Rice surplus grows as prices fall with trade uncertainty on Chinese border

07.10.2016

As local rice prices continue to tumble, worried farmers and traders are asking the government to step in with purchase guarantees. China, Myanmar’s main customer for rice, is reducing its demand amid a crackdown on illegal cross-border trade.

Farmers harvest rice in a paddy field. Photo: AFPFarmers harvest rice in a paddy field. Photo: AFP

The worries are intensifying as the monsoon harvest approaches.

Over the past few weeks, Myanmar Rice Federation (MRF) has met with officials from the ministries of commerce and agriculture to state their concerns and to request government help.

They fear that without government price support, many farmers face serious losses as the Chinese border authorities tighten controls over the import of agricultural products from Myanmar, including rice, maize, sugar and beans, while prices continue to fall, say industry insiders.

MRF joint secretary U Nay Lin Zin told The Myanmar Times yesterday that Myanmar has no real market for its rice except for China. Their expected losses are compounded by high production costs caused by poor infrastructure compared to that of neighbouring countries.

“In the past six months since the present government took office, our problems have been attributed to the uncertainty of the political situation and the transition,” he said. “But China has now reduced its import volume fivefold.”

Myanmar was exporting about 5000 tonnes of rice a day to China at the Muse border gate, but it is now less than 1000 tonnes, U Nay Lin Zin said.

“Over the past six months, our surplus has risen to nearly 600,000 tonnes,” he said.

With the kyat currently trading at K1269 to the dollar, exchange rate woes compound the situation further.

“I think China is trying to stop illegal border trade completely. We have to start looking for new markets or other solutions,” said U Nay Lin Zin.

U Thein Aung, president of the Freedom of Farmers League, said that unless the government stepped in to buy rice from the monsoon crop at a fair price, farmers could be plunged into debt for years to come.

In the past six months, prices for 100 baskets (about 2.05 tonnes) of rice have dropped from around K520,000 to be hovering at about the K400,000 mark, he said.

“Myanmar produces nearly 20 million tonnes of rice a year, which is twice what we consume locally,” he said. “China used to import 90 percent of our total exports – we relied too heavily on that market.”

With harvest time approaching, farmers were anxious about the increasing surplus, U Thein Aung said.

“We still have summer crops in hand and haven’t found buyers yet for the monsoon crop,” he said. “We need enough capital for the next crop as well as a market for the coming harvest.”

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, said U Nay Lin Zin.

“Even local rice traders and millers hesitate to buy from farmers in this insecure market at these falling prices,” he said.

According to the statistics from the Ministry of Commerce, rice exports from April to September last year were valued at US$168 million, compared to only $122 million during the same period this year.

U Khin Maung Lwin, an assistant secretary at the commerce ministry, said yesterday the ministry 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, he said.

“The letter is to request that China’s central economic committee negotiate [with us] to get a regular rice export quota, both from the border at Yunnan Province and through normal trade,” he said, referring to trade via ports.

Yunnan provincial government was keen to buy Myanmar’s produce, U Khin Maung Lwin added, but the decision had to go through Beijing.

“We know that the farmers and traders are concerned about the low price of rice and uncertain about if China has banned rice imports from the border area,” he said. “The commerce ministry is trying to negotiate an agreement on legal exports to China and at the same time we are trying to explore new markets.”

The government was 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.

The Ministry of Agriculture could not be reached for comment yesterday.


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