Rising rice yields seen as golden opportunity

Myanmar can more than double rice exports by improving farm productivity, cutting export costs, and opening milling sector to FDI

Once the world’s top rice exporter, Myanmar has a chance to rejuvenate its glory days if its export strategy is reviewed, the World Bank said.

The country’s rice exports could more than double if production is raised and foreign investors are welcomed into the milling sector, it said in a new report “Myanmar: Capitalising on Rice Export Opportunities”.

The report was produced by the World Bank and the Livelihoods and Food Security Trust Fund (LIFT) of Myanmar. It highlighted that Myanmar’s paddy yield was the among the lowest in Asean, at 2.52 tonnes per hectare (6.25 rai) during 2010-2012 compared to 5.60 tonnes in Vietnam, which topped the chart.

The World Bank urged the country to diversify and increase rice production, open its rice-milling sector to direct foreign investments, and reduce export costs. This will help poor families in rural areas escape poverty, it said.

“This is now a government call to capitalise on rice export opportunities and secure sufficient incomes to smallholder farmers,” said Kanthan Shankar, the World Bank’s Country Manager for Myanmar. “Rice production is a source of livelihoods for about 70 per cent of the population. Higher and more profitable rice export improves farm incomes and food security of the rural poor. Increasing rice exports will spur momentum for inclusive growth and poverty reduction in Myanmar for the next decade.”

The report showed that though improving agricultural productivity and promoting rice exports are top priorities for government, rice export volumes remain small. Despite its plan to export four million tonnes of rice by 2020, annual rice export has reached only 1.3 million tonnes over the past years.

The current rice export strategy favours the production of low-quality rice, which is largely sold to Africa and China. Consequently, farmers earn minimal profits and agri-businesses have skipped necessary investments. The situation is worsening as the global demand for low-quality broken rice is shrinking.

There are good market prospects to accommodate more diversified rice exports from Myanmar over the next 10-15 years, particularly in the European Union and Asian countries, earn higher incomes, and diversify risks along different markets, the report said. The obstacles in hitting these marks are low productivity and poor rice quality at the farm level, undercapitalised and inefficient rice mills, and costly export infrastructure and procedures.

Opening rice mills to direct foreign investments is, according to the report, a vital step to take to increase quality and volumes of rice export.

Improving infrastructure and reducing export procedure costs would also boost Myanmar’s export competitiveness.

More efficient mills and lower exporting/trading costs would trigger changes at the farm level, helping to raise agricultural productivity and change farm practices, including the choice of rice varieties, required to match the evolving demands of importers

Conducive agricultural policy is also important to modernise Myanmar’s rice value chain.

“A policy environment conducive to supporting this refocus of the rice export sector is essential if anything is to change,” said Andrew Kirkwood, LIFT’s Fund Director. “Much of the policy change can be introduced without cost to public finances. In short, consistent economic policies without anti-export bias, alongside the current government effort to improve farmer access to finance, will offer high rates of return for Myanmar rice exports, for its farmers and for the rural poor”.

According to the Myanmar Rice Federation, the major rice-growing region is the Ayeywaddy. Myanmar’s average yearly production of rice has been steady at about 30 million tonnes since 2006, according to the federation.

Source: Myanmar Eleven

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