In a bid to consolidate various development plans under one common strategy, the government is working with several development partners to create an agriculture master plan for sustainable growth.
Drafted with the help of the Asian Development Bank, the UN Food and Agriculture Organisation, and the Livelihood and Food Security Trust Fund, the Agricultural Development Strategy and Investment Plan (ADS) aims to secure more international market share by increasing cooperation between the private and public sector, while also breeding higher-quality crops through the use of pedigrees. The plan further aims to provide fertiliser to farmers, promote good agricultural practices, raise the awareness of pesticide use and improve farmers’ access to loans.
According to the fourth draft of the ADS released in September 2017, the plan will have “profound implications for the ways the Myanmar population will shape their food production and distribution systems”. The report goes on to state, “The ADS will ensure that the process of agricultural transformation is accelerated and moulded according to the aspirations and constraints of Myanmar society.”
Opportunities & Threats
The country offers a number of opportunities in agriculture that investors can capitalise upon, including increasing demand for safe and convenient processed food in urban centres, particularly Yangon, Naypyidaw and Mandalay.
Rising global demand for agricultural goods presents another possibility for boosting Myanmar exports, namely rice, beans and pulses, in which the country has the potential to be competitive. Regional integration with ASEAN neighbours and an increase in economic activity will provide further opportunities for investors who may consider Myanmar as a production base. There is also the possibility for developing more sophisticated and efficient value chains for agricultural products including rice, pulses, fruit, vegetables, shrimp, cattle, maize, cassava and rubber. In addition to suggesting avenues for growth, the document identifies a number of threats that could derail progress in the sector, including the risk of land seizures, which continues to create social and economic pressure.
The unsustainable use of natural resources has also been cited as an issue that could result in land degradation. In addition, there are concerns regarding production capacity, as the pace of human resource development is currently too slow to sustain reforms. The report also noted the risk of natural disasters, and questioned whether Myanmar’s farming community is equipped to compete on a regional level.
In consultations held in preparation for the ADS, a number of key policies were highlighted for inclusive agricultural development.
The first was the development of an integrated value chain involving smallholder farmers, with a focus on specific male- and female-oriented initiatives, stemming from the fact that the majority of crop farming in Myanmar is done by women. These initiatives aim to reduce rural poverty and inequality while working to enhance economic efficiency.
The expansion of agri-business is also seen as a priority for the sector, with a focus on developing Myanmar’s supply chain through storage, processing, packaging, branding and logistics services – all of which will be assigned dedicated budgets. The document also notes the importance of enhancing inputs for the long-term sustainability of the agri-business environment, particularly in relation to access to fertilisers and agro-chemicals, seeds, feed, irrigation equipment and finance, all of which have historically been challenging for the average smallholder farmer to obtain.
Additional areas of the plan’s focus include agricultural diversification, rice crop intensification, development of the non-farm segment, secure land rights, expansion of rural credit, research to maximise crop yields, the growth of farmer organisations, infrastructure development and targeted budget preparation.
A number of five-year targets will support the overall vision of the ADS to achieve inclusion, competitiveness, food and nutrition security, sustainability and well-being. In terms of inclusion, the ADS aims to increase the income of marginal and landless male farmers by 40% and females by 45%, while reducing overall poverty by 15%. To boost competitiveness, the ADS projects a 40% rise in investment in the agri-food segment, up from a baseline of $530m in FY 2016/17. It also targets 40% growth in the value of agricultural exports by 2022, from $2bn in FY 2016/17. The plan further aims to boost value addition in the sector from 30% to 80%, while increasing the share of Myanmar’s agricultural exports to the world market by 30%.
Other targets include raising land and labour productivity by 50%, water use efficiency by 30% and soil fertility by 30%. Overall, the ADS aims for a 50% increase in smallholder male farmers’ income, while female farmers’ income should rise by 60% by 2022. Coupled with the main vision of the ADS, a number of broad outcomes are expected to be achieved by 2022.
The first of these outcomes is the enhanced governance and capacity of the Ministry of Agriculture, Livestock and Irrigation, and greater capabilities by other agricultural institutions to design, formulate and implement policies. This task will be managed by the Department of Planning, which has been allocated a budget of MMK135.9bn ($103.8m). The second outcome of increased agricultural productivity and higher income for smallholder farmers will fall under the remit of the Department of Agricultural Research, with a budget of MMK1.24trn ($947.1m). Higher yields are expected to result from a number of improvements, such as enhanced research systems for crop, livestock and fisheries; wider application of appropriate mechanisation in the agricultural value chain (see analysis); more responsive and reliable irrigation and drainage services; and better-fed and more productive animals. “Myanmar’s geographic location and huge fishery resources in its coastal waters, rivers and inland reservoirs provide great potential for fisheries exports, especially prior to festive periods such as Chinese New Year,” U Maung Maung Nyunt, senior executive officer of Global Treasure Bank, told OBG. “Commercialisation and industrialisation through the use of technology in compliance with food safety standards must be encouraged so that the fisheries industry can enhance export capacity,” added fellow senior executive officer U Khin Ko Lay.
Meanwhile, the third outcome – enhanced market linkages and competitiveness of farmers and agro-enterprises – has been allocated a budget of MMK912.6bn ($697.1m), which will be divided between the departments of planning, agriculture, rural development and small-scale industry, and the Myanmar Agriculture Development Bank. This target will be reached through a series of steps, including an improved business environment along the supply chain; enhanced investment regulations for agri-food investors; higher food quality and safety; upgraded institutional framework for planning and implementation of rural development programmes; and better access to a range of financial services for farmers and agri-businesses. It is anticipated that 34% of funding, or $593m, will come from the budget at an average of $118m a year. The private sector and farmer organisations will contribute 5%, and the remainder, $1.08bn, will be provided by ADS development partners at $216m per year through to 2022.
With support from international institutions and development partners, the strategic targets of the ADS appear to be within reach. A number of development programmes in recent years have contributed to production growth in certain segments, and Myanmar can capitalise on some of those production gains by leveraging its low farmgate prices, especially when compared to Vietnam and Thailand. However, this competitive advantage is threatened by high processing and transport costs. Companies and producers note it is more expensive to move agricultural goods inside Myanmar – for example, between central Myanmar and the Port of Yangon – than to export them elsewhere by sea. Alongside infrastructure investment, which would contribute to significantly reducing logistical costs, Myanmar could also look more actively at rolling out a land reform plan capable of strengthening property rights. According to the OECD, more than half of all farms consist of land plots less than 2 ha in size. The scale and structure of agriculture property in Myanmar remains a primary reason growth is hindered and limited mechanisation has been introduced.
Despite these challenges, the successful implementation of the ADS could mark a turning point in unlocking Myanmar’s agriculture potential. The plan identifies structural problems and indicates paths with the potential to help transform agriculture into an engine for growth with the ability to lift millions of people out of poverty. If enacted in a timely and efficient manner, some of the suggested reforms could help support the development of exports by raising production levels and the overall value of Myanmar’s agri-food products.