Ministry to deal with illegal rice exports to China

27.11.2017

ILLEGAL trading of raw paddy with China may hurt official rice exports in the upcoming harvesting season, U Nay Lin Zin, joint general secretary of Myanmar Rice Federation, said.

Chinese demand for raw paddy produced in Myanmar is expected to rise because the spot price for the crop in China is higher than the market price in Myanmar.

As a result, many merchants from China buy paddy at a lower price from Myanmar which they then resell to the Chinese government at a higher price.

These transactions are illegal, as China does not allow raw paddy imports.  They are also damaging to Myanmar, as illegal exports lead to price volatility.

On one hand, local paddy farmers benefit from higher paddy prices when demand from China rises.

This is why the related ministries and authorities have trouble controlling this illegal market, businesses from the rice sector commented.

On the other hand, the entire process is inherently risky. A slowdown in Chinese demand, for example, could lead to steep and sudden fluctuations in price. That, in turn, could jeopardise the entire Myanmar rice export business.

It could also negatively affect the amount of tax the government collects from the trade. U Nay Lin Zin said exports of raw paddy should only take place after domestic consumption needs are met.

"If we calculated the amount of rice needed to maintain food security in Myanmar, we might face difficulties.

“In the long-term, illegal rice trading will harm the rice export business,” he added.

The relevant ministries are aware of the situation though, and over the shorter term, “we will be discussing how to manage the business of illegal rice trading between the Ministry of Commerce, Ministry of Home Affairs and stakeholders of the sector soon,” U Khin Maung Lwin, Assistant Permanent Secretary of Ministry of Commerce, said.

Myanmar exported 1.7 million tonnes of rice in the 2016-17 fiscal year and up to 1.9 million tonnes up until November 20 during the current fiscal year.


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