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OATAM A Credible Platform for Beans and Pulses Trade

On 29th August, 2015, nearly one and a half years since its inception, the Overseas Agro Traders’ Association of Myanmar (OATAM), celebrated its success with members and suppliers of Myanmar’s beans and pulses. Inaugurated by the Indian Ambassador, Mr Gautam Mukhopadhyay, the event displayed the rapidly changing trading business, in this case, of two major agro products, beans and pulses. The systems and processes being put in place can be- come benchmark practices for other trades as well, introducing a high level of profes- sionalism and accountability in the hitherto unorganized sector.

OATAM was formally launched in March 2014, and its inception is attributed to Mr. Sunil Seth, Country Head of Tata International, who along with other trading companies, decided to seriously take up the suggestion of His Excellency U Win Myint, and approach all the significant beans and pulses traders operating in Myanmar. It is now being registered with the DICA (Direc- torate of Investment and Company Admin- istration), and in the course of one year, has emerged as a credible platform to interact with concerned ministries and Chambers of Commerce.

Some of the members of OATAM besides Tata International include, Swiss Singapore Overseas Enterprises, Agro Corp International, Sudoma Inernational, Sun Impex Fze, Singtrade Global, and others. With an existing 23 of the top traders, OATAM traders control 75% of the total export of pulses from the country. A total of 1,420,000 tons of black matpe, green mung bean, toor whole, chick pea, cow pea etc are annually exported to countries like India, Singapore, China, Pakistan, Malaysia, Indonesia etc. India is by far the biggest market for Myanmar’s beans and pulses, with its vast lentil-eating population, and also because raw beans are processed and finished in India before being sold locally and internationally. India thus, accounts for 80% of the total beans and pulses export.

Myanmar’s Beans and Pulses

Beans are the second richest source of protein in the human diet. ‘Pulses’ is a term used for all edible seeds that grow in a pod, thus including lentils, beans and peas. The general reference to beans and pulses in- cludes the dried form of peas, chick pea,

cow pea, black matpe, green mung bean and another 13,000 grown worldwide. These can be raw whole, split, de-husked, polished and processed in numerous other ways. Over 68 million tons of beans are produced globally. Myanmar is one of the world’s leading producers of rice, and known lesser for its beans and pulses, the latter never quite enjoying the same preferential treatment with incentives as rice. In fact, beans and pulses have been cultivated in rice fields once the mon- soon paddy has been harvested, the sowing time starting in November, and the crop be- ing ready for harvest before February. Crops sown a bit later are ready before March. Instead of leaving the land idle, pulses and beans are grown without any great effort or investment, since they neither require additional manure or fertilizers, nor ample amounts of water to grow-the left over mois- ture in the land from the paddy is sufficient. The crop is ready in 3 months and quick sale of this nutritious staple is impetus enough for farmers to grow these, and statistics reveal a steady increase in land area being al- located for growing beans and pulses. Highly motivated farmers, less cumbersome cultivation cycle, ideal climatic conditions, and ample yield that brings quicker returns as compared to other crops, are some of the big advantages of cultivating beans and pulses. Two thickly populated neighbors, namely India and China, present a ready market for the crops, thus reducing the need to find sales channels internationally. Myanmar’s Beans and Pulses Trade Myanmar as a developing country, exports more of low-margin, unprocessed, raw goods to other countries without any val- ue addition due to lack of resources for the same.

The beans and pulses crops are exported to 52 countries since domestic consumption is not very high. The single largest export is to India, the biggest market for beans and pulses, which are an essential part of the common man’s diet in the country. Even though India is the world’s largest producer of beans and pulses, it is unable to cater to domestic demand, and imports 1.1 million tons from Myanmar alone, besides specific varieties from Canada, Australia and Tanza- nia. Quantities exported to other countries are in much smaller quantities.

The OATAM impact

OATAM is playing a very useful role in Myanmar’s beans and pulses trade, and the initiatives of the organization will have far-reaching effects, benefitting the traders and the economy. Its members, led by Sunil Seth, include some of the best, highly experienced traders in the beans and pulses business, with offices in Singapore and India, who have multiple marketing channels to supply products to markets in ASEAN, Middle East, Europe and USA. Their ex- pertise and experience is ensuring that the best practices of the trade get introduced in a country that has recently opened its doors to the world.

At the outset, OATAM is helping elevate beans and pulses to the same level of importance as rice, to ensure that this trade gets similar incentives and sops that will push returns higher.

It is offering a united platform and present- ing a common ground for improved inter- action between buyers and sellers, creating space and place for small and big traders. Standardizing of trade practices has been long overdue in this hitherto unorganized sector. This will ensure uniformity, security and prevent arbitrary actions. With regu- lar meetings and workshops, members are getting more exposure and interacting with officials from the Ministry of Commerce, the banking sector, suppliers and inspection agencies. Interaction with the Indian Puls- es and Grains Association has helped them gain insights into the needs of their biggest market.

Proximity to India, good relations and a huge amount of trade continuing, gives Myanmar an advantage to seek technical ex- pertise and training to improve agricultural produce. India has numerous agricultural research institutes with all the technical knowhow needed here. OATAM can be the channel for this purpose as well.

OATAM pitches in to resolve problems and quality issues for all its members and its unified stand prevents defaults in both pay- ments and supplies. This helps protect the interests of the small traders. Standardized contracts, payment security and weighing facilities at the ports are some of the big issues being addressed by the organization. It has been coordinating with shipping com- panies to resolve logistics issues.

As a single, strong unified body, OATAM is gradually attempting to improve product quality, improve available varieties, and try to provide benefits to farmers like help them procure better seeds, introduce latest technologies in agriculture.

OATAM is looking improvements and in- novations both upstream and downstream. The former includes exploring ways of pro- viding improved fertilizer quality, better pesticides to prevent crop damage due to pests, and so on. Downstream innovations being explored are finding ways to exporting value-added products of beans and pulses, which will have higher margins and create employment opportunities for the locals. This however, requires large investments in setting up factories for the same.

OATAM and the Future of Beans and Pulses Trade Sunil Seth envisions OATAM to be a catalyst in creating a ‘brand Myanmar’ for beans and pulses which is recognized globally and will be able to compete with countries like Canada, Australia, Africa and USA. He wants to decommoditize the market so that pulses and beans can be processed, packaged, branded and sold in retail markets. Adding value, he says, is much better than just trad- ing in raw produce. He is working towards upgrading of specifications of products to have them better suited for the vast Indian market. The current system of cash advances needs to change and payment securities ensured somehow, he feels. It is here that changes in the banking sector are required

so that eventually traders can operate on Letters of Credit (referred to as LCs) of local banks, rather than having to be routed via Singapore based banks.

Having started from scratch over two years ago, to set up Tata International’s Myanmar office, to make the company one of the top beans and pulses traders, Sunil Seth is optimistic about helping this trading business grow from a current USD 800-900 million business to cross USD 1.5 billion in the com- ing years.

He is also enthusiastic about having OAT- AM push for processing centers in Myanmar for more value added products, which will increase revenue and create jobs. At present less than 10% of the beans and pulses ex- ports include value added products.

Though agriculture is the main contributor to GDP in Myanmar, it requires a lot of in- vestment for improving quality, output and earnings. At present, farmers do not have access to top quality seeds or technology

to mechanize processes, or understand the nuances of pest management. Insufficient storage facilities and infrastructure needed further reduces agricultural returns. The dependence on low value exports which include raw pulses needs to change. The banking sector is playing a minimal role in agriculture, and farmers do not have access to bank financing.

The global population is growing, awareness for eating healthy increasing, a drift towards vegetarianism is creating increased demand for the highly nutritious beans and pulses. The focus on environmentally friendly crops, adds to the case for protein rich beans, especially since its by-products can be used as animal feed in fisheries, dairy and poultry farms. With organizations like OA- TAM, agriculture and trade, both stand to benefit, since they are able to take combined initiatives, stay united on issues which will provide long term benefits to producers and consumers alike.