Despite being the backbone of Myanmar Economy, agriculture seems to have been largely ignored by the government. Fortunately, government recognition of the sector’s importance to the country’s economic development is increasing. However, there remain many needs for policy reform and targeted investment for the sector to realize its promise and underpin Myanmar’s inclusive growth. What would it take to unlock the potential of Myanmar’s agriculture sector?
Without question, the greatest drive to unlock the potential for Myanmar’s Agriculture is its resources. The country has four competitive advantages abundant land, water, and labor resources; and proximity to major future food markets. Indeed, with 12.8 million hectares of cultivated land and the potential to expand this by nearly 50% into additional fallow areas, agricultural potential is immense. In addition, diverse topography and ecosystems enable farmers to produce a range of cereals, pulses, horticultural products, and fruits, as well as livestock and fishery products.
According to Asian Development Bank (ADB), Myanmar is the largest continental member country of the Association of Southeast Asian Nations with 67.6 million hectares. 5.67 million hectares is classified as “virgin and fallow land” or “cultivable wasteland”, suggesting significant potential for bringing new land into production. Reflecting the relative abundance of land, the average size of holdings is high compared with other developing Asian countries even though a large share of Myanmar’s workforce is in agriculture. This enables an easier transition to technologies that improve labor productivity and means less immediate pressure for out-migration from rural areas.
In addition to land, Myanmar’s water resource remains relatively unexplored. Myanmar’s water resources are considerable and are centered on four major rivers and their related systems. These supply more than 19,000 cubic meters per capita of renewable fresh water each year, about 9 times the levels available in the People’s Republic of China (PRC), 16 times that of India, 5 times that of Viet Nam, 6 times that of Thailand, and 30 times that of Bangladesh (ADB, 2012). Moreover, three of Myanmar’s four major river systems originate within the country, giving the country exclusive control over them. As growing water scarcity constrains agricultural production around the globe, particularly in the neighbor in PRC, Myanmar’s water resources offer a significant agricultural competitive advantage. Even so, less than 10% of its water resources have been utilized.
Another resource to the sector is workforce. With 56% of the workforce in agriculture, labor is still plentiful compared to other Asian countries. According to Philippines National Productivity Commission 2014, Myanmar’s minimum wage the lowest in Southeast Asia, i.e., labor is expensive and mechanization is limited. Because labor is a principal input into agricultural production, this helps the country maintain low production costs.
Given its location between two enormous regional markets in India and China, Myanmar’s farmers and agribusinesses are potentially well positioned to contest both regional and global agricultural markets—if the right investments are made in institutions and infrastructure. Proximity to the fastest growing food markets in the world can be a significant factor in reducing transportation and transaction costs for agricultural products, even if this is not yet the case.
If the underperformance in the sector is to be lifted, both short-term and long-term plans are needed. In the short-term, there are areas where relatively simple policy reforms and project-type, direct sectoral interventions can reap large rewards. There are some areas, which might be considered short-term development priorities. The first area is the input market development. In the absence of sufficient credit for optimal input use, farm demand for quality inputs has remained constrained. This constrained demand, in combination with a lack of supportive regulations, has probably contributed to the underdevelopment of markets for quality inputs. As a result, certified or other high-quality seeds are not widely available, and agronomic practices suffer from suboptimal germination and stand densities. Moreover, a substantial share of chemical inputs is imported, with variable, unregulated, and poorly labeled concentrations and quality. While Myanmar imports most of the fertilizers that it applies, it exports most of its natural gas, which is the key input into fertilizer production. Reallocation of gas to fertilizer production would allow more domestic value addition and help to ensure stable fertilizer supplies for farmers. Myanmar’s agriculture has traditionally involved little use of pesticides. However, this has rapidly changed, with massive imports from the PRC and large increases in application rates. Current pesticide application levels are beginning to approach those of other countries in the region, even though fertilizer levels trail them substantially. At the same time, imported pesticides are poorly documented, barely regulated, and not well understood by the farming population. This is likely to lead to problems of environmental contamination, ecological disruption, and pest destruction in the long-term. More effective pesticide regulation is needed to avoid long-term costs to the sector and to the health of farmers and consumers.
The second area to develop in the short-term is labor productivity. Considering the relatively large size of Myanmar’s farms compared to the rest of the region, the mechanization of threshing and land preparation has the potential to alleviate labor constraints and improve labor productivity. Moreover, the current practice for much paddy production is to leave harvested stalks standing on bunds while the subsequent crop is established. This prolonged time in the field after harvesting leads to large losses of the quantity and quality of harvests according to a research published in 2013. With resolved tenure, improved credit access, and more open border trade, the small-scale mechanization of tillage and threshing should increase to foster greater productivity and quality of output.
Another area to consider is water management. Even though Myanmar’s water resources are among the largest in the region, availability varies over time and across regions. For farmers to benefit from the productivity potential of more modern varieties, better drainage control is necessary. The last area for short-term development is public-private partnership. Public–private partnerships have developed in recent years, and help to address some of the constraints to credit, input access, innovation, processing, and milling of agricultural output for selected groups of farmers. Even though effective agribusiness partnerships have the potential to address constraints, effective regulation is needed to ensure that this potential is truly harnessed for inclusive growth. They also cannot fully substitute for essential services and public goods that the public sector should provide to underpin inclusive growth. For the long-term growth, the focus in developing Myanmar’s agriculture should be on climate change adaptation, rural energy and transport infrastructure, capacity for innovation, and, comprehensive agricultural planning. Myanmar will need to restructure key agricultural support institutions to backstop more complex productivity and value adding opportunities in the context of climate change. To do so, it needs to build the basis of innovation through enhanced investment in research, and extension should be reformed to become an effective service in support of smallholder farmers. Farmer organizations that can facilitate economies of scale in risk pooling, marketing, distribution, and supply chain linkages should be supported. Connectivity and electricity infrastructure need improving in rural areas to facilitate better processing and postharvest value addition. Transaction and transportation costs will need to be reduced to allow Myanmar to become competitive in export markets through enhanced border and port facilities, as well as through streamlined regulation.
Myanmar’s agriculture has enormous potential given its abundant resources and excellent market positioning. With the right reforms and targeted investments, the country can look forward to large growth in the sector that can foster dramatic and inclusive development across the economy