LIFT thanks Dr Sergiy Zorya, Team Leader, Senior Agriculture Economist for the World Bank, for this blog in which he discusses the main findings of the 2016 LIFT/World Bank study, Myanmar: Analysis of Farm Production Economics. Dr Zorya is the lead author of this study.
Dr Zorya is based in Bangkok, working on the agricultural portfolio in Cambodia, Lao PDR and Myanmar. Sergiy joined the World Bank in 2005 through the Young Professionals Programme. Prior to the assignment in Southeast Asia, he worked in Europe, Central Asia and Africa, as well as in the corporate unit for the agriculture and rural development department of the Sustainable Development Network.
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Myanmar’s unusually fertile soils and abundant water source are legendary in South-East Asia. It is even said that Myanmar has the most favourable agricultural conditions in all Asia. Almost anything can be grown in the country, from fruits to vegetables, from rice to pulses. The agriculture sector dominates the economy, contributing 38 per cent of GDP, and employing more than 60 per cent of the workforce. The importance of agriculture in the economy and as an employer will diminish in coming years as a result of structural transformation. However, the sector will continue to play a remarkable role in reducing poverty in Myanmar for many years to come.
Myanmar’s farming systems are well diversified. The recent farm economics study by the World Bank and LIFT found that most farms produce paddy during monsoon season but grow a variety of other crops such as beans and pluses, oil seeds, and maze during dry season. This is very positive development as it helps to strengthen resilience of farming systems and effectively manage water during dry spells. In addition, the rice consumption per person is lower than reported in official statistics (132 kg instead of reported 175 kg). This shows that people’s food basket consists more proteins or vegetables in addition to rice, which is very important to combat Myanmar’s high levels of malnutrition.
Agricultural productivity is low. The study confirmed that the land and labour productivity in Myanmar are much lower than in other Asia’s rice bowls. The example of monsoon season shows that one day of work generates only 23 kg of paddy in Myanmar, compared to 62 kg in Cambodia, 429 kg in Vietnam, and 547 kg in Thailand. Low labour productivity is the main reason why agricultural wages are some of the lowest in Asia. An agricultural worker in Myanmar earns only USD 1.8-2.5 per day during monsoon season, and USD 3.0-3.5 during dry season. In comparison, a farm labourer in Thailand earns USD 8.50 per day, and a Philippine farmer earns on average USD 7 per day.
Farm profits in Myanmar are among the lowest in Asia. This is a direct result of low productivity of land and labour. In 2013/14, the net profit from producing monsoon paddy averaged USD 114/ha. This is ten times smaller than those in China for example. A similar picture arises from producing other crops. Farm profits in general are not sufficient to raise household’s per capita income above the regional rural poverty line, according to the study. This indicates that the potential of the agriculture sector has not yet been realized when it comes to poverty reduction.
Myanmar Has the Lowest Profits from Rice Production
Source: World Bank, and Bordey et al. 2014
There is a lack of agricultural public programmes and public goods. Farmers in Myanmar are less educated and less knowledgeable than their regional peers; they also access fewer public services than farmers in neighbouring countries.
First example, seeds: the supply of certified paddy seeds is estimated to meet only 1 per cent of the demand. The situation for other crops is even worse: the public system does not produce enough quality seeds. In addition, the enabling environment for the private sector is not conducive enough to stimulate seed imports or production and multiplication of seeds in the country. It is not a surprise that most Myanmar farmers use their own saved seeds, a practice that keeps yields low.
Second, the insufficient use of fertilisers: Myanmar farmers use much less fertiliser, often in wrong nutrient balance, because of the lack of knowledge and training and a shortage of fertiliser quality assurance. As a result, the agricultural yields remain low.
Third, poor access to irrigation: in 2014-2015, only about 3 million hectares of agricultural land were part of public irrigation systems, which constituted 15 per cent of the crop area. This is much lower coverage than in Indonesia and Thailand (about 30 per cent), China (50 per cent), and Vietnam (70 per cent).
A policy shift is needed from rice production to broad-based agricultural support. Producing more and getting higher paddy yields does not automatically lead to higher farm incomes. Higher incomes will arise from better farm management triggered by better public programmes and policies. Higher income will also come from more strategic diversification. The study found that in many regions of Myanmar, paddy production is less profitable than growing other crops, especially during the dry season. Most profitable is green gram, for example, and it is also less costly and less thirsty for water than paddy. It is important, therefore, that farmers have freedom to select the least costly and most profitable crops to make their production effective and profitable. The other words: producing more by using less inputs, or using inputs better instead of using more to achieve higher yields, are the keys to ensuring high returns to land and labour in Myanmar agriculture.
Agricultural policy makers in Myanmar can do more to step up and provide high quality agricultural support programmes. Agricultural productivity is affected by many factors. Some of them are beyond the immediate influence of agricultural policy makers such as a decrease in labour availability, labour costs or cost of working capital. Yet many factors can be influenced directly by the agricultural ministry. The public seed production system, which is currently biased towards hybrid rice varieties, needs to broaden its scope to a diverse range of paddy and other crops. Agricultural extension services are to be scaled up and strengthened to reach out to more farmers and cover more crops to accelerate adoption of productivity-increasing farm technologies. Irrigation systems can be made more flexible and provide on-demand irrigation services to enable farmers do produce different crops in different areas, and respond effectively to market opportunities.
Dr Zorya presented the main findings of the report on May 11th at UNOPS to an audience of partners, NGOs, UN agencies, agriculture experts and the press. His presentation can be found here.
A one page summary of the report in both English and Myanmar language can also be found here.
