Rising production costs deny farmers benefits of high rice prices

Rice costs are going up, hitting peculiar Myanmar customers, however smallholder farmers should nonetheless cope with larger prices of fertiliser and diesel.

By FRONTIER

Ploughing his patch of land with a pair of oxen in central Myanmar, U Zaw Myo Latt wearily laments the lifetime of a small holder. Though rice costs are rising, the prices of rising the crop have soared due to occasions past his management.

“I farm as a result of I’ve no alternative. I’ve no different means of incomes a residing. I make no revenue from farming. I’ve a plot of land, so I farm, that’s all,” the 30-year-old stated as he ready his 2.5 acres for a winter crop of black gram rice following the monsoon paddy harvest in Zabuthiri Township, Nay Pyi Taw.

“This yr in our discipline,” Zaw Myo Latt stated, “we harvested 70 baskets per acre,” a decrease yield than typical. “That was as a result of we needed to economise on fertiliser, which is getting dearer,” he defined.

Zaw Myo Latt is the eldest son in a household of seven and has taken over the farm work so his mother and father can do different jobs, as a result of they’ll not survive on farming alone.

“My father works as a dealer at a cattle market. My two youthful brothers are authorities workers incomes a [monthly] wage of K200,000 every,” he stated, roughly US$95 on the official alternate charge.

His expertise mirrors that of many rice farmers throughout Myanmar, as elevated prices of fertiliser and mechanisation over the previous two years outstrip rising market costs for rice. Some 70 % of Myanmar’s inhabitants is determined by earnings from agriculture and most farmers are smallholders.

Monsoon paddy costs this yr ranged from K1.2 million to K1.5 million per 100 baskets, relying on the variability, up from K800,000 final yr.

“The worth is larger… Final yr the revenue for farmers on one acre of rice could be simply over K100,000,” stated U Aye Swe, who has seven acres of land in Pyawbwe Township in Mandalay Area. “This yr I feel will probably be round K400,000. However even that may not be a snug and enticing revenue for farmers.”

Farmers interviewed by Frontier complained {that a} sack of chemical fertiliser rose to over K100,000 forward of this yr’s monsoon paddy from K80,000 final yr, whereas the price of hiring a mechanical harvester jumped to K90,000 an acre from K70,000.

This follows an 80pc leap in international fertiliser prices final yr, in accordance with the World Financial institution, pushed partially by hovering fuel costs as economies emerged from COVID-19 lockdowns. Russia’s invasion of Ukraine drove costs even larger. 

As a result of Myanmar farmers depend on imported fertiliser, they had been additionally hit by the devaluation of the kyat that adopted the army coup in February final yr, driving up costs of all agricultural inputs from abroad.

Though some farmers are recovering this yr in comparison with the market turmoil of 2021, cash-strapped rice farmers are slicing again on fertiliser use, which can have an effect on yields. 

“Per acre yield varies from one farmer to a different,” stated U Than Htun, who farms 10 acres in Mandalay Area’s Patheingyi Township. “If cultivated systematically and you utilize as a lot fertiliser as wanted, then the yield is bound to be good. Presently farmers need to economise on enter, utilizing solely as a lot as they’ll afford.”

The typical paddy yield is 50-70 baskets per acre, in accordance with farmers, with manufacturing prices of practically K600,000 an acre for an excellent yield.

U Ko Ko, proprietor of 30 acres, additionally in Patheingyi Township, says larger paddy costs had been being sustained in late November by consumers who count on yields to fall on the subsequent harvest. “That’s the reason they’re nonetheless shopping for eagerly,” he stated.

Native data is backed up by worldwide studies.

The Worldwide Meals Coverage Analysis Institute, a United States-based non-profit analysis centre, says Myanmar’s rice productiveness dropped 2.1pc throughout final yr’s monsoon season. Yields declined considerably in Kayah and Chin states, each affected by battle and enduring excessive ranges of meals insecurity. IFPRI stated 2021 costs of fertiliser based mostly on urea elevated by 56pc on common, whereas mechanisation prices rose 19pc. Paddy costs on the farm, in the meantime, rose by simply 8pc.

“Whereas the rice sector has been a supply of stability within the nation, the scenario for future crop seasons is nevertheless regarding given additional will increase in enter costs (particularly fertiliser), the general lowered profitability of rice farming, the lowered coping methods remaining for rice farmers, and foreign money coverage modifications by the army authorities,” IFPRI stated.

IFPRI stated in a separate survey of millers throughout Myanmar in August this yr that 91pc cited restricted entry to electrical energy and reasonably priced gas as their most vital disruptions, with common milling throughput falling by 20pc from a yr earlier. Greater rice costs and milling margins had largely tracked the devaluation of the kyat towards the US greenback, it stated.

With millers predicting decrease yields this yr due to much less fertiliser and fewer beneficial rains, IFPRI stated a decline in monsoon paddy manufacturing might have massive implications for rural and concrete households if costs had been pushed larger because of this.

U Myint Wai, a farmer with 100 acres in Maubin Township within the nation’s greatest rice rising area of Ayeyarwady, stated the buyer is paying extra however the farmers don’t see the earnings.

“Farmers need to repay loans taken for rising their rice as quickly as it’s harvested. The worth of rice normally rises in March and April, however the farmers haven’t any extra rice by that point. The brokers and retailers may have it. So, the revenue goes to those that have already got cash,” he stated.

Costs of fundamental commodities in Myanmar, together with rice, have gone up in tandem with the worth of the US greenback. 

“The worth of the greenback is round K3,000, gold is round K2.6 million/tical [16.34 grams] and rice is above K40,000 for 50 kilogrammes. The costs have jumped and I don’t suppose they’ll fall again,” stated Ko Ko.

Junta dismisses scarcity considerations

Coup chief Senior Normal Min Aung Hlaing insisted throughout a speech in August that the nation was nonetheless producing sufficient rice for native consumption.

His subordinate U Myo Tint Tun, deputy everlasting secretary of the regime’s Ministry of Agriculture, Livestock and Irrigation, stated Myanmar expects to develop over 17 million acres of paddy on this fiscal yr, ending in March 2023.  This is able to be lower than the 17.42 million grown final fiscal yr, however barely greater than the 16.88 million in 2020-21.

These assurances had been echoed by U Ye Min Aung, chair of the Myanmar Rice Federation, which often meets with the junta. The businessman instructed Frontier that though the worth of rice has risen, folks shouldn’t worry shortages as a result of “successive nationwide governments” have prioritised sustaining adequate home shares earlier than exporting the excess.

Nevertheless, he stated rice wanted to be cheaper, particularly for city employees. “For this, the non-public sector, the federal government and worldwide improvement businesses ought to cooperate. Then the socio-economic lives of peculiar folks will enhance.”

Ye Min Aung predicted rice exports will stay steady at round 2 million tonnes within the 2022-23 fiscal yr, bringing in $800 million. He stated that to this point this fiscal yr, ending in March 2023, exports have totalled over 1 million tonnes, with the subsequent 4 months anticipated to see essentially the most exports. Rice is certainly one of Myanmar’s greatest export earners, and the nation is the world’s seventh largest exporter of rice, with China serving as the biggest purchaser.

Myo Tint Tun stated a brand new contract farming system for summer season paddy remains to be being deliberate. “We’re discussing with area and state governments. It isn’t full but,” he stated, explaining that sub-national administrations wanted to resolve what number of acres and which farmers could be concerned. Underneath the contract system, the junta will lengthen loans to non-public entrepreneurs, rice millers and rice corporations to work with farmers.

From the K400 billion State Financial Promotion Fund, the regime says it’ll use K230 billion for cultivation of 850,000 acres of summer season paddy and 500,000 acres of inexperienced gram rice within the 2022-23 fiscal yr. Farmers won’t be given money straight however K200,000 price of seeds, chemical fertiliser and diesel per acre.

Ye Min Aung stated the Myanmar Rice Federation invited rice millers and rice corporations in September and obtained proposals from round 40 corporations for the scheme, which might be underway by January.

“This programme is geared toward selling summer season paddy manufacturing and might be principally applied in Ayeyarwady, Bago and Yangon areas,” he stated. “Summer season paddy is vital and if the manufacturing charge is nice, the native and export market will profit.”

However 4 of the 5 farmers interviewed by Frontier stated they weren’t on this contract system and that they merely needed decrease enter costs.

Regime ‘not displaying goodwill’

The fundamental reference or assured ground worth for paddy was set by the junta at K630,000 for 100 baskets on November 11 for this yr’s monsoon paddy and the summer season paddy early subsequent yr.

Though ostensibly geared toward defending farmers’ earnings, these interviewed by Frontier stated that at about half the market worth, it provided no actual safety in any respect.

“They [the regime] set the fundamental worth annually simply as a formality. They aren’t displaying goodwill in the direction of farmers,” stated Ko Ko.

Nevertheless, Ye Min Aung insisted that the fundamental reference worth solely acts as a assured ground in case costs fall too far. 

He identified that the worth was determined by the Main Physique for the Safety of Farmers’ Rights and Enhancement of their Advantages. Arrange after a legislation handed in 2013, it’s composed of agriculture ministry and different officers, non-public business-owners, farmers’ organisations, technicians and state and regional ministers of agriculture.

Myint Wai, the farmer in Ayeyarwady, stated farmers couldn’t survive at that worth.

“If farmers had been to promote their paddy on the fundamental worth introduced by the federal government, you would need to go to the museum to see one,” he declared.