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Assessment of Supply Chain Management of Sesame Seed in Pakokku Township, Magway Region, Myanmar Assessment of Supply Chain Management of Sesame Seed in Pakokku Township, Magway Region, Myanmar *Theingi Myint 1 , Ei Mon Thida Kyaw 2 1 Professor, Department of Agricultural Economics, Yezin Agricultural University, Nay Pyi Taw, Myanmar 2 Ph.D Candidate, The University of New England, 8/152, Markham St., Armidale, NSW, 2350, Australia. 2 Lecturer, Department of Agricultural Economics, Yezin Agriculture University, Nay Pyi Taw, Myanmar This study was carried out to examine the market performance of stakeholders along the sesame seed supply chain. The primary data were collected from 89 sesame farmers from four villages in Pakokku Township by using simple random sampling method and 11 traders or wholesalers at the crop exchange center in Pakokku, 5 sesame oil millers in Pakokku, 3 Mandalay wholesalers and 4 Yangon exporters were purposively selected in 2016-2017. Benefit and cost ratios in Pakokku were 1.22, it means that if the famer invest one MMK in sesame seed production, they will gain 0.22 MMK. Wholesalers and Chinese commission agents in Mandalay sell raw sesame products directly through the Muse exchange center, which is located on the border of Myanmar and China. Exporters in Yangon sell raw sesame products to Japan, Taiwan, and roasted sesame powder to Korea via Yangon port. The wholesalers/traders derive the greatest marketing margin and profit from the Sahmon Nat variety sold in Pakokku and Mandalay. The sesame supply chain was very weak in the study areas because of the profit by transacting the sesame without value adding and without any negotiating power by farmers. Key words: Supply chain, sesame, benefit and cost ratio, price, marketing margin INTRODUCTION Oilseed crops play a vital role in Myanmar’s high consumption of cooking oil compared to neighboring countries. There are numerous kinds of oilseed crops such as groundnut, sesame, and sunflower, mustard and niger seed. Among them, sesame occupies the largest sown area (approximately 46.62% of total oilseed crop areas), followed by groundnuts, (26.76%) (MOAI,2014). Sesame is economically important not only for producing edible oil, which is used in Myanmar for cooking but also for export. In Myanmar, there are three main types of sesame seed: (1)white sesame seed which is famous for making snacks and cooking, (2) red sesame which is best for oil extraction and is cheaper than white, and (3) black sesame which is a major oil seed crops for export and is grown mainly in Aunglan Township and the Magway Township of Myanmar (Linn, 2013). Worldwide, India occupies the greatest sesame harvested area (186,0000 ha), followed by Myanmar (1590,000 ha); however, in 2013 Myanmar’s sesame seed production was the highest (890,000 tones) (Grimay, 2018). In terms of sesame production, Myanmar produces 21.05% of total world production and 36.37% of the Asian production (FAO, 2013). However, the amount of sesame seed exporting declined in 2017 because Myanmar possessed just 6.5% of the sesame world market that was the fourth position among top sesame seed exporting countries in 2017 based on the data of USAID (2019). According to the oil seed crop organization, Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), the amount of Myanmar produced sesame exported via normal official trade channel was 96.621 MT in 2015-2016 (UMFCCI, 2017). Therefore, sesame production constitutes a major part not only of farmers’ livelihood development but also of Myanmar’s economic development through its exports. Corresponding Author: Theingi Myint, Professor, Department of Agricultural Economics, Yezin Agricultural University, Nay Pyi Taw, Myanmar. Tel: 95-9-250108681 E-mail: [email protected] Co-Author Email: [email protected], [email protected]; Tel: 61-452544728 Research Article Vol. 6(2), pp. 215-224, July, 2019. © www.premierpublishers.org. ISSN: 0521-9965 International Journal of Agricultural Marketing
Transcript
Page 1: Research Article Assessment of Supply Chain Management of ... · Myanmar possessed just 6.5% of the sesame world market that was the fourth position among top sesame seed exporting

Assessment of Supply Chain Management of Sesame Seed in Pakokku Township, Magway Region, Myanmar

Assessment of Supply Chain Management of Sesame Seed in Pakokku Township, Magway Region, Myanmar

*Theingi Myint1, Ei Mon Thida Kyaw2 1Professor, Department of Agricultural Economics, Yezin Agricultural University, Nay Pyi Taw, Myanmar 2Ph.D Candidate, The University of New England, 8/152, Markham St., Armidale, NSW, 2350, Australia. 2Lecturer, Department of Agricultural Economics, Yezin Agriculture University, Nay Pyi Taw, Myanmar

This study was carried out to examine the market performance of stakeholders along the sesame seed supply chain. The primary data were collected from 89 sesame farmers from four villages in Pakokku Township by using simple random sampling method and 11 traders or wholesalers at the crop exchange center in Pakokku, 5 sesame oil millers in Pakokku, 3 Mandalay wholesalers and 4 Yangon exporters were purposively selected in 2016-2017. Benefit and cost ratios in Pakokku were 1.22, it means that if the famer invest one MMK in sesame seed production, they will gain 0.22 MMK. Wholesalers and Chinese commission agents in Mandalay sell raw sesame products directly through the Muse exchange center, which is located on the border of Myanmar and China. Exporters in Yangon sell raw sesame products to Japan, Taiwan, and roasted sesame powder to Korea via Yangon port. The wholesalers/traders derive the greatest marketing margin and profit from the Sahmon Nat variety sold in Pakokku and Mandalay. The sesame supply chain was very weak in the study areas because of the profit by transacting the sesame without value adding and without any negotiating power by farmers.

Key words: Supply chain, sesame, benefit and cost ratio, price, marketing margin INTRODUCTION Oilseed crops play a vital role in Myanmar’s high consumption of cooking oil compared to neighboring countries. There are numerous kinds of oilseed crops such as groundnut, sesame, and sunflower, mustard and niger seed. Among them, sesame occupies the largest sown area (approximately 46.62% of total oilseed crop areas), followed by groundnuts, (26.76%) (MOAI,2014). Sesame is economically important not only for producing edible oil, which is used in Myanmar for cooking but also for export. In Myanmar, there are three main types of sesame seed: (1)white sesame seed which is famous for making snacks and cooking, (2) red sesame which is best for oil extraction and is cheaper than white, and (3) black sesame which is a major oil seed crops for export and is grown mainly in Aunglan Township and the Magway Township of Myanmar (Linn, 2013). Worldwide, India occupies the greatest sesame harvested area (186,0000 ha), followed by Myanmar (1590,000 ha); however, in 2013 Myanmar’s sesame seed production was the highest (890,000 tones) (Grimay, 2018). In terms of sesame production, Myanmar produces 21.05% of total world production and 36.37% of

the Asian production (FAO, 2013). However, the amount of sesame seed exporting declined in 2017 because Myanmar possessed just 6.5% of the sesame world market that was the fourth position among top sesame seed exporting countries in 2017 based on the data of USAID (2019). According to the oil seed crop organization, Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), the amount of Myanmar –produced sesame exported via normal official trade channel was 96.621 MT in 2015-2016 (UMFCCI, 2017). Therefore, sesame production constitutes a major part not only of farmers’ livelihood development but also of Myanmar’s economic development through its exports.

Corresponding Author: Theingi Myint, Professor, Department of Agricultural Economics, Yezin Agricultural University, Nay Pyi Taw, Myanmar. Tel: 95-9-250108681 E-mail: [email protected] Co-Author Email: [email protected], [email protected]; Tel: 61-452544728

Research Article

Vol. 6(2), pp. 215-224, July, 2019. © www.premierpublishers.org. ISSN: 0521-9965

International Journal of Agricultural Marketing

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Assessment of Supply Chain Management of Sesame Seed in Pakokku Township, Magway Region, Myanmar

Myint and Kyaw 216

An efficient marketing system for both domestic consumption and the export market, that transfers commodities from the production side to the demand side with the right quality and, quantity, on time and at low cost, plays an important role in the world’s market economy system. Aysheshm (2007) argued that a scientific analysis of that identifies the strengths and weaknesses of the market structure of a particular commodity and sector is important to achieve the efficient market system and sustainable market demand essential for economic development. Linn’s 2013 research into the sesame supply chain in Magway region found that the major problems of the oilseed crops and edible oil sector in Myanmar were price uncertainty, low productivity and quality of sesame, and a lack of marketing laws and regulations. Based on the value chain analysis of Sonar et al (2012), the major constraints such as lack of agricultural knowledge and technology, crop price fluctuation, pest and disease problem, inadequate market information and poor linkage within marketing activities. Based on Linn (2013), more research should be done to explore more deeply Myanmar’s sesame supply chain because of sesame’s great export potential for Myanmar. Pakokku Township is located in the Magway region, which is one of the largest sesame producers in Myanmar, and its productivity is lower than its potential capacity. Linkages and relationships among actors in the supply chain of sesame are fragmented. Farmers in this region face unfair prices, as there is a huge gap between the farm gate price and the consumer price in Yangon and Mandalay because of the higher transaction costs. Moreover, farmers have no roles or responsibility in production quality and standards to meet the standardization of markets especially for export market. Benefit sharing distribution among actors is also not clear and the number of vulnerable farmers integrated in the supply chain of sesame production is unrecorded. This study was carried out (1) to analyze the various stakeholders’ activities along

the sesame supply chain in order to investigate the marketing costs and margins of various stakeholders along the sesame marketing channel and

(2) to assess the major constraints of sesame production and marketing in order to improve the supply chain management.

MATERIAL AND METHOD

To access the current performance of the sesame market, field surveys for primary data collection were conducted in Pakokku Township and market surveys were conducted in Pakokku, Mandalay and Yangon in 2016 and 2017. The study was designed to analyze the entire sesame supply chain from farm level to consumer. For this study, farmers, wholesalers, traders, millers, processors and exporters along the supply chain were interviewed, each category

with a different set of structured questionnaires to obtain a clear understanding of the current sesame marketing channels. The primary data were collected from 89 sesame farmers from four villages in Pakokku Township by using simple random sampling method and 11 traders or wholesalers at the crop exchange center in Pakokku, 5 sesame oil millers in Pakokku, 3 Mandalay wholesalers and 4 Yangon exporters were purposively selected in 2016-2017. Data were collected to investigate of marketing costs, the marketing margin of various stakeholders, marketing channels constraints and challenges, and possible solution for sesame production. Secondary data were taken from published and official records of the Ministry of Agricultural, Livestock and Irrigation (MOAI), various government organizations related to agriculture, the Food and Agricultural Organization (FAO), the Central Statistical Organization (CSO) and other publications. Method and technique of data analysis The data collected from various stakeholders were analyzed using the descriptive statistics method and the statistical software package SPSS Version 16. Enterprise budget analysis was used to evaluate the economic and technical performance of each farm enterprise. Marketing margin analysis is the first and foremost economic analysis to determine the efficiency of the market. The higher marketing margin reflects fewer share of producers and more benefits to marketing middlemen and vice-versa ( Htun, 2013). To calculate the marketing costs and margins at different levels along the supply chain, a total gross marketing margin analysis was performed. The following indicators were used in the analysis a) Total Gross Marketing Margin (TGMM)

TGMM = (Consumer Price−Farmer’s Price)

Consumer Price ×100 (1)

Margin of wholesaler = (Consumer Price−Wholesaler’s Price)

Consumer Price×100 (2)

Margin of Miller = (Consumer Price−Miller’s Price)

Consumer Price×100 (3)

Margin of processor = (Consumer Price−Retailer’s Price)

Consumer Price×100 (4)

Margin of exporter = (Consumer Price−exporter’s Price)

Consumer Price×100 (5)

(b) Farmer’s Portion of Producer’s Gross Marketing Margin (PGMM)

PGMM = (Consumer Price−Marketing Gross Margin)

Consumer Price×100 (6)

(c) Gross Marketing Margin (GMM)

GMM= Average Selling price – Average Buying price (7)

(d) Profit Profit = Gross Marketing margin − Total Marketing cost (8)

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Assessment of Supply Chain Management of Sesame Seed in Pakokku Township, Magway Region, Myanmar

Int. J. Agric. Mark. 217

RESULT AND DISCUSSION Sesame Supply Chain Mapping The structure of the sesame marketing system normally start with the farmers and there are many stakeholders along the sesame supply chain in Pakokku Township. The common channel is the flow of raw sesame from farmer to township wholesaler. Most township wholesalers and traders exchanged their commodities in the exchange centre and millers sometimes double as the wholesalers/traders buying the raw product for milling. Sesame oil is processed by oil millers and then distributed to many towns within Pakokku Township (Pakokku, Yesagyo, Htilin, Gangaw, and Saw). Simultaneously, township wholesalers and traders sell the raw sesame products directly to the Mandalay and Yangon sesame markets. In the Mandalay marketing channel, traders there buy the raw material and sell it to Chinese commission agents who in turn sell it directly to the Muse Exchange Centre. Sometimes, Chinese commission agents buy directly from the wholesalers in Pakokku Township. In the Yangon sesame supply chain, the raw sesame product is sold directly by township-based wholesalers to the sesame exporters and then processed in Yangon to obtain the quality sesame seed and powder. There are three additional export channels of sesame-graded seed in Yangon specifically for Japan, Taiwan and Korea and

roasted sesame powder is also sold from here to Korea. Although the China market accepts normal quality sesame seed, the Japan, Taiwan and Korea markets accept only the highest quality sesame seed. The sesame supply chain in Pakokku Township is shown in Figure 1. The key market functions of farmers in Pakokku are shown in Figure 2. According to the sesame farmer survey in Pakokku Township, Sahmon Nat is the most popular variety among the sample farmers because of its high price and market demand. Most people who took part in the survey (94%) said they used their own seed rather than buying seed in; this resulted in, low quality product and reduced of yield. The weighing system when selling was viss (1 viss = 1.32 Kg) and there are 15 visses in 1 basket. It was found that the average yield for farmers in the sample was 3.8 baskets per acre and the price was about 44000 MMK (1 dollar = 1527 MMK) per basket. The average total variable cost for a sesame farmer was 143,167.10 MMK per acre and the average total gross return for the farmers in the sample was 168,136.80 MMK per acre. The return above variable cost (RAVC) was 24,969.69 MMK per acre and the benefit-cost ratio (BCR) for sesame production was 1.22 which means that if the famer invests 1 MMK in sesame seed production, he will gain 0.22 MMK. The costs and benefits for sesame production can be found in Table 1.

Figure 1: Core Process for Sesame Supply Chain in Pakokku Township

Chinese commission agent

in Mandalay

Exporter in Yangon

Muse market (Cross- border Export to

China)

Export to Japan & Taiwan

Export to Korea

Trader in Mandalay

Wholesaler and retailer in Pakokku, Htilin, Gangaw, Saw

Myaing, Yesagyo Township

Farmer in Pakokku Township

Wholesaler in Pakokku

Trader in Pakokku exchange center

Miller in Pakokku

Raw Sesame Product

Sesame Oil

Roasted Sesame Powder

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Assessment of Supply Chain Management of Sesame Seed in Pakokku Township, Magway Region, Myanmar

Myint and Kyaw 218

Farmers and Their Specific Activities The key market functions of farmers in Pakokku are shown in Figure 2. According to the sesame farmer survey in Pakokku Township, Sahmon Nat is the most popular variety among the sample farmers because of its high price and market demand. Most people who took part in the survey (94%) said they used their own seed rather than buying seed in; this resulted in, low quality product and reduced of yield. The weighing system when selling was viss (1 viss = 1.32 Kg) and there are 15 visses in 1 basket. It was found that the average yield for farmers in the sample was 3.8 baskets per acre and the price was about 44000 MMK (1 dollar = 1527 MMK) per basket. The average total variable cost for a sesame farmer was 143,167.10 MMK per acre and the average total gross return for the farmers in the sample was 168,136.80 MMK per acre. The return above variable cost (RAVC) was 24,969.69 MMK per acre and the benefit-cost ratio (BCR) for sesame production was 1.22 which means that if the famer invests 1 MMK in sesame seed production, he will gain 0.22 MMK. The costs and benefits for sesame production can be found in Table 1. Table 1: Enterprise Budget of Sahmon Nat Sesame (Black) Production in Pakokku Township

Items Unit Total Value

Yield Bsk/ac 3.8

Average Price MMK/bsk 44178.89

Gross return MMK/ac 168136.8

Material cost MMK/ac 46951.39

Family labor cost MMK/ac 39472.22

Hired labor cost MMK/ac 47316.67

Interest rate MMK/ac 9426.80

Total variable cash cost MMK/ac 103694.9

Total variable cost MMK/ac 143167.1

Net benefit MMK/ac 24969.69

Benefit -cost ratio 1.22

Wholesaler/traders and their Specific Activities in Pakokku In the sesame-marketing channel in Pakokku Township, the wholesalers play key roles in the distribution of crops from producers to millers, processors, traders and exporters. They also have connections with other township wholesalers and millers from Natmauk, Magway, and Aunglan and keep them informed about the buying and selling prices. In addition, they sell raw material to wholesalers in Mandalay and Yangon Township on commission. According to the survey responses, all wholesalers bought raw material. The wholesalers’ purchasing methods did not differ they all used the cash down purchasing system. Fifty five percent (55%) of

wholesalers bought solely from farmers near Pakokku Township, such as from Pauk, Myaing, Htilin, Gangaw, Saw and Yesagyo etc. and the rest bought from both farmers near Pakokku Township and from wholesalers. All the wholesalers graded the products using their own judgment and divided them into three categories, namely, high, medium and low. They set the price depending on standardization of such characteristics as variety, moisture, quality, dryness, cleanness and purity of the sesame. There were many reasons for wholesalers selecting the sesame varieties they did, market demand and price being important criteria. Most of the wholesalers in Pakokku Township, interviewed for this study-traded in sesame throughout the year. It was found that international demand and price, especially in the Chinese market, could significantly affect the export price, which in turn, could affect the local producer’s price. The marketing margins, costs and profits of wholesalers in Pakokku are shown in Table 2. According to the analysis, while the sample wholesalers in the sample studied-traded in many sesame varieties such as Sahmon Nat, Red and Brown, they derived the highest profit from Sahmon Nat. Oil Millers and Their Specific Activities in Pakokku Township Oil millers play an important role in the oilseed crop marketing chain by transforming the raw oilseed crop into edible oil. According to the survey responses, all oil millers bought raw sesame seed and sold sesame oil and oil cake. All of them used cash to buy and cash and credit to sell. The weighing system used by the oil millers for both buying and selling was viss. The majority of the respondents graded their products using their own judgement. All the millers ran their mills for 9 months, ranging from 6 to 12 months. The average milling capacity per hour was 5.8 baskets (ranging from 3 to 10 baskets per hour). By milling the sesame raw material, a mill produced an average of 330 visses of oil per day, the full range being from 200 viss to 550 viss per day. Sesame oil millers in Pakokku sold their oil to Pakokku, Htilin, Gangaw, Saw, Myaing, Yesagyo and villages around Pakokku. In addition, the oil cake byproduct of the oil mills was supplied to the Mandalay and Yangon markets for animal feed. In the areas studied, a similar trend was found with selected oil millers of Pakokku and Magway. Most oil millers bought red and brown sesame for milling. The marketing margin and profit gained from the oil derived from brown sesame was higher than that of oil made by the red sesame because the average price of the brown sesame seed was lower than the red sesame seed; however, the average prices of both show no difference. The marketing margin, cost and profit of oil millers in Pakokku is shown in Table 3.

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Assessment of Supply Chain Management of Sesame Seed in Pakokku Township, Magway Region, Myanmar

Int. J. Agric. Mark. 219

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Assessment of Supply Chain Management of Sesame Seed in Pakokku Township, Magway Region, Myanmar

Myint and Kyaw 220 Table 2: Marketing Margine, Cost and Profit of Wholesalers in Pakokku

Pakokku wholesalers Sahmon Nat Varieties (MMK/bsk)

Red Varieties (MMK/ bsk)

Brown varieties (MMK/bsk)

(1) Average buying price 42400 25000 22000 (2) Average selling price 44000 26000 23000 (3) Marketing Margin (2-1) 1600 1000 1000 (4) Total Marketing cost

Labor cost for loading 46 46 46 Labor cost for cleaning 30 30 30 Packaging cost 110 110 110 Grading cost 50 50 50 Storage cost 275 275 275 Transportation 172 172 172 Total marketing cost 683 683 683 (5) Cost price (1+4) 44683 26683 23683 (6) Profit per unit of each variety(3-4) 917 317 317 (7) Profit per cost price (6/5*100) 2.052234631 1.188022336 1.338512857

Table 3: Marketing Margin, Cost and Profit of Oil Millers in Pakokku

Pakokku oil Miller Red Varieties (MMK/ bsk)

Brown varieties (MMK/bsk)

(1) Average buying price 25000 22000 (2) Average selling price of sesame oil

(1 basket of sesame= 7.5 viss of sesame oil) 27750 26250 (3) Marketing Margin (2-1) 2750 4250 (4) Marketing cost Labor cost for loading 70 70

Packaging cost 819 819

Transportation 150 150

Milling cost 18 18

Electricity cost 590 590

Total marketing cost 1647 1647 (5) Cost price (1+4) 26647 23647 (6) Profit per unit of each variety (3-4) 1103 2603 (7) Profit per cost price (6/5*100) 4.14 11

Table 4 Marketing Margin, Cost and Profit of Mandalay Wholesalers

Mandalay wholesalers Sahmon Nat Varieties

Black Varieties

White Varieties

Red Varieties

Brown varieties

(MMK/bsk)

1 Average buying price 44000 30000 28300 26000 23000 2 Average selling price 51000 33000 33000 28000 25000 3 Marketing Margin (2-1) 7000 3000 4700 2000 2000 4 Marketing cost Labor cost for loading 133 133 133 133 133 Labor cost for cleaning 300 300 300 300 300 Packaging cost 366 366 366 366 366 Grading cost 300 300 300 300 300 Storage cost 50 50 50 50 50 Transportation 459 459 459 459 459 Total marketing cost 1608 1608 1608 1608 1608 5 Cost price (1+4) 45608 31608 29908 27608 24608 6 Profit per unit of each variety (3-4) 5392 1392 3092 392 392 7 Profit per cost price 11.8 4.4 10.3 1.41 1.59

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Wholesalers/Traders and Their Specific Activities in Mandalay According to the survey data, many wholesalers in Mandalay bought about 600 baskets/day of sesame raw material from traders/wholesalers in Magway, Pakokku, Wetlet, Madaya, Aunglan, Pyay, Taungoo and Pyinmana by using the cash down system. There were 10 wholesalers and traders in the whole area who collected raw sesame from their local area. All respondents bought various sesame varieties especially black (Samhon Nat), white, red and brown sesame. They traded the commodity to Chinese buyer’s agents who then sold it directly to the Muse exchange center and sometimes, they also acted collectors for these agents on commission. The sesame was graded by the wholesalers and traders themselves into low, medium and large categories by hand. They set the market price depending on the variety, quality, purity, cleanness and moisture of sesame. All the Mandalay wholesalers who took part in the surey used a bag (1bag=45 visses) as their weighing measure: when they sold to a Chinese buyer’s agent 1 bag contained 30.75 vissees. The wholesalers’ marketing margin, costs and profits in Mandalay are shown in Table 4. It was found that the Mandalay wholesalers in the study sample got the highest profit from trading in Sahmon Nat varieties followed by white sesame, science black, red sesame and brown sesame. Exporters and Their Marketing Activities There are two kinds of exporters, those who export to Japan, Korea and Taiwan by normal trade shipment and those who export to China by truck across the land border. According ro the study, black sesame and science black were the most popular varieties for exporting to Japan, Korea and Taiwan and they were bought from the collectors (agents) and wholesalers of Magway, Aunglan, Pakokku and Pwint Phyu. When it came to buying activities, the exporters in the sample bought high quality, high purity and low moisture content sesame raw material by measuring, again into bags of 45 visses each, and grading the product using their own judgement. Monsoon sesame was favored by many exporters because of its high quality and low moisture content. After the raw sesame products were bought by the sample exporters, they were cleaned by filter and machine. However, when these exporters were selling to international buyers, they sued international grading system standards such as FFA (Free Fatty Acid) = 2%, chemical residue= 0.005%, moisture content = 7-8% and color variation = 5-10%. The weighting scale was by the ton (18 tons = 1 container). Although it was common for export raw material to Japan and Taiwan, the exporters who participated in the Yangon survey exported their product to Korea as sesame powder because the Korean import tax on sesame powder is lower

than the tax on sesame seed. Exporters set the price depending on the buying price, lag price, China market price, world price and the exchange rate. Border trade, especially in the China market, plays the major role in Myanmar’s sesame supply chain. Most Chinese buyers’ agents transport the sesame products directly to the Muse exchange center by car and they buy raw sesame raw products from collectors, traders and wholesalers from Mandalay, Magway, Pakokku and some other places depending on the quality of the sesame. They grade according to their own judgment and additional standardization is done by such machines as color sorters and cleaning machines. They buy in-viss (1bag = 37.8 visses) and, sell in Kilograms (1 bag = 50Kg). It is obvious that the standard of the border trade grading system is lower than the grading system used for normal trade, mostly Sahmon Nat to Japan, Korea and Taiwan. However, the buyers from China bought several varieties of sesame; therefore, the China market is the major export market for Myanmar’s sesame crop. The exporters participating in the Mandalay survey determined their prices according to lag price, exchange rate, demand and supply. Challenges and Constraints of Farmers in Production and Marketing Activities It was found that climate change was the major constraint for the farmers in the study area because a short monsoon season reduced the sesame yield. Moreover, the respondents also faced unstable price and market demand because the price of sesame seed depended on the China cross border market in Myanmar. The sesame quality in the study area was low because many younger people migrate internationally and to other parts of Myanmar, and so labor scarcity has become one of the constraints for respondents in the study area. Pests and diseases, high input costs, lack of capital, high transportation costs, lack of advanced technology, lack of improved varieties and weak systematic usage of pesticides were other constraints for the respondents in the study area. In the weighing system, wholesalers always reduce the value of each viss of sesame by 25% when buying because of inert materials (impurities) and the weight of the bag itself. In relation to advanced technology, the farmers in the sample did not get enough information from Myanmar Department of Agriculture extension workers in the study area; as a result, post-harvest loss was a major challenge in the production of good quality sesame in the study area. Most respondents could not access good quality seed because of their high cost; therefore, they used their own seed for production, which produced a low yield in sesame production in the study area. The constraints affecting sesame production in the sample households are shown in Figure 3.

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Assessment of Supply Chain Management of Sesame Seed in Pakokku Township, Magway Region, Myanmar

Myint and Kyaw 222

Figure 3: Major Constraints of Stakeholders in Sesame Marketing System

Challenges and Constraints for Wholesalers in Sesame Marketing in Pakokku Dynamically, wholesalers were the leaders in the Myanmar sesame-marketing sector by connecting the farmers, oil millers and exporters. However, there was a weakness in the grading system because it was based on individuals’ personal judgment and it could not be accurate. Unstable markets and prices were major challenges for wholesalers and they needed storage facilities in order to wait for prices to rise. To maintain the quality of the goods during storage, they used a lot of pesticides and insecticides to prevent pests and disease but this caused a chemical residue problem in the exported products. Other constraints for the sample wholesalers in Pakokku Township were lack of capital and high transportation cost.

Challenges and Constraints for Oil Millers in Sesame Marketing in Pakokku The major constraints for the millers were lack of capital and lack of a sesame oil market, the latter because of the influx of imported palm oil into the edible oil market in Myanmar. Most people use palm oil because it is cheaper than sesame oil. Nowadays, many oil millers mix sesame oil and palm oil to meet buyer demand. It was found that some uncompetitive millers had shut down their oil mills because they did not have enough capital to buy good quality sesame raw materials and, the quality of the oil was therefore too low to meet international demand.

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Assessment of Supply Chain Management of Sesame Seed in Pakokku Township, Magway Region, Myanmar

Int. J. Agric. Mark. 223 Challenges and Constraints of Wholesalers/Traders and Chinese Commission Agents in Sesame Marketing in Mandalay Interviews with the wholesalers and Chinese commission agents in Mandalay about the constraints they faced in sesame marketing activities, revealed that the major constraints were lack of capital, low quality sesame, seed impurity, lack of good storage facilities, lack of modern cleaning and color sorting machine, unstable demand and market price, high variation in the exchange rate and transportation systems. The problems associated with the transportation systems, including border trading, traffic jams and civil war, always caused delays in the flow of commodities. Although the Myanmar government officially permitted the cross-border trade, the Chinese government did not; as a result, Chinese commission agents faced the double challenges of unstable market demand and lower prices. Challenges and Constraints of Exporters in Sesame Marketing in Yangon Myanmar is the second largest sesame exporter in the world and there is a large potential demand. However, the quality of Myanmar sesame seed is still relatively low and it cannot compete with the world price because of its high production costs. The major constraint for sesame exporters is low quality seed because most of the sesame raw materials have a high chemical residue, high moisture content and high acidity. Thus, they cannot export large amounts of sesame despite potential demand. Nor do they have access to any chemical test laboratory in order to establish the quality of the seed. Variations in the exchange rate are another challenge for exporters. CONCLUSION The sesame supply chain was found to be very weak in the study areas for a number of reasons. These included (1) that wholesalers received much of the profit by transacting the sesame without value adding and (2) individual farmers marketed their sesame directly to wholesalers without any negotiating power. Moreover, because of the constraints in this supply chain, good quality seed, stable market price and demand, advanced facilities and technologies are all needed for market participants to achieve more benefits along the supply chain in the study area. Many stakeholders mentioned palm oil as a major challenge because it was cheap, although lower in quality. Indeed, the price of palm oil on the world market was far below the price of sesame oil and is excellent, for cooking or frying. This imported palm oil does have a negative effect on the economic returns of all stakeholders in the sector. The Myanmar sesame market has great potential for export but its current annual export rate remains low because of the low quality of the sesame

and its high chemical residue. According to a study of an export company in Yangon, it was found that a contract farming system had the potential to provide an efficient supply chain system for farmers. This was because it would enable the farmers to produce quality produce for normal trade obtain a higher price and be in a stable market for their goods. It would also reduce the cost of the intermediaries along the supply chain. Proposed Interventions for the Sesame Marketing Sector • Ensure adoption of good quality seeds, appropriate

fertilizer and pest management alternatives and other integrated crop management practices by farmers

• Strengthen technology, weather information delivery and extension services

• Encourage inspection and establish laboratories to test the agrochemicals marketed locally for export quality products

• Establish credit facilities with loan equity to enable the private sector to buy post-harvest and marketing machinery and facilities for use by all participants

• Upgrade existing oil mills or acquire new units to boost efficiency, lower unit cost and improve milled output

• Conduct relevant market research in different areas • Encourage the establishment of a weighting scale and

standards for sesame (in line with international standards)

• Develop education programs about collective action in marketing activities

• Encourage public and private sector partnership to invest in infrastructure

• Develop contract farming to get good quality sesame for export.

ACKNOWLEDGMENTS This research was financially supported by YAU-JICA Technical Cooperation Project. The research team would like to express its deep gratitude and appreciation for the financial support of the sponsoring organization JICA (Japan International Cooperation Agency) for this study. The team wishes to show its gratitude to Professor Dr. Tanaka, Dr. Yamamoto and Mr. Nichimoto for invaluable support, guidance and assistances during the study and to thank the Rector of Yezin Agricultural University for providing fruitful support throughout the study period. In particular, the research team also wants to extend its sincere appreciation to the respondents of this study who cheerfully cooperated in the primary data collection and the local authorities who provided much help and generously hosted the team in the study areas. Our special thanks go to U San Lwin, Manager, Department of Agriculture, Pakokku Township for his very kind assistance and for accompanying the team to the sites. This report would not have been possible without their generous participation.

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Assessment of Supply Chain Management of Sesame Seed in Pakokku Township, Magway Region, Myanmar

Myint and Kyaw 224

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Accepted 20 June 2019 Citation: Myint T, Kyaw EMT (2019). Assessment of Supply Chain Management of Sesame Seed in Pakokku Township, Magway Region, Myanmar. International Journal of Agricultural Marketing 6(2): 215-224.

Copyright: © 2019: Myint and Kyaw. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are cited.


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