Is Burma Ready for a Rice Renaissance?
INVESTMENT

Ready for a Rice Renaissance?

Myanmar rice, Myanmar agriculture

Myanmar Rice Federation Chairman Chit Khine. (Photo: JPaing / The Irrawaddy)

Since Myanmar’s current government took power three years ago, the country’s rice exports have steadily increased. Now no longer confined to markets in Asia and Africa, Myanmar’s rice is increasingly finding its way to the West, including the United States and the European Union. Recently, The Irrawaddy’s Kyaw Hsu Mon had a chance to speak with U Chit Khine, the chairman of the Myanmar Rice Federation, about the outlook for an industry in which Myanmar was once a key international player.

Question: What is your role as the chairman of the Myanmar Rice Federation?

Answer: As chairman of the Myanmar Rice Federation, and also as head of Mapco [the Myanmar Agribusiness Public Corporation], my role is to do whatever I can to improve Myanmar’s rice industry.

Q:What is Myanmar’s ranking among rice-exporting countries?

A: Myanmar is still behind Thailand, Vietnam and India as an exporter of rice. Last year, we exported just 1.5 million tons, and this year will probably be less, because we need to rebuild our rice-cultivation system and improve our milling system. Those are challenges for us.

Myanmar’s advantage is that we have GSP [Generalized System of Preferences, a preferential tariff system that provides for formal exemption from the more general rules of the World Trade Organization] status for export products. This means that we are in a good position to compete if we can improve the quality of our rice.

At present, our main market is southern Africa, but demand there is decreasing, so we need to find new markets. That means we have to change our entire process of producing and exporting rice. Since 2009, many rice-related companies have been involved in helping to improve the industry. The federation is also teaching farmers about the different kinds of seed. Even if we improve the milling process, the quality will still suffer if the rice we are growing is not very good.

Until now, we’ve only had low-quality rice to sell, but we’re looking to change that. Last year, we exported 5,000 tons to Japan, and this year we will increase that to 6,000 tons. This is just a first step toward winning the trust of markets in other developed countries.

Q: Many farmers in Myanmar are struggling financially. What can be done about this?

A: First we need to get their debts under control by offering insurance to reduce risk. We also offer awareness training. Another problem they face is a shortage of workers in the paddy fields, so we make mechanized farming equipment available to them on a rental basis. We are also collecting data about how many rice mills there are in Myanmar, so we can assess their needs. The government could also help, for example by enacting a land law.

Q: What kinds of problems do rice traders face?

A: Transport costs are a major problem that cuts into the profitability of rice-trading. For example, even if we sell rice for US$400 a ton, we will earn 20 percent less than a rice trader in another country [selling for the same price] because of high shipping costs here. The reason for that is the long waiting time at ports in Myanmar, especially during the rainy season. To address this problem, we need to improve port facilities. That’s why Mapco is building a grain terminal at Thilawa port, which will be completed in late 2015.

Q: What are the major international markets for Myanmar’s rice?

A: Until recently, we relied mostly on markets in southern Africa, but these days we are expanding to other areas, such as Russia, the EU, Singapore and Japan.

Q: What is the current situation with regard to exports to the EU and US?

A: We are just starting to export there, but we need to upgrade our rice mills to improve the quality of the rice. The EU market now welcomes our rice exports and will import more in the coming season.

Q: What are the main rice-producing areas in Myanmar?

A: Ayeyarwady Region is still the top rice producer. Bago Region and Mon State are also important rice-producing areas, and Sagaing Region has the potential to become one in the future.

Q: Why is there still very little interest among foreign investors in Myanmar’s agriculture sector?

A: Some investors are starting to take an interest, but they are learning that there are a number of problems affecting this sector, such as the lack of transportation and power infrastructure, and land disputes.

President U TheinSein has called for the cultivation of the new Pearl Thwe paddy seeds for the export market, but so far with little success. Why is that?

It’s a complicated issue. There have been demonstrations of hybrid paddy cultivation in Naypyitaw, but for farmers, it’s all new. So there needs to be awareness training for the farmers, and also financial and other support. Because the cultivation cost is much higher, it would be good if the government provided loans.

Q: What else can the government do to assist the agriculture industry?

A: Parliament has recently approved laws that will protect farmers’ interests, such as rules and regulations affecting land mortgages, credit loads and long- and short-term credit. If it also passed laws on agriculture insurance, it would benefit farmers greatly.

This interview first appeared in the May 2014 issue of The Irrawaddy magazine.


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