total production, and only 12pc goes to export. A large percentage of Myanmar rice exports go to China through border trade.

“Myanmar traders have faced problems from Chinese crackdowns on undocumented rice exports recently, which have affected local market prices. We have been supporting regular overseas rice exports by exploring new markets and strengthening the existing China border trade,” he said.

Jeremy Zwinger said if Myanmar aims to export two million metric tonnes of rice in total this year, Myanmar will have to work very hard on a variety of issues. The biggest thing is to continue dialogues with the government and the associations for solutions and strategies. It took a long time to push the industry forward, even in places such as Vietnam.

“Myanmar is an important industry in the world rice market. As a large producer of rice, as well the largest consumption of rice per capita in the world, I think Myanmar is doing a great service,” Mr Zwinger remarked.

China is still the biggest rice buyer and market in the world, so it is important for Myanmar to retain a good relationship with China in order to continue the trade, according to Mr Zwinger, who added that relying on China for rice export is not a bad thing.

“What do the businessmen do? Businessmen try to sell your rice to the best place. It’s good to sell 70pc of your rice to one customer. Yes, it’s enough – having a customer buying that much.

“But there are also challenges like relying too much on one customer. Obviously, rice traders in Myanmar want to have a developing market,” he said.

U Nay Lin Zin, joint-secretary general of Myanmar Rice Federation said a lot of infrastructure needs to be built such as a dry port; logistics have to be improved with the support of the central and regional governments in order to meet the two-million tonnes export target.

“We are sending recommendations and the results from the event to the related ministries and government departments. We still have many challenges in expanding export,” he said.

Myanmar started relying on the Chinese border market since 2011. Of the total rice exports from Myanmar, 80 percent goes through the Chinese border market. With last year’s crackdown, stakeholders have started to search for a normal export market and it has become a ratio of 60:40 between Chinese border market and other markets, U Nay Lin Zin said.

“The crackdown affects the local rice price as prices dropped severely last year. We are expecting to have a 50:50 of export from both border and normal trade,” he said.

U Myo Aung, joint secretary of Myanmar Rice Federation said the border trade is where everybody can trade freely. It is much easier than normal trade as only rice export companies – with the help of agreements and efforts from governments from both sides – can initiate trading contracts. The top-down approach works when governments create the context in which businesses can have contracts and flourish.

“In the past, the Myanmar government suspended rice export licenses if the local price became high. The contracts were then cancelled and Myanmar was removed from the list of major exports in the world market. Myanmar is now trying to build the trust with import countries,” he added.

U Thaung Win, central executive member of Myanmar Rice Federation said Myanmar is not trying to cut off relations with the Chinese rice export. As 15pc of the total production is going to export, Myanmar is now trying to increase the yield and production of paddy.

“If production increases, we will have a surplus for export. So we would like to strengthen the Chinese border market at the same time while we attempt to connect with new markets for normal export,” he said.

Source: http://www.mmtimes.com/index.php/business/26068-rejoining-asia-s-rice-bowls.html