USDA: Burma Rice Update


MARKET SITUATION

Despite a rumor that Government of Burma (GOB) may decide to permit the private sector to export rice, a rice export ban has not been lifted officially thus far. Post anticipates that this is unlikely to happen in the near future. The World Food Program (WFP) is reported to have procured 1,000 metric tons of rice from the Burmese private sector for its food aid projects. In the past, WFP was permitted to buy rice only from Myanma Agricultural Produce Trading, an agency under the Ministry of Commerce. The Ministry of Defense also obtained 40,000 metric tons of paddy in Irrawaddy Division and 78,000 mt of paddy in Pegu Division for army force rations.

According to Ministry of Agriculture and Irrigation, the harvest of main wet season crop is almost completed. Meanwhile, about 45 percent of the dry season crop has been seeded against the target of 3.38 million acres.

TRADE

In January 2005, 28, 575 mt of rice, 3,754 mt of broken rice and 16 mt of paddy were exported:

West Africa (Togo) – a total of 28,285 mt of rice exported: 28,285 mt of Ehmata 25 percent Bangladesh – a total of 1,468 mt of Br

oken rice exported: 290 mt of Ehmata 25 percent* 1,178 mt of Broken rice B 1 & 2 16 mt of Paddy*

Malaysia - a total of 1,495 mt of Broken rice exported: 1,495 mt of Broken rice B 2, 3 & 4 Singapore – a total of 1,081 mt of Broken rice exported: 1,081 mt of Broken rice B2, 3 & 4.

Myanmar's Rice Export Ban Hurting Farmers, Foreign Exchange Earnings

The Myanmar government's ban on rice exports is costing the impoverished Southeast Asian nation millions of dollars in foreign exchange earnings, a news report indicated Monday.

The ruling junta says the temporary ban, instituted on Jan. 1, aims to ensure there's enough rice for Myanmar's people, and to keep domestic prices affordable.

Myanmar exported less than 20,000 metric tons (22,000 U.S. tons) of rice during the first 11 months of the 2003-2004 fiscal year, beginning in April, the Myanmar Times weekly reported Monday, citing figures from the Commerce Ministry.

The report said that during the same period in 2002-2003, Myanmar exported 692,000 metric tons (761,200 tons) of rice, earning an estimated US$90.7 million _ at the official exchange rate of about 6 kyats to the U.S. dollar.

The black market rate is about 850 kyats per dollar. The government would normally apply the official exchange rate when tallying export earnings _ but in domestic dealings, the free market exchange rate is a more realistic measure of value.

Most orders this year were not shipped before the surprise ban was imposed in January.

Analysts, requesting anonymity, said the move has severely hurt Myanmar's farmers, who make up more than 70 percent of the country's 52 million people.

The Myanmar Times newspaper quoted Agriculture Planning Department Director General Tin Htut Oo as saying the export ban should be lifted because "this year's paddy production is expected to increase and export prices are high." He did not indicate when it would be removed, however.

The export ban reversed a major policy reform launched last April to ease the government's monopoly on rice exports, and let the private sector export surplus rice from the tightly controlled country.

Along with rice, the government banned exports of four other basic commodities _ onions, beans, sesame and maize _ apparently to stabilize or lower prices by forestalling shortages, which could cause public discontent.

Burmese farmers forced to grow dry season rice

While the price of paddy/rice is plunging and the sale stagnating in Burma, Burmese farmers are being forced to grow dry season paddy by the country’s military junta, State Peace and Development Council (SPDC).

Farmers from lower Burma especially the delta region have been threatened by their local authorities with arrest and confiscation of their lands if they didn’t obey the order.

A farmer from Kyonpyaw Township told that the government only provide inefficient amount of fertiliser and fuel need for planting rice. He added that farmers also have to buy extra seedlings, fuel and fertilisers.

Modern day Burmese farmers under the rule of their own government are faring worse than their ancestors under the foreign British rule, complained the farmer.

Myanmar Slaps Sudden Ban On Rice Exports

Myanmar has imposed a sudden, six-month ban on rice exports in an apparent bid to curb public discontent by keeping prices down, sources said.

The ban, effective from January 1, was discovered by traders only when their goods were blocked from leaving the country.

However, analysts say the move may have backfired by driving prices dramatically lower, sparking fear among rice farmers.

Traders also face legal action from foreign firms who placed large orders for rice.

"Authorities have a penchant for coming up with such ad hoc measures without considering adverse effects," one analyst noted.

The ban is especially surprising given the government's decision in April to halt its involvement in the rice trade, including lifting controls on exports.

The move was welcomed by farmers who boosted production in anticipation of better prices. The current harvest is more than 21 million tonnes, according to official figures.

But with the bumper crop now hitting the markets, prices for paddy, or unhusked rice, have dropped from 180,000 kyat per hundred baskets (2,090 kilograms) to less than 100,000 kyat -- an amount that does not cover production costs.

"The military authorities are very wary of any potential security risks such as public dissatisfaction that could be brought on by spiralling prices," another analyst said.

The last major unrest in Myanmar was the student-led 1988 democracy uprising, which was brutally suppressed by the regime. Although politically motivated, it came amid dire economic turmoil in the Southeast Asian nation.

The six-month ban is also being applied to chillis, onions, sesame and maize -- all classified as essential foods by the government.

Consumers have become the inadvertant winners, paying 3,300 kyat per 23-kilogram (50-pound) bag of rice, 40 percent lower than last year. The prices of chilli, onion, sesame and maize have fallen by 10-20 percent.

But those who do not grow their own rice or other crops in Myanmar are in fact the minority, with some 70 percent of the 51 million people here estimated to work or live on farms.

The junta has also quietly started to pay state employees an extra 5,000 kyat (around five dollars at black market rates) per month to compensate for the loss of a rice subsidy last April.

"We were told that this money was a sort of rice allowance, since we no longer receive our rice rations," a low-level state employee from the information ministry told.

According to analysts, the junta feared that once news of the extra payment for 1.2 million employees spread, unscrupulous entrepreneurs would hike up prices, placing the crucial staple out of the reach of ordinary workers.

"But the move may have backfired as prices plunged much more than expected and has hit rice farmers hard," one analyst told.

Myanmar's economy is already reeling under decades of mismanagement by the military, with international sanctions, upped last year following the detention of opposition leader Aung San Suu Kyi, also biting hard.

The international legal ramifications of the surprise ban are only just starting to be felt as Myanmar companies fail to deliver on contracts, says one company official.

With the April announcement of controls on exports being lifted, some 25 companies began stockpiling extra rice for export, thrilling farmers as their crops commanded better payments, the official said.

He said his joint venture company, which has been unable to deliver 500 tonnes of paddy promised to a Singaporean firm, may now be just one facing legal action.

Analysts suspect the ban could be reversed earlier than in six months, as the government realises it is losing precious hard currency.

"This is like a self-imposed economic sanction that authorities can well do without," one analyst said.

Source:AFP

It has been learned that the SPDC [State Peace and Development Council] has issued a notification banning the export of five important basic commodities including rice. The Ministry of Trade issued the notification on 2 January and the other banned commodities were beans, corn, chilies, and onions. The imposition of the ban was not officially announced in the media but locals from Rangoon told DVB [Democratic Voice of Burma] that the junta's Trade Department sent letters to the traders informing them of the ban.

It is not known whether the ban is linked with the Trade Ministry's recent notification terminating special rice quota for government employees. Similarly, local people from Rangoon told DVB the ban contradicts the junta's policy of liberalization of the rice market in Burma as declared by SPDC Secretary 1 Lt-Gen Soe Win.