Com­merce min­istry preps rice re­ac­tion

The Myanmar Times - - Front Page - – Trans­la­tion by Emoon and San Layy SU PHYO WIN CHAN MYA HTWE

The Min­istry of Com­merce is pre­par­ing to ad­dress a slump in rice prices, but is wary of an­swer­ing in­dus­try de­mands for a price floor.

THE Min­istry of Com­merce is pre­par­ing to take ac­tion to com­bat a se­vere drop in rice prices threat­en­ing the coun­try’s farm­ers, which in­cludes step­ping up ef­forts to se­cure new ex­port mar­kets. But some solutions sug­gested by agri­cul­tural in­dus­try groups – such as a gov­ern­ment-man­dated price floor – risk rais­ing a host of other prob­lems, Com­merce Minister U Than Myint told The Myan­mar Times.

The com­merce minister said the gov­ern­ment is con­sid­er­ing as many op­tions as pos­si­ble to ad­dress the plunge in prices, and will de­cide on the best course of ac­tion early this month.

Myan­mar has no well-es­tab­lished mar­ket for rice ex­ports other than China, but that coun­try’s crack­down on il­le­gal rice im­ports has left Myan­mar with a grow­ing sur­plus of un­sold paddy. Heavy rain dur­ing the harvest has made things worse, soak­ing fin­ished rice and low­er­ing the price, said U Soe Tun, vice pres­i­dent of the Myan­mar Rice Fed­er­a­tion.

Local farm­ers are strug­gling to find will­ing buy­ers let alone cover costs, and are wor­ried about fall­ing deeper into debt. Some in­dus­try groups are push­ing for the gov­ern­ment to step in with a min­i­mum price.

“We’ve been de­mand­ing that for years,” said U Thein Aung, pres­i­dent of the Myan­mar Free­dom Farmer League. “We don’t mean that the gov­ern­ment has to buy at the high­est prices. It would be a fair price that cov­ers the cost of pro­duc­tion and fixed in a range where con­sumers, pro­duc­ers and traders can all ben­e­fit.”

Fol­low­ing a meet­ing with the com­merce min­istry, U Soe Tun said the gov­ern­ment was con­sid­er­ing a min­i­mum price. But U Than Myint said it was un­clear whether that would be pos­si­ble.

“There are many chal­lenges to set­ting a fixed price,” he said. “Who will buy the rice at the fixed price? Does the gov­ern­ment have the bud­get to buy it? Where can we ex­port to? Those ques­tions are hard to an­swer.”

In many cases, traders and millers are re­luc­tant to pur­chase paddy be­cause the Chi­nese ex­port mar­ket has crum­bled. A min­i­mum price would not help farm­ers strug­gling to find a buyer. In the mean­time, is­sues around stor­ing sur­plus paddy and dry­ing wet rice are still un­solved.

“We need the gov­ern­ment to sup­port rice dry­ing to reduce the mois­ture,” said U Soe Tun, adding this was re­duc­ing al­ready pres­sured rice prices by over 25 per­cent.

Myan­mar Agribusi­ness Public Cor­po­ra­tion (MAPCO) re­cently signed an agree­ment worth around US$3 mil­lion with South Korean firm SK net­works to im­port 100 grain dry­ers for rice and corn. The dry­ers will go to the agribusi­ness ser­vice cen­tres MAPCO is set­ting up in Yan­gon, Man­dalay and Aye­yarwady re­gions, but those are not ex­pected to be op­er­a­tional un­til Jan­uary.

U Than Myint said the min­istry was fo­cused on two mea­sures that could be im­plemened in con­cert. The first is al­ter­ing a rule so that paddy can be ex­ported di­rectly, rather than fin­ished rice.

Rice traders are also plan­ning to push the gov­ern­ment to lower ad­min­is­tra­tive re­stric­tions on where they can sell rice within Myan­mar. Yan­gon rice traders look­ing to make sales in Tanintharyi Re­gion and Rakhine State, for ex­am­ple, re­quire per­mis­sion from the Yan­gon Re­gion gov­ern­ment.

The other mea­sure the com­merce min­istry is fo­cussed on is to find new mar­kets for rice and paddy ex­ports other than China. This is by no means a new ini­tia­tive. Myan­mar has been search­ing for new ex­port mar­kets for some time, but has had dif­fi­culty ink­ing suc­cess­ful agree­ments.

A po­ten­tial ex­port agree­ment with the Philip­pines last year fell through, mainly be­cause Myan­mar rice proved too ex­pen­sive and so the Philip­pines bought from Viet­nam in­stead. At­tempts to re­new a mem­o­ran­dum of un­der­stand­ing with In­done­sia are un­der way but yet to come to fruition.

U Khin Maung Lwin, deputy sec­re­tary at the com­merce min­istry, said the gov­ern­ment was pur­su­ing ex­ports to the EU and In­done­sia, and try­ing again to form an agree­ment with the Philip­pines. He was hope­ful that the In­done­sia agree­ment would be fi­nalised soon.

“In­done­sia will in­form us of the con­firmed agree­ment date,” he said. The Philip­pines de­sires Myan­mar rice, but at the same price as it pays Viet­nam, he added.

The gov­ern­ment has held meet­ings with traders and rice in­dus­try of­fi­cials to iden­tify ways to lower pro­duc­tion and lo­gis­tics costs that have made it hard to com­pete with other re­gional ex­porters.

In or­der to make progress on open­ing up new ex­port mar­kets the gov­ern­ment is plan­ning a se­ries of for­eign trips, U Khin Maung Lwin added.

“At the ear­li­est we’ll con­duct vis­its with rice as­so­ci­a­tion rep­re­sen­ta­tives [to the EU, In­done­sia and the Philip­pines] be­fore the end of this year,” he told The Myan­mar Times.

Al­though re­liance on China for ex­ports has proved risky, the MRF’s U Soe Tun also wants to see an of­fi­cial agree­ment with China put in place.

“We can’t blame the Chi­nese gov­ern­ment for seiz­ing [il­le­gally im­ported rice] at the Muse bor­der as it’s their right to stop il­le­gal trade,” he said. “But our gov­ern­ment needs to agree quo­tas for Chi­nese ex­ports. We signed for 100,000 tonnes [of rice ex­ports to China] last fis­cal year, and we are ask­ing [the gov­ern­ment] for a 200,000tonne quota for bor­der trade and 200,000-tonne quota for ship­ments.”

U Khin Maung Lwin said the gov­ern­ment was at­tempt­ing to hold diplo­matic dis­cus­sions with China to se­cure those of­fi­cial ex­port quo­tas.

U Ye Min Aung, man­ag­ing direc­tor of MAPCO, said that the MRF and MAPCO have in­vited Chi­nese state en­ti­ties for dis­cus­sions on rice ex­ports to be held this month. The state en­tity in charge of ex­port and im­port qual­ity, the Gen­eral Ad­min­is­tra­tion of Qual­ity Su­per­vi­sion, In­spec­tion and Quar­an­tine of the Peo­ple’s Repub­lic of China (AQSIQ), is in­vited. China’s na­tional macroe­co­nomic agency – the Na­tional De­vel­op­ment and Re­form Com­mis­sion – will also at­tend, said U Ye Min Aung.

The dis­cus­sion would help “fa­cil­i­tate the [nec­es­sary ex­port] cer­tifi­cates from re­lated min­istries meet the [level of] qual­ity de­manded by China for bor­der trade,” he added.

‘There are many chal­lenges to set­ting a fixed price.’

U Than Myint Minister of Com­merce

Pic­ture: EPA

Work­ers pre­pare rice for dry­ing next to a road dur­ing the harvest in Nay Pyi Taw.

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