Myanmar boasts diverse ecological conditions, fertile soils, and promising fisheries and aquaculture. The current administration has centred its vision for future economic prosperity and its drive to alleviate poverty around agriculture. Underlying the sector’s significance, agriculture accounted for 38% of GDP and 70% of the workforce in 2018.
While Myanmar was once the world’s largest exporter of rice, the post-independence era saw state support for agriculture decline and productivity levels drop. Today, however, efforts to enhance crop diversity and increase output are being introduced, bolstered by the June 2019 opening of the Myanmar Productivity Centre. Even so, major upgrades to storage and processing facilities, rural electrification and transport infrastructure are needed to strengthen the position of producers in the farm-to-market value chain and gain additional revenue.
The Asian Development Bank (ADB) predicted that growth of the sector would slow to 0.5% in FY 2018/19, down from 2% the previous year, because of flooding experienced in 2018. However, modernisation and mechanisation are on the rise and the continuation of this trend is expected to stimulate growth in the future. Indeed, the fact that just 6.6m ha – or about 53.5% – of the country’s 12.3m ha of arable land is under cultivation further emphasises the sector’s room for expansion.
Structure & Oversight
The Ministry of Agriculture, Livestock and Irrigation (MALI) is responsible for managing and providing oversight to the sector. MALI’s Agriculture Development Policy 2016 set forth its vision for inclusive development, emphasising the opportunity to capitalise on Myanmar’s favourable farming conditions to diversify and improve the quality of crops. The policy aimed to ensure the food and nutritional security of Myanmar citizens and boost the socio-economic well-being of rural families and communities. Infrastructure development and better seed, livestock and fish species procurement and cultivation feature prominently in the policy.
In June 2018 MALI launched the Agriculture Development Strategy and Investment Plan (ADS), with backing from the ADB, the UN Food and Agriculture Organisation (FAO), and the Livelihoods and Food Security Trust Fund. The ADS builds on the 2016 policy and sets out a five-year plan for strategic investment aimed at accelerating growth while forging efficient channels of communication between the government, farmers and other stakeholders.
Effectiveness of implementation will determine the success of the ADS, U Soe Tun, vice-chairman of Myanmar Rice Federation, told local media in June 2018. “Under previous governments, strategies to develop the agriculture sector were devised but implementation was weak,” he said. “Now we have a good strategy to grow the sector for the next five years. The government must not fail to implement it.”
Key Crops
Around 60 different types of crops are grown across the country. The most common crops are rice, beans and pulses, and maize. Rice is grown by 80% of the country’s farmers, primarily during the monsoon season. Traditionally, farmers switch to beans, pulses and maize during the cool and dry seasons, but some farmers in the highlands and the Ayeyarwady Delta now opt for a second rice harvest, depending on the remaining level of rainwater.
Beans, pulses and oil crops can withstand hotter, dryer conditions and are generally found in central dry zones. Shan State, Chin State and the Sagaing Region are home to the most fields of maize, the third-largest crop in terms of total land area. While rice, beans and pulses, and maize account for the majority of the cultivated land, groundnut, sesame seeds, watermelons and soybeans can be found throughout the countryside. In this crop diversity lies the potential to boost the value of outputs. “Myanmar has reached a stage of increased value added for its agricultural products,” Daw Yi Mon Aye, executive director of domestic industrial lubricants wholesaler AKT Holdings Company, told OBG. “There is significant potential in crops such as cocoa and sesame to build on Myanmar’s strong agricultural base and move up the value chain.”
Export Opportunities
Myanmar’s advantageous location in South-east Asia underlines the potential for farming and fisheries to grow as major global exporter, especially with markets such as India and China across the border. According to figures from the Ministry of Commerce (MoC), between October 2018 and February 2019 agricultural export revenues rose by $81.9m, reaching $1.3bn, relative to the same period the previous year. However, even this increase compares poorly to Myanmar’s ASEAN neighbour of Vietnam, which exported $40.2bn worth of agricultural products in 2018. Despite the fact that Vietnam is half the size of Myanmar, it uses around the same amount of land for agriculture.
However, the US-China trade dispute has given Myanmar and other South-east Asian economies the chance to plug gaps in China’s supply chain. “Some welcome export opportunities could arise for the farmers of Myanmar, who could capitalise on Chinese demand for products previously imported from the US,” U Thawda Tun, CEO of Marlarmyaing, a manufacturer, importer and distributor of farm inputs, told OBG. One product with notable potential is soybeans. China bought 54% of all soybean exports from the US in June 2019, highlighting the opportunity for other suppliers should tariffs and other barriers continue to disrupt trade. Experimental planting of high-yield US soybeans was scheduled to begin in Shan State’s Nawngcho township in late 2019 to secure contracts with China. Implemented by the MoC, it is the first step towards more widespread planting of the strain, yet it is unclear if the project began on time. “There is an opportunity for both domestic consumption and exports if we can grow more soybeans,” U Aung Maun, deputy director-general for consumer affairs at the MoC, told local media in July 2019.
Funding & Investment
In August 2018 the Myanmar Companies Law 2017 came into force, allowing 35% foreign ownership of any Myanmar company. It is expected to lead to a rise in foreign direct investment (FDI) in many sectors, including agriculture. The shift has been slow, however, with FDI into agriculture accounting for just 0.5% of the total in FY 2017/18, therefore funding primarily comes from international organisations.
One of the major donors has been the International Fund for Agricultural Development (IFAD), which invested $77.7m in the country between 2014 and 2018, funding projects aimed at boosting performance at the smallholder level. In March 2018 IFAD signed an agreement with the government to assist up to 62,400 rural households in the eastern states of Kayin and Shan in improving their incomes through higher levels of production and the forging of stronger connections with agri-businesses. The programme also aims to help agro-forestry enterprises diversify their operations, enabling them to access new markets. The project will cost an estimated $65.2m, comprising both a loan and a grant from IFAD of $56.7m and $1.5m, respectively. The remaining financing will come from the government, the private sector and the beneficiaries.
IFAD also signed an agreement in December 2018 to provide the bulk of the funding for a $20.3m project intended to promote food security and reduce poverty in both the Magway Region and Chin State by helping communities grow commodities that can generate a profit and respond to market demand. The programme included training on modernised production techniques and investment in critical infrastructure such as irrigation systems. Improving irrigation would reduce the country’s reliance on rain water for crop cultivation and enable agricultural enterprises to diversify their crops and improve yields. With the increasing unpredictability of rainfall, the need for comprehensive irrigation grows ever more necessary and offers a major avenue for the private sector to work hand-in-hand with the government to enhance sustainability and output.
Financing
Smallholder farmers account for the majority of the sector, according to a 2016 report from the World Bank. There has been a slow adoption of mechanisation methods by these farmers, who hold between 1 ha and 5 ha of land. It has traditionally been difficult for these farmers to access credit. The state-owned Myanmar Agricultural Development Bank (MADB) is the primary source of funding for farmers. It does not require collateral to issue loans, but instead spreads risk by lending to groups of farmers who collectively guarantee each other.
However, demand has outstripped the MADB’s capacity, forcing farmers to seek loans from informal lenders at excessively high interest rates, thereby creating a cycle of debt from which it can be difficult to recover. Indeed, access to credit is a challenge across all sectors of the economy, not only for agriculture. The Central Bank of Myanmar imposed a cap on lending rates, making it difficult for banks to adequately price risk in a country where many lack a formal financial history and collateral such as land and property (see Banking chapter).
However, efforts to increase financial inclusion are expected to alleviate this issue. In July 2019 the government launched the Myanmar Financial Inclusion Roadmap 2019-23 to increase the banked population from 48% to 60% by 2023. In partnership with the UN Capital Development Fund, the roadmap draws heavily on the potential of microfinance, which expanded by 260% between 2014 and 2019.
Both multinational and local microfinance firms have stepped into the market. One such entity is Yangon-based Proximity Finance, a social business established to assist small-scale farmers in achieving higher crop yields and greater profits. Proximity Finance operates a microfinance service through which farmers can access small, unsecured seasonal loans, as well as a farm advisory service. Through information and training, the company helps farmers with issues such as seed selection, crop diversification and how best to protect crops from pests, disease and climate-related challenges. The company also designs irrigation and water-storage systems. According to the company, some farmers have reported a $300-$400 increase in annual income after using the service, which is significant given that the average daily wage of a smallholder farmer is between $1.80 and $2.50.
Crop Insurance
Susceptibility in Myanmar to weather-related crop damage is high, and its impact on rural livelihoods is increasing due to climate change. Without crop insurance, farmers can fall into debt following floods as it is difficult to personally cover their losses. In January 2018 a proposal by local insurance provider Global World Insurance (GWI) was accepted for the country’s first crop insurance pilot programme. The two-year programme offers farmers in the Ayeyarwady, Mandalay and Yangon regions yield-based coverage for rice. However, lack of precise yield data and information about weather patterns has proven to be problematic during the first year of implementation, and there remains a need for greater levels of government leadership, U Soe Win Thant, director of GWI, told local media in March 2019. “We are learning that there is a need for things such as a national crop insurance committee, crop insurance laws and crop re-insurance,” he said.
Nevertheless, there have been some concerns raised about the financial viability of yield-based insurance schemes. Such systems were adopted in Bangladesh and India and resulted in significant losses, making some sceptical about its long-term viability in Myanmar. In light of this, in December 2018 state-owned Myanma Insurance signed a memorandum of understanding with the MADB and Sompo Japan Nipponkoa Insurance to begin a oneyear pilot programme in the Pyay Township of Bago Region and the Shwebo Township in Sagaing Region.
Under this scheme, premiums are set and issued relative to an agreed-upon level of rainfall, with the weather index period set from July to October, covering most of the rainy season. The crop segment looks set for further expansion after the then-Ministry of Planning and Finance opened the sector to foreign investment In January 2019.
Climate Change
The threat posed by climate change to Myanmar’s economy, and particularly its agriculture sector, is severe. A traditionally long monsoon season that runs from May to October has, in some areas of the country, been cut short by an average of one month, according to the World Wildlife Fund. This has caused significant disruption and damage to crops and harvests. Rising sea levels are also a major concern, with low-lying farmland areas such as the Ayeyarwady Delta facing the possibility of inundation and soil salination, while the highlands and central dry zone are predicted to experience increasingly hot and arid conditions.
On June 5, 2019 – World Environment Day – the government introduced two policies to codify environmental safeguarding initiatives: the National Environmental Policy and the Myanmar Climate Change Policy. The former is a long-term policy framework to achieve development objectives while recognising the value of the surrounding environment and the complications that can arise from climate change. The latter aims to promote sustainable economic growth through socially and environmentally inclusive measures that drive and protect the productivity of the country’s agriculture, fisheries and livestock.
Digital Solutions
Around 70% of farmers in Myanmar access the internet on their mobile phones, according to Myanmar-based Impact Terra, paving the way for the introduction of digital solutions linking farmers to advisory businesses. The company provides these services via the Golden Paddy platform, through which it collects farm data such as planting dates and crop varieties. This allows the firm to issue practical advice based on crop-prediction and weather-forecasting models. It is also able to assess whether farmers qualify for microfinancing and the type of loan they would need to connect them with the appropriate institution. “The primary way to assist farmers is to offer them better channels to access credit,” Francesco Scandola, business intelligence and data manager of Impact Terra, told OBG. “In gaining that access they can afford to buy high-quality agricultural inputs such as seeds and fertiliser, advance their crop protection methods and invest in mechanising their farm.”
As of September 2019 Golden Paddy had around 50,000 users, indicating farmers’ willingness to utilise digital methods. Platforms such as Golden Paddy could become a vital component of the production cycle in the future as the effects of climate change become more pronounced, providing warnings of destructive weather systems and information on how to efficiently diversify crops to maximise output.
Fisheries
While Myanmar’s fisheries and aquaculture have potential, lack of regulation and infrastructure, along with low levels of investment have curbed growth. Even regulations implemented to support fisheries have had some negative effects. Bans on marine and lake fishing from July to August and May to July, respectively, are necessary to facilitate the breeding season but cause a shortage in meeting domestic demand and lead to periodic hikes in the price of farmed fish. U Win Kyaing, general director of the Myanmar Fisheries Federation (MFF), told local media in July 2018 that the need to protect wild fish stocks means that traditional techniques may need to be replaced by aquaculture, which offers a sizeable scope for expansion. “In the fisheries segment it is no longer possible to extend catching fish naturally. But we can extend fish farming,” he said.
Due to traces of bacteria found in fish imported from Vietnam, Saudi Arabia imposed a ban on imports of certain fish products from Myanmar and several other Asian nations in April 2018. This was a damaging development for Myanmar’s fisheries’ exports as Saudi Arabia was previously one of its primary markets, importing 21,000 tonnes of fish worth $25m-35m a year. However, in May 2019 Saudi reopened the kingdom to Myanmar fisheries and aquaculture products after Saudi delegates conducted tests and inspections.
While Saudi Arabia continues to be a leading purchaser of Myanmar fish, the South-east Asian nation is working to diversify its consumer base. It has identified China as a strategic market for expansion, according to the MFF. Indeed, Myanmar is looking to align its technology with that needed to export aquaculture products to China, and to entice local and foreign investment into these endeavours. Despite the Saudi ban, Myanmar recorded its highest fisheries exports earnings in FY 2018/19, at $728.3m, up from $680m in FY 2017/18 and $652m in FY 2016/17. The increase also came despite a year-on-year decline in export volumes.
Outlook
The ongoing liberalisation of Myanmar’s economy presents an opportunity for farmers and agricultural enterprises to take advantage of increased attention from international investors. Key to this will be implementing changes to allow farms better access to finance. Farming methodologies must also change to improve productivity, with the adoption of new seed strains and farming techniques set to be supported by digital platforms tailored to farmers. Mega-projects focusing on infrastructure development are also expected to positively impact the sector. Some of the planned special economic zones will focus on developing agri-business as part of the government’s aim to produce more value-added agricultural and food products. Successful implementation of these projects should see the country better integrated in the global supply chain.
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