The growing opportunities in the rice industry are driving Myanmar to regain its posi- tion as the world’s top rice exporter. This is possible considering the vast area, more than 6 mil- lion hectares, devoted to rice and network of rivers that when harnessed will provide irrigation for a year-round production. Myanmar is currently exporting rice, but its
products are closer to the lower end of the quality spectrum. Much has to be done if the country wants to attain and surpass the level of Vietnam and Thailand, the current market leaders in rice. Vietnam has cor- nered the low-cost end of the market, while Thailand has cornered most of the premium market and has successfully its branded rice products.
Developing the rice industry is important because it will contribute in the develop- ment of the rural economy. The agriculture sector also employs 70% of the country’s labour force. There is a catch though, as a wrong approach may result in increase in the volume and quality of rice but may also end up with farmers remaining poor and in debt. Agricultural productivity should not
be attained at the expense of the farmers. Any effort at increasing production and im- proving quality should be coupled with the development of social infrastructure for the farmers. Quality and volume of rice should also translate to the improvement in the liv- ing condition of the farmers.
Most farmers fall prey to merciless play- ers in the market. Informal moneylenders fleeced them through exorbitant interest rates and traders take advantage during har- vest season with low price. These market re- alities leave the farmers perennially in debt and without resources to start the next sea- son. One of the relevant responses to this situation is to consolidate the small farmers into an organization that will enable them to be one of the players in the market. Farmers organizations, either as associations or co- operatives, when provided with appropriate tools and strengthened through capacity building programs can be developed to man- age the business of rice. At present, there are limited strong farmers organizations in the country that can do this function.
For farmers organizations to effectively work in their favour, it has to have control of the three basic elements in the value chain – production, financing and post-harvest and marketing.
Integration of production
Rice farmers will exert efforts to produce more when there is incentive for them to do so. If the backbreaking work in the fields will not provide the financial returns that will satisfy them, they will either change crops or look for other sources of income. Only with a motivated workforce will the rice industry succeed to generate surplus.
With a farmers organization, efficient pro- duction can be done by ensuring that they have the right seeds and other inputs, bought in bulk at more affordable price. Use of tractors and other machines are sched- uled ensuring access of all the members when they need it. Consolidation of prod- ucts during harvest also allows quality pro- cessing and higher prices. Without a farm- ers group, there will have several layers in the value chain where brokers at every stage will take advantage of the situation, getting all the gains and leaving the farmers holding an empty sack.
In the experience of the other Asian coun- tries, organizing the farmers also facilitates efficient transfer of technology and deliv- ery of extension services. In Thailand, the Philippines, Vietnam and Indonesia coop- eratives form the backbone of a vibrant rice industry.
Conduits for financing
Informal financing will always tie up the farmers to the lender creating an unequal relationship at the expense of the farmers. In most cases, farmers resort to informal credit because financing from formal in- stitutions does not reach them. If it does reach them, the process is cumbersome especially for those with limited education and capacity to read and write. Timely re- lease of loans is also an issue and most often it happen long after the planting season has passed. The Myanmar Agriculture and De- velopment Bank (MADB) may be providing production loans at present, but it is limit- ed in the sense that it cannot provide for all financing requirements of the rice industry. There will be areas that will not be covered with the limited resources of the bank. Fi- nancing individual farmers will be very cost- ly even for a government bank.
To maximize the outreach of the formal fi- nancial institutions, farmers organizations can effectively function as an intermediary or a conduit of credit services. A government bank dealing with a producers coop- erative with thousands of members will re- quire almost the same time as dealing with an individual borrower. The bank lends to the farmers organization who will in turn relend it to its member-farmers. The orga- nization will be responsible for the collec- tion and repays the bank with a minimal fee that will allow the organization to earn and finance its operations. In addition, a group lending approach will minimize the risk as the organization will ensure collection for them to be able to borrow again. Among the banks in the region utilizing this approach are Vietnam Bank for Agriculture and Rural Development (VBARD), Bank Rakyat Indo- nesia (BRI) and the Land Bank of the Phil- ippines (LBP).
Post-harvest and marketing
The quality of product depends on the avail- able post harvest facilities. The farmers may use the best seeds and may have good har- vest, but without a good drying and storage facilities, the harvest will be ruined. This is the advantage of the rice traders. They have the drying, storage and milling facili- ty enabling them to hoard stocks, mill and release only when sales are finalized. Enor- mous profit is generated by simply buying low during harvest season and selling high during lean months.
Farmers organizations managing post-har- vest facilities will generate the same profits generated by private traders. The profits when given back to the member-farmers in terms of dividends will add up to the income of the farmers. Setting up post harvest facilities can be a strategic initiative of a farmers organization and can be supported by the government and the international funding agencies.
Government support programs
The government will have to provide the roadmap and the overall enabling policy environment. The formation of farmers or- ganization should not only be a token group that receives dole out from the government, but an empowered organization with strong governance system and skilled management team.
The government can also look at other areas. Strengthening of property rights such as ti- tling and documentation of lands is another area that has to be addressed. This will allow the farmers to capitalize on their lands. In-
frastructure development focusing on farm- to-market roads and irrigation facilities are big ticket items that can be done by the gov- ernment in partnership with bilateral and multi-lateral funding agencies. Crop insur- ance is also an initiative that will help much in lessening the risk of the lenders and other investors in the agriculture sector.
Opportunities in the rice sector is there and if activities are not marshalled, will be- come a tool for social injustice rather than a means to improve living condition in the rural areas and to alleviate poverty. We can- not prevent growth, but it has to be sustain- able and equitable where everybody shares the benefits. Formation of strong farmers organizations is an option that the country can take.
