1. Dolly Kyaw, Tin Htut & Hnin Yu Lwin
Yezin Agricultural University, Myanmar
International Conference onInternational Conference on
“Agricultural Transformation“Agricultural Transformation
in Asia: Policy Options for Foodin Asia: Policy Options for Food
and Nutrition Security”and Nutrition Security”
International Conference onInternational Conference on
“Agricultural Transformation“Agricultural Transformation
in Asia: Policy Options for Foodin Asia: Policy Options for Food
and Nutrition Security”and Nutrition Security”

2. 4. Conclusion & Recommendations
3. Identifying Key Drivers: Results from PAM
2.2 Seed Industry
2.1 Fertilizer Utilization & Distribution
2. Evolution of Input Policy
ContentsContents
1. Background
2

3.  Agriculture _ the major sector (cultivated land 29.7 million acres,
agricultural population 25.7 million, 30% of GDP, and 13.7% of the
total export earnings in 2010-2011 (MNPED, 2012)
 About 54% of total farmers _ “small landholders” (owned less than 5
acres (Agriculture Census 2011)
 Potential land for development in future is about 51 million acres
Fig. 1 Expansion of cultivated land (Central Stat Organization)
CSO various issues 3

4.  Rice self-insufficiency in Chin and Mandalay region in 2010
(Myanmar Agriculture Service )
 Agricultural Census (2011) points out that not only Chin and
Mandalay, but also Taninthari and Yangon region faced rice
self-insufficiency in 2010
MAS, MOAI
4

5. Fig.3 Poverty Incidence in Myanmar (UNDP & MNPED)
 Poverty incidence reduced (32% in 2005 to 25.6% in 2010)
 Food poverty incidence declined by half (4.8% in 2010)
 Rural poverty (29%), urban poverty (15%)
 Reduce poverty (target _ 16% in 2015)
5

6. (1) Socialist system (1962 – 1988)
 Agricultural policy _ rice self-sufficiency and surplus for
export, Land tenure reform in 1964
 Traditional technology with very low level of inputs used
 Agricultural development _ stagnant during 1962 & 1972
 Under “20-year plan (1973 – 1993)”, fertilizer was
subsidized along with adoption of MVs of rice
 Govt’s interventions in input and output markets resulted
deadweight efficiency losses
6

7. (2) Partial Liberalization (1988 - 2010)
 Centrally planned economy to a market-oriented
 “Summer Paddy Program” was introduced in 1992-1993
(Farmers received subsidized chemical fertilizer and
diesel fuel for pump irrigation)
 Fert. subsidy program was gradually reduced since
1993-94 (up to 2002)
 Imported on a purely commercial basis by both private
and public sectors
 State’s agencies imported and distributed fert. at market
price
 However, distribution program for paddy crop production
has been substantially reduced in 2003 (New rice policy)
7

8. (CSO 2011)
Fig. 4 Imported fertilizers by the state’s agencies
8

9. (MIS 2012)
Fig.5 Trends of fertilizers prices in Myanmar ($/ton)
9

10. (Author’s calculation based on CSO & MIS, FAO STAT 2012 for fert. qty.)
Table 1. Urea fertilizer utilization in paddy production
YEAR Utilization in
paddy (000 MT)
Total utilization
(000 MT)
Paddy & urea
price ratio
1962-71 22.26 36.55 0.22
1972-81 124.04 160.14 1.17
1982-91 224.36 282.96 1.04
1992-2001 201.66 237.89 0.30
2003(FAO) NA 101.5 0.22
2010(FAO) NA 67.6 0.40
 Fertilizer prices were increased at faster rate than rice
prices resulting deterioration in the price ratio of rice and
fertilizer (input use inefficiency)
10

11.  Provision of credit from
MADB covers only 10% of
total cost of paddy
production
 Smallholders cannot use
fertilizers at optimum level
due to limited working
capital, inadequate credit,
and low access to credit
 rely on informal credit at a
high interest rate
UNDP & MNPED 2011

12. (2) Partial Liberalization (1988 - 2010)
Pricing and marketing system is inefficient
 Transaction cost of fert. is too high, profit margin of
wholesalers/retailers is ranging 25% to 40%
 In addition, farmers have to pay back the cost of fertilizer
with 2 percent interest rate per month
Enforcement of the fertilizer law
 Illegal importation through China border
 Uncertain the quality of the unregistered fertilizers
 No cost effectiveness in use of fertilizer and low use of
fertilizer (below recommended level)
12

13. (2) Partial Liberalization (1988 - 2011): Seeds Distribution
Private Seed Production & Marketing ?
13

14. (2) Partial Liberalization (1988 - 2011): Seeds Distribution
 Certified seeds (good quality) distribution by the public
sector is relatively small and insufficient
 Gap between the distribution of good quality seeds by the
state’s agencies and demand of farmers (especially in
rice)
 Public institutions (Shwetaung Farm, Yezin Agricultural
University’s Farm and Mawbi Farm) started to produce
hybrid rice seeds in 2011-2012
 The State Peace and Development Council enacted the
Seed Law in January 2011
14

15. (2) Partial Liberalization (1988 - 2011): Seeds industry
Truth in labeling is important in seeds marketing
Warranty for the quality of seed (for purity of seed, trust of
farmer, high yield at reasonable price)
Public sector’s investment in R & E (capacity building and
farmers participation) is essential
However, budget for agriculture sector was reduced (from
5.4% of total union budget in 1990 to 3.4% in 2010) (CSO
2011)
Farmers save the seeds to grow in next season
the main problem is mixed varieties of rice resulting poor
quality of milled rice and thus receiving low price
15

16. Policy Analysis Matrix
 Monke and Pearson (1989) policy analysis matrix, an
analytical framework _ to determine the comparative
advantage and policy distortions in the rice sector
 PAM for Case Study in Ayeyarwady Region in 2008 & 2012
(due to unavailable time series data)
 Field survey was conducted by Aye Moe San in 2008 and
by Dolly Kyaw in 2012 (to collect data on two rice varieties;
HYV and fragrant local rice variety)
 Ave. FOB price of Manawthukha (HYV rice) is 300
USD/MT in 2008 and 334 USD/MT in 2012
 Ave. FOB price of Pawsanmwe (fragrant rice) is 570
USD/MT in 2008 and 482 USD/MT in 2012
16

17. Table 2. Revenue, Inputs Cost and Profit of Paddy
Manawthu
kha (2008)
Pawsanmwe
(2008)
Manawthukh
a (2012)
Pawsanmwe
(2012)
Revenues (Kyats/ha) (Kyats/ha) (Kyats/ha) (Kyats/ha)
Private Prices 694643 611117 721531 642460
Social Prices 802168 868457 815331 470478
Output Policy -107525 -257340 -93800 171982
Cost of
Tradable
Inputs
(Kyats/ha) (Kyats/ha) (Kyats/ha) (Kyats/ha)
Private Prices 176176 209760 27181 13591
Social Prices 164317 195470 23919 11960
Input Policy 11859 14290 3262 1613
17

18. Table 3. Revenue, Inputs Cost and Profit of Paddy
Manawthuk
ha (2008)
Pawsanmwe
(2008)
Manawthukh
a (2012)
Pawsanmwe
(2012)
Costs of Domestic
Factors
(Kyats/ha) (Kyats/ha) (Kyats/ha) (Kyats/ha)
Private Prices 25008 262036 405244 392889
Social Prices 234786 246212 387119 376210
Factor Cost 15222 15824 18125 16679
Profits (Kyats/ha) (Kyats/ha) (Kyats/ha) (Kyats/ha)
Private Prices 268458 139319 289106 235980
Social Prices 403064 426774 404293 82308
Net Policy -134606 -287455 -115187 153672
18

19. Table 4. DRC, NPC and EPC of HYV and local rice varieties
Manawthuk
ha (2008)
Manawthukh
a (2012)
Pawsanmwe
(2008)
Pawsanmwe
(2012)
DRC 0.37 0.49 0.37 0.82
NPCO 0.87 0.88 0.70 1.37
NPCI 1.07 1.03 1.07 1.14
EPC 0.81 0.88 0.60 1.38
 net effect of output and input tax resulted in a net taxation on
value added (EPC<1) for self-sufficiency policy especially in HYVs
of rice
19

20. 20

21.  Access to effective credit and external inputs
(especially fertilizers and certified seeds) _ key
role for increasing productivity and food
security
 Due to undeveloped seed industry, farmers
keep their seeds and mixed HYVs of seeds
(resulting poor milled quality of rice)
 Because of no contract (for assuring pay back
by farmers) bet. Input suppliers & farmers, price
margin for wholesalers is high by 40% (thus low
fertilizer utilization & low crop yield)
21

22.  Although DRC is less than one, the value of
NPCO is unfavorable especially for farmers who
grow HYVs of rice in delta region
 Farmers who grow HYVs rice received lower
price than international price (eg. around 63
percent lower than the world price in 2008)
 NPCI value (greater than one) presents that the
current input policy imposed tax on farmers
 EPC value (net policy effect) presents that
farmers in delta region are suffered from 19% of
net tax in production of rice
22

23.  Role of the government in provision of
agricultural inputs especially for the small
holders is crucial (to increase productivity &
income for obtaining households’ food security)
 Enforcement of the fertilizer and seed laws, rules
and regulations _ key factor to support farmers
for getting right quality of inputs at reasonable
price
 Require to reduce the profit margin (40%) of
wholesalers plus 2% interest rate for buying
inputs (high cost of fertlizers)
23

24.  To develop the rural financing sector (instead of
providing inadequate credit and low access to
credit by farmers)
 To promote investment (by both private and
public sectors) for development of input industry
 Public-Private Partnership approach with farmers
participation to revitalize agriculture sector
 To support for developing semi-
commercial/commercial farming by small and
medium scale farmers (Transforming Agriculture)
24

25. 25