As China prepares to check illegal border trade with Myanmar, farmers and traders are apprehensive about the growing rice surplus and are asking the government for purchase guarantees. The worries are intensifying as the monsoon harvest approaches.
Myanmar Rice Federation (MRF), over the past few weeks, has met the officials from the ministry Agriculture to raise their concern over the growing needs of the farmers and traders for government price support. As China tighten controls over the import of agricultural products from Myanmar comprising of rice, maize, beans and sugar the farmers have serious concerns over the falling prices and therefore need government price support. Moreover Myanmar’s poor infrastructure compared to that of neighbouring countries compounds their cost of production. China has reduced its imports many folds in the recent past owing to uncertainty of Myanmar’s political situation. After the stringent checks at the Muse border gate the trade across border has been reduced to 1000 tonnes from 5000 tonnes a day earlier. As a result, Myanmar’s surplus has risen to nearly 6 laces tonnes over the past six month. With harvest time approaching, the farmers were anxious about the increasing surplus of rice and haven’t found buyers yet for the monsoon crop.
Demand of negotiation with China over annual contract
The MRF has asked the government to negotiate with China to arrange an annual contract for rice exports and to buy buffer stock to prevent further deterioration in the price. Even local rice traders and millers hesitate to buy from farmers in this insecure market at these falling prices.
Replying to their request an official from the commerce ministry said it was working with Myanmar’s ambassador in Beijing to determine if a quota can be negotiated. An official letter of request is currently being drafted in which it will be requested that China’s central economic committee; negotiate to get a regular rice export quota, both from the border at Yunnan Province and through normal trade. The commerce ministry was trying to negotiate an agreement on legal exports to China and at the same time was trying to explore new markets.
Myanmar’s history with regards to rice production and exports.
Since 1940 exports have played a major role for Myanmar with over 70% production was exported. Most of the rice was sold to the war-torn countries which faced food shortage. Although Myanmar remained the largest exporter of rice in the world but its contribution dropped to 39% come 1960 with the arrival of political instability in and growing ability of its neighbour to produce rice. While the total area under cultivation reduced, its production rose considerably from 14m tonnes in 1985 to 32m tonnes in 2009.Meanwhile its exports fell from 3.1m in 1940 to 1.7m tonnes in 1960, to a low of 28,000 tonnes in 1997(0.17% of production).
Myanmar’s High goals in Rice exports
Investment in Myanmar’s agriculture sector is beginning to see gradual results. Current government has set high goals for rice industry to regain its historic levels in production and in exports. In late 2012, it set an export target of 3m a year by 2017 and 4m tonnes by 2020. With Myanmar’s exports hitting 1.7m tonnes in March 2015 up 40% year on year it is expected that the country will achieve its 2m tonnes for 2015/16 which will be the highest volumes of exports since 1940. Since the lifting of economic sanctions, new markets, like Europe and now Great Britain are available to Myanmar.
The government want to help farmer and traders and are concerned about low price of rice because of Chinese ban but are currently in discussions with Indonesia’s government to export 3 million tonnes of rice between 2016 and 2019, he said, adding that it would help relieve some of the burden. According to the World Bank, Myanmar should open up its milling industry to foreign investment, diversify production and reduce the cost and complications of exports. If successful, the bank estimates that many of the most vulnerable people in Myanmar will have a chance to rise from extreme poverty.