BUSINESS

Can Burma Become World Rice Bowl Again?

By WILLIAM BOOT / THE IRRAWADDY| August 14, 2012 |

  

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Labors unload rice sacks from a boat in Nyaung Tone, Irrawaddy Delta, around 60 miles southwest of Rangoon. (Photo: The Irrawaddy)

Burma has ambitions to try to regain its onetime stature as the world’s rice bowl when the country was by far the biggest exporter of the grain.
Back in the 1930s—before World War II wrecked the economy during the Imperial Japanese Army’s occupation—Burma shipped seven million metric tons of rice abroad annually.
In 2011, it managed 778,000 tons while neighbor Thailand now holds the export crown with 10 million tons per year.
However, Thai producers are beginning to look apprehensively over their shoulders at the possibility of their western neighbor edging back up the competition ladder as Burma begins to reform its stagnant political and economic landscape.
But experts believe this is not likely to happen for a few years yet. Many of the country’s rice farmers are saddled with rising debts while the price of their crop falls, Reuters news agency reported on Aug. 9.
In a special assessment of economic developments in Burma since the end of the stifling junta regime, Reuters noted: “Change is coming either too slowly, or in the wrong forms, to the place where the great majority of Myanmar’s people live—the farming heartland, which once led the world in rice exports before withering under half-a-century of military dictatorship.”
The report paints a rural scene barely changed in a century, with oxen still the chief muscle engine in an unmechanized, labor-intensive industry where the hand-made scythe remains principal tool.
Antiquated practices and poor quality seed are two aspects of infrastructure problems holding back rice production and bigger, higher-value exports. Inadequate and sluggish transport and decrepit milling plants still driven by 19th century steam engines also hinder growth.
Carting rice from a major production area of the Irrawaddy Delta to Rangoon—a distance of roughly 120 miles—is more expensive than shipping it from Rangoon to Singapore, Myanmar Rice Industry Association Secretary-General Ye Min Aung told Reuters.
So what would it take to get Burma’s rice business back on its commercial feet?
“The [Burma] rice sector, which has been affected by decades of extensive government controls, needs more efforts to improve the availability of credit, inputs and storage facilities,” says economist Samarendu Mohanty, chief of social sciences at the International Rice Research Institute (IRRI) in Manila.
“The port facility and financial system, which have been in complete disarray from years of international sanctions, need a major uplift if the country dreams of returning to its old glory of being a major player in the global rice market,” he added.
“[Thailand’s] stay on top may be short-lived if [Burma] and Cambodia get their act together and modernize their rice sector and reform their policies. Both these countries are endowed with fertile lands and a favorable natural environment that can expand their production and take away market share from Thailand,” the IRRI official suggested in a study of Southeast Asia’s market potential.
Mohanty praised the Burmese government’s establishment of the Myanmar Rice Industry Association (MRIA) in 2010 by merging producers, traders and millers associations. The MRIA acts as a channel between investors, farmers and millers and is allowed to export without government involvement or interference.
But new infrastructure will require considerable investment. Building new mills or renovating existing ones could cost US $500 million alone, Ye Min Aung estimated.
And it is unclear where that kind of cash will come from. The IRRI said in a study report in July that Burma’s emergent status might benefit from a system used in Uruguay which has come from nowhere to achieve the world’s third-highest rice productivity rate—reaching eight tons per hectare in the last five years. That has happened due a “unique system that has triggered 25 percent gains.”
“The key features of the [Uruguayan] rice sector are vertical integration and transparency among farmers, millers, researchers and the government,” says the IRRI.
“The mills lend farmers up to 70 percent of the credit required for investments in machinery and other inputs, and coordinate a collective insurance scheme with farmers to protect them against crop losses.”
Other features of the Uruguayan system include close links between millers and overseas traders as wells as liaison between millers, farmers and plant-breeding scientists at the country’s research center, and a fund drawn from rice sales to finance new grain research.
“While most of the rice in Asia is consumed by the very poor, there is a rapidly growing middle class buying high-quality branded rice from supermarkets,” said Bas Bouman of the Global Rice Science Partnership who studied Uruguay for the IRRI.
“It’s possible that rice production in [Burma] could benefit from the experience of Uruguay. I consider [Burma] a virgin territory because the existing system is relatively undeveloped and comes with no baggage. If it continues to open up, it could be a great opportunity to introduce a Uruguayan-style rice system from scratch.”
But before this could be undertaken in Burma there is a far more fundamental problem threatening to bedevil rice farming in the country—land rights.
Many farmers fear that economic reforms now being pushed by the government will encourage more rather than less land grabs as big businesses seek to capitalize on new investment potential, Reuters reported.
“Two new bills—the Farmland Law and the Vacant, Fallow and Virgin Lands Management Bill—already face criticism from farm activists for creating more opportunities for the state to take over land,” the news agency said.
Burma’s chances for a rice renaissance are further worsened by the unfortunate timing of the country’s economic revival coinciding with a world slump in rice prices triggered by a glut as more countries export.
Top exporter Thailand saw a crash of 45 percent to just 3.45 million tons in the first six months of this year, caused in part by stiff competition from rivals Vietnam and India.
This is expected to be a short-to-medium term hitch though, with global demand for rice expected to grow by 116 million tons per annum over existing production by 2035, says the IRRI.
Meantime, although Burma may have a long climb to be among the world’s top five rice-exporting countries once again, it is already in fifth place when it comes to eating rice.
Rice is such an important staple of the Burmese diet that the average annual per person consumption is 157 kg—above Cambodia, the Philippines, Indonesia and Thailand in Southeast Asia.

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