New commodity exchange centres are acting to improve market efficiency. In 2013, MBCA set up commodity exchange centres in six Dry Zone townships to provide farmers and traders with easier access to one another, to improve the quality of produce through competition, and to increase the flow of market information. LIFT intern Gauri Gadgil visited the centre at Seik Phyu and reports.
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Even on a quiet morning at the commodity exchange centre in Seik Phyu there are truckloads of onions to be bought and sold, and the men draw straws to see which farmer and which trader will be the first to negotiate. The commodity exchange centre is a project supported by the Myanmar Business Coalition on Aid (MBCA) and funded by LIFT. Its purpose is to facilitate better market access in rural areas ensuring that farming families receive higher returns on their crops. To date, MBCA has helped establish six commodity exchange centres throughout the Dry Zone.
Small heaps of onions, samples of the larger crop waiting in the trucks, are placed on tarps and arranged into neat rows so that traders can gauge their quality. We speak to Than Ko, an onion farmer, who tells us that the emphasis on quality is new, and a direct result of the exchange centre. Because the onions are purchased side by side instead of out in the villages from each individual farm, quality becomes an important determinant in setting price.
The onions bought here will be sent primarily to Yangon and Mandalay, though some will go to China through Muse. Than Ko goes on to explain how traders formerly would go out to villages and buy whatever was available only when the market prices for the crop were already high. If, on the other hand, prices were low, farmers had to first find a trader willing to buy their crop, then sell at whatever price he offered. Now, the commodity centre is open all but 4 days per month, and prices from major markets including Yangon, Pakokku, and Yaynanchaung are phoned in each morning. Farmers can bring in a portion of their crop at a time, selling enough to meet their cash flow needs, and holding some crop in reserve to sell when demand is higher. There is a general agreement among the farmers present that the prices they received through the commodity cetre are closer to the final sales price in Yangon.
The activities of the morning are taking place on an open lot behind the trade association building, where MBCA has been conducting trainings on farming techniques, and encouraging farmers to use hybrid seeds and natural fertilizers.
MBCA project officer Tint Lwin Myo recalls the initial reluctance amongst farmers in adopting new practices. Education was critical in overcoming this particular barrier, and today the farmers we meet are quick to tell us of the increase in quality that comes from using organic fertilizers rather than compound fertilizers and the subsequent increase in price that they’re able to negotiate with traders. Trainings and education are not limited to information about farming inputs. For farmers who are absent from the commodity centre, market prices are broadcasted over local radio station Padamya FM throughout the township. Tint Lwin Myo recalls that at the beginning of the project there were some farmers who would turn on their radios to any station at any time expecting to hear Yangon market prices, until they received specific instruction on how to listen for a specific broadcast.
A member of the trade association steps forward to call out numbers and prices much like an auctioneer, and the day’s trading begins. Membership in the trade association is required to participate in the commodity exchange centre, and eligibility is open to those with residence or employment within the township. The association has agreed that any new members must have a minimum of 3 years work experience or apprenticeship with traders or farmers currently in the association, thus ensuring local oversight of the institution going forward. The trade association now pays rent for the land hosting the commodity trade centre, and has the infrastructure in place to sustain the trading centre without external aid. This is by design, as MBCA’s project period of three years is now complete. The self-sustaining nature of the project speaks to the larger goal of LIFT to promote sustainability in rural development.
The morning’s trading is completed without incident, and trucks overflowing with onions soon take to the roads. The commodity trading centre has evolved significantly since its conception in 2011, and is embraced and supported by farmers and traders alike. Farmers have come to expect fair market prices. Traders have come to expect a stable supply of high quality product. And everybody knows how to listen for the radio broadcast.
