Myanmar has a total land area of 67.7 million ha with 17 million ha culti-vable area. Only 8.2 million ha of the culticulti-vable land is currently used for farming with about 80 percent in rice. It is the largest country on the southeast Asian mainland, equivalent to 7.4 percent of the United States in total area and about five times the size of the state of Arkansas.
The status of the rice sector was the major focus of interest in this study.
Myanmar was the dominant world rice exporter during the first half of this century, accounting for nearly three-fourths of the world market. Production was severely curtailed during World War II. Myanmar experienced repeated difficulties regaining its status as a major world rice exporter after indepen-dence in 1948 with ill-conceived experiments in central planning and social policy. Thailand rapidly emerged as the dominant world rice exporter in the 1960s, and Myanmar’s position declined due to restricted rice production, infe-rior quality and uncompetitive prices. Both rice production and rice exports have again been on the upsurge in Myanmar since 1990 as a result of the government’s current thrust to expand the cultivated area and multiple crop-ping of rice. However, most observers of Myanmar’s historical, political and economic progress remain skeptical as to whether this new growth phase in rice production will be sustainable under the current military government.
The major rice-producing regions are in the delta, including Ayeyarwady, Pegu, Yangon and Mon State. These four areas produced 66 percent of the 1994/95 monsoon crop. Major rice ecosystems include rain-fed lowland rice (about 52 percent of total rice lands), deep-water submerged rice (about 24 percent), irrigated lowland rice (about 18 percent) and rain-fed upland rice (about 6 percent). Total estimated paddy production in 1994/95 was 16 million mt on 5.5 million ha including 1.3 million ha of dry-season paddy that is mostly irrigated. Only 10 percent of the main monsoon paddy crop is irrigated.
Myanmar’s overall paddy yield has averaged about 2.8 mt per ha with an estimated average fertilizer application rate of 50 kg per ha for HYVs and minimal application for traditional varieties. Use of HYVs is about half of the rice area. Technology use has been limited because of the shortage of foreign exchange to import inputs, such as chemical fertilizer and fuel, and the risk of investment with hazardous production conditions in flood-prone areas and areas with erratic rainfall. Most of the chemical fertilizer use is for HYVs pro-duced on the more favorable production sites and in irrigated areas. The overall cropping intensity was 134 percent in 1993/94 with 17.3 percent irrigated.
The Minister of Agriculture in Myanmar has been recently promoting increased rice production by introducing improved cultivation practices, greater use of HYVs and increased input supply. However, there has been little change in the reported average paddy yield in recent years. The major increase has been in cultivation of dry-season paddy. Total irrigated crop area increased from 12.7 percent in 1992/93 to 17.3 percent in 1993/94 and is targeted to increase to 25 percent by 2000. Dry-season irrigated paddy increased from 0.9 million ha in 1993/94 to 1.3 million ha in 1994/95.
Paddy production in Myanmar has increased from 14 million mt in 1990/
91 to 16 million mt in 1994/95. The main source of production increase has been the expanded public irrigation development that is essential for increased dry-season paddy production as well as of benefit for dry-zone, wet-season production. The irrigation development has been largely concentrated in low rainfall areas. Only 5 percent of the national water resources had been utilized in 1993/94. Additional investment in flood control is needed in the delta and coastal areas to increase rice production and to support high technology use.
Increased paddy production has enabled Myanmar to sharply increase the level of rice exports since 1993/94. Virtually all exports have been low-quality 25 percent brokens, long-grain rice. The government export target for 1994/95 was 1 million mt; however, the apparent difficulties in meeting this target caused an upsurge in domestic rice prices. There are relatively few modern rice mills and serious problems with quality control to export high-quality rice.
Although Myanmar has developed cultivation on only 8 million ha out of a total estimated arable area of about 19 million ha, only a small part of the estimated surplus arable area is recommended for rice production. Major
rec-ommended uses of this idle arable area are rubber, oil palm and orchard crops.
There is general agreement that the greatest potential to increase rice produc-tion is through further intensificaproduc-tion, such as increased double cropping and dry-season irrigated production. Increased infrastructural development in irri-gation and flood control will facilitate greater use of HYVs and other technol-ogy to improve yield.
Infrastructural development has been severely constrained by governmen-tal budget problems, particularly the shortage of foreign exchange, and the general lack of investment capital in Myanmar. These financial constraints are expected to continue because of limited foreign investment and the difficulties in controlling government spending. Most of the current public infrastructural development in progress, including irrigation development, is labor intensive, often using unpaid labor.
Reported rice production costs per metric ton are low by world standards at only US$42.32 for HYV paddy and $40.84 for local paddy. Rice production was clearly profitable at the 1994/95 average, free-market paddy price of US$120-$130 per mt. However, producers are obligated to deliver part of their crop to the government at a fixed procurement price of about US$34 per mt, which is less than the reported production cost. The estimated export-supply cost of bagged milled rice at the Yangon Port in 1993/94 was US$117.44 per mt, based on the reported paddy production cost, reported average milling out turn and other marketing costs from the farm gate to export position. The local retail price of milled rice increased from US$172 per mt in 1994 to US$208 in early 1995 due to a surge in export demand.
Rice production increased at an average annual growth rate of 0.9 percent from 1960-72 and 3.5 percent from 1973-91. Over the total period, 1960-91, Hossain and Oo (1995) have estimated that the change in HYV area contrib-uted 37.1 percent to growth, increased irrigated area as a percentage of the total area contributed 12.2 percent and increased fertilizer use contributed 49.2 per-cent. Population growth has been about 2 percent per year. Estimated produc-tion elasticities for the second period, 1973-91, were 0.15 for use of HYVs, 0.19 for the portion of irrigated area and 0.26 for chemical fertilizer use. Pro-duction growth was not responsive to price over most of this period because of the restricted free market. Market restrictions have been substantially reduced since 1991, resulting in better price incentives for production.
Major factors other than price incentives that will determine production over the next decade are irrigation development and other infrastructural im-provements, increased use of HYVs, now only half of production, and increased fertilizer use. The AGRM baseline projection of the Myanmar rice sector, which includes growth factors since 1991 and likely infrastructural development con-straints, projects that paddy production will increase to 19.5 million mt in 2000 with exports increasing to 0.8 million mt. The major export surge and rapid
price increase in 1994/95 was triggered by a major drought in Indonesia and flooding problems in Vietnam. Only a modest price increase of about 1 percent per year over the next decade is projected for Myanmar’s rice exports with the baseline model. World rice exports are projected to increase only slightly from 18.4 million mt in 1996 to 18.9 million mt in 2000.
Although highly improbable, a 1996 five-year government plan to aggres-sively increase rice yield was also evaluated with the Arkansas econometric model. The 1996 plan projected a massive increase in paddy production from 15.6 million mt in 1996/97 to 26.7 million mt in 2000/2001 with the annual rice surplus increasing to 6.0 million mt. Assuming that this annual surplus from Myanmar was sold on the world market, the AGRM model projected that the Thai high-quality rice price would fall by 7.7 percent in 1997/98 to 16.6 per-cent in 2000/2001 compared to results in the baseline projection. The Thai low-quality rice price was projected to be less affected than the Thai high-low-quality rice price as a result of the proposed massive increase in Myanmar low-quality rice exports. Other rice-exporting countries were assumed to switch from low-quality to high-low-quality rice exports in response to the increase in Myanmar low-quality rice exports. Former Myanmar government production plans have seldom been successful; thus, it is doubtful if increased Myanmar rice exports will have an important impact on the world price level in the near term.