Myanmar Agriculture Sector at a Glance and its Evolution: Opportunities

and Challenges

San TheinFreelance Consultant

Paper presented to “Investing in Sustainable Agriculture in Myanmar” Yangon, July 20 th 2014 email:usanthein@gmail.com

Planning Process• This presentation is part of the Agriculture Master

Plan formulation. As a preliminary exercise before the formulation of Myanmar Comprehensive Development Vision (MCDV) for Agriculture Sector, our team has constructed “Overall Framework of Setting Vision, Goals, Policies, Strategies and Measures”.

• The previous policy objectives will first be reviewed briefly before going into the policy planning process of the present paper.

Review of previous visions, mission, and objectives and of adopted strategies of agriculture sector in Myanmar• Agriculture was and is still considered as major

GDP earner for the country by the successive regimes.

• It is the most intervened sector by the authorities in various hierarchal order from the top to the village tract over the country.

Policy Objectives, Carried over about 50 Years

• Development of agriculture was prioritized as the base and all round development of other sectors of the economy as well.

• Rice self- sufficiency is over-emphasized at each local level of the country. The government had driven maximization of crop output without regard to maximization of farmers’ income.

• The following main objectives of the agriculture sector were pursued during the period from 1990s to 2010 by the previous ministers of MOAI;

• To provide surplus paddy for domestic food security and for promotion of exports,

• To achieve self-sufficiency in edible oils, and • To expand production of beans and pulses, and industrial crops

for export.

Strategy packageFollowing five strategies were officially spelled out by the previous Government as:

• Development of land resources;• Increased provision of irrigation;• Expansion of small scale agricultural

mechanization;• Transfer and application of new and

improved technologies;• Increase supply of agricultural inputs

including quality seeds.

Recent reform measures in new democratic government• MOAI has pushed the crop productivity with the

following ministrial objectives: • Use of high yielding seeds• Application of good agricultural practices• Balanced uses of farm inputs, agro-chemicals and

biofertilizers• Minimize the production costs and transaction costs

in each supply chains• Maintain a sustainable market to ensure benefit and

profitability•

Naypyitaw -based Measures for Agriculture Development

• The present Minister of MOAI has been pushing and implementing the following measures ( particularly the first three)to achieve his set objectives;

• Hybridization (focus on hybrid rice)• Mechanization (focus on land improvement to permit

mechanization and large scale farming)• Irrigation• Training and education• Privatization

Institutional Transformation over Years• From the post independent years to mid-socialist

period, agriculture sector was under the policy guidance and jurisdiction of the Ministry of Agriculture and Forest. It included livestock and fishery components also. The Ministry had pursued the integrated and coordinated objectives of the complimentary nature of the agriculture sector.

• The Institutional Structure was disintegrated into three different separate ministries during the period of the State Law and Order Restoration Council (SLORC).

Complementary Nature of Agricultural Components

Animal Husbandry

Fishery and Aquaculture

Forests

Crops Husbandr

y

Disintegration and Separate Administration in each Sector of Agriculture

MOAI MoECaF MLFR

Ministry of Agriculture

and Irrigation (MOAI)

Ministry of Environmental Conservation and Forestry

(MoECaF)

Ministry of Livestock, Fishery

and Rural Development

(MLFR)

Comparison of Structure and Authority

MAFFMOAI

Minister

Minister

Ministry of Agriculture, Fishery and Forestry

(MAFF)

Ministry of Agriculture and Irrigation (MOAI)

JAPAN MYANMAR

• Decision making process is not solely vested in the Minister. His power could be restricted by the strong bureaucratic body and permanent secretary in the Ministry. Professional staffs are strong in the Ministry.

• There are several farm legislations and the Minister may not have in-depth understanding and he may be in trouble to handle these laws without consulting relevant competent officers.

• His authority is limited to recruit to his personnel assistant, but not new DG or MD easily.

• The Minister’s policy may be the policy of the Ministry.

• Up to the end of the Military Regime, there is no law or legislations in the Ministry except for the Pesticide law and the old laws promulgated during the colonial period. The Minister rules the Ministry with his instruction. Most ministers are allergy to the policy or law.

• The Minister could recruit officers such as new MD or DG of his former loyalty to follow his new office of MOAI.

• There is often not pressure group out side his Ministry.

JAPAN MYANMAR

Changing Trend to Large Scale Farming under ABCs.• Since the time of SPDC rule, large scale land concession to the private

agricultural business companies (ABCs) was carried out throughout the country.

• Virgin and Waste Land Instruction was reinforced by promulgating the Virgin, Fallow and Vacant Land (VFVL) Law for promoting the large scale farming by ABCs.

• Up to March 2013, a total of 377 national companies and about 18000 small and medium farmers (SMF) were allocated 1.5 million ha of VFV and deep water land and 0.36 million ha of forest lands for a total of 1.89 million ha.

• The new Farmland Law was passed in 2012 allowing the sale, transfer, mortgage and rent the land among users. The law promotes the private investment but does not provide legal provisions for the protection of small farmers for the land tenure security.

• Land grubbing by the military camps, government projects and encroaching companies had led to eviction of small farmers with weak land tenure security.

Need for Redesigning Agricultural Development: Vision, Strategies and Business Models • Myanmar Comprehensive Development Vision (MCDV) has

been envisaged by the Japanese economic development team from ERIA (Economic Research Institute for ASEAN and East Asia).

• Before MCDV was approved, the Ministry of National Planning and Economic Development attempts to design National Comprehensive Development Plan (NCDV).

• Both are known to be not finalized yet. • Under the MCDV program, our team conceived the inclusive

growth -oriented agricultural business models within the scope of the new vision and strategies.

Overall Framework of Setting Vision, Goals, Policies, Strategies and Measures

Setting Goals

Develop Visions (Agriculture Sector)

Review and assessment of previous and existing national policies,

measures and practices of agricultural development

Development Issues

Priority Setting

Sector-based approachArea-based approach

Commodity-based approach

Setting Goals

Goal # 1: Improved food securityGoal # 2: Pro-poor and inclusive growthGoal # 3: Investment-based developmentGoal # 4: Green-growth and sustainable development

Development of objectives and strategies

(for Goal 1, 2, 3, etc.)

Key measures

Vision• Agriculture sector, not only being capable to

maintain, reaffirm and strengthen the role of achieving food security, food safety and the nutritional well- being of the nation and its growing people in an inclusive and sustainable ways

• but also could emerge as globally linked competitive agro-industries and outstanding Myanmar brand of global supplier of foods and processed agricultural commodities and

• thereby increases the export earning and stimulates the economic growth and prosperity of the country.

Mission• To ensure sustainable food security, food safety and nutritional well

being of the nation

• To enhance the structural transformation of agriculture proper into the agri- business structure by increasing the industrial scale process of value –adding to primary agricultural commodities and thereby will act as an interface between agriculture and industry and foster the industry development and economic growth

• To foster the shared –growth oriented business models which maintain economically well- being of small farm holders through voluntary integration to contract production or to corporate organization through vertical coordination of the agribusiness process of assembly of outputs, transfer, transform and value added processing of agricultural commodities.

Vision Development At least three dimensions will be based

Environment

Social

Economics +(Economic Integration)

Viable

Sustain-able

Bearable

Equita

ble

Based on the holistic concept of long-term sustainable development, including economic, Social and ecological dimensions

Policy Planning Framework

Agroecological zone-based programmes

Technology, Investment, Markets, Trade, Production Factors, Supply chains management, Land Laws & Land Use Planning, Crop Planning,

Rural Financing, Industrial Restructure, Food Safety, Agri-business structures, Climate change resilient measures, natural resources management, Pro-poor strategies

Agri. Development Vision, Goals, Objectives, Strategies

Integration to Regional Economic Corridors

National Economic Goals

National Political & Economic Reform

Regional, Sectoral, Area-based Plans

Area

of I

nter

venti

onM

aste

r Pla

nIncreasing Detail

A Case Study: Cane & Sugar Industry

• This case study will help explain how inclusive growth could be attained in a sustainable way in one aspect of agriculture sector, i.e. sugar industry.

• The problem of sugarcane growing will be considered from the business aspects of “ How to survive sugar industry by paying farmers high purchasing cane price and by selling sugar to consumers at globally competitive price. Present factory sizes are ranging from 1500 to 2000 tons cane crushing capacity (TCD) which are to small to be economical. The size should be at least 4,000-5,000 TCD in a cane supplying area of 30,000-40,000 acres. If investment is afforded, factories should be scaled up to 15,000 TCD as in the case of Thailand and other global sugar producers.

Percent cane growers’ share in sugar industry in different years (In Thailand, growers’ share is 70%).

Year Cane Purchase price, K/MT

Tone cane crushed to get 1 MT of sugar

Sugar selling price, K/MT

Sugar price after Tax, K/MT

Cane growers’ share, %

2006-2007

13500 11.76 520540 463281 34

2007-2008

13500 11.76 428680 381525 42

2012-2013

30000 8.33 58300 518870 48

Myanmar cane procurement is approaching ceiling limit

2001 2010 2011-12$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

MyanmarThailandIndia

Cane

pur

chas

ing

pric

e M

T of

suga

rcan

e

Year/Country Myanmar Thailand India

2001 7.3 USD 12.3 USD 12.8 USDKs. 2,500 Baht 491 Rupee

48.82010 13.5 USD 26 USD N/A

Ks. 13,500

N/A N/A

2011-12 41.2 USD 33.2 USD 37 USDKs.

30,000Baht

1,000Rupee 2000

Compositions of sugarcane farmers with respect to farm holding sizes

< 5 acres 5-10 acres Above 10-20 acres

Above 20-30 acres

>30 acres0

10

20

30

40

50

60

70

80

No

of F

arm

ers

Farm holding size (Acre)

% Number of Farmers

< 5 acres 695-10 acres 23Above 10-20 acres

6

Above 20-30 acres

1.5

>30 acres 0.5

Farmers with Upstream and Downstream Backup for Inclusive Growth in Sustainable Development of Sugar Industry

Small and Medium Farmers

Sugar Factory

Farm Machinery Companies

Bank

INGO

Factory

Govt. Extension

International NGO

INGO International NGOs

Capacity Building

1. Financial Management

2. Conflict Management

3. Conservation Agriculture

Cane Growers’ Association

1. Negotiation for cane contract

2. Strengthen can price

3. Lobbying government

4. Ensure farmers for regular

can supply and product

traceability

Cane supply

Contract Farming

Sell in Install -

payment

Technology

Financing

Payment transfer

upon cane delivery

from farmers

Integration of different layers in resource allocation and utilizing cycles

• Market competitiveness• Establishment of sustainable

sugar industry

Government Departments

TaxGovernment

Establishment of large-scale

sugar mill Expansion of sugarcane

growing areas Production of sugar and

downstream commodities

Policy Regulation

Policy Umbrella

Sugar Policy Investment Policy Monetary Policy Infrastructures and services

link

Sugarcane and Sugar Council

(Government + Private)

Sugarcane Growers Association

Private Investors

• Technology and Agriculture

Services• Sugarcane Growers• Agro-based Industry Banks All Stakeholders from Sugar Industry

Repayment

Loan Asian Development BankThe World Bank

Conclusion

• There is a pathway for sustainable agriculture development with inclusive growth.

• It requires the comprehensive improvement of all sectors and stakeholders involved in the development process.

• Development opportunities in sugar industry case study has shedding light on the potential business model of other agricultural commodities and services.

•THANK YOU