Myanmar govt raises minimum rice price; exports risky but promising

Myanmar govt raises minimum rice price; exports risky but promising

The government has raised this year’s floor price for rice in view of higher agricultural and production costs, said U Soe Tun, executive committee member of the Myanmar Rice Federation (MRF).

For the 2020 monsoon and summer 2021, the price has been set at K520,000 for every 100 baskets, according to the committee for protecting rights and enhancing economic welfare of farmers last week. One basket weighs 46lb or 20.86kg.

In fiscal 2018-19, the minimum rice price was set at K500,000 for every 100 baskets. “The rice floor price is calculated based on cost. Now it is revised as costs have increased,” U Soe Tun said.

But the higher prices also implies more export revenue for Myanmar in the year ahead. Export prices are already rising, and are now up by about US$10-$15 per tonne compared to earlier in the year, according to the MRF.

Notably, Myanmar can now officially export broken rice to China after the two governments agreed to include in this year’s export contract. “In the past, China bought broken rice from Vietnam only. Now it can also buy from Myanmar so the export market looks more promising,” said U Soe Tun.

According to MRF projections, Myanmar is expected to export between 2.5 million and 3 million tonnes of rice and broken rice next year. China is the main buyer of rice from Myanmar, followed by Malaysia and the Philippines as well as countries in Africa and the EU.

Between October 1, 2019 and July 10, rice export volumes rose to 2.2 million tonnes worth more than US$666 million, up by 360,000 tonnes and $100 million year-on-year, respectively, according to the MRF.

There are risks to these forecast though. Two weeks ago, Thai imports of Myanmar broken rice collapsed due to a sudden drop in demand, traders said.

“The Thais have stopped importing due to falling prices at home. Now, there is hardly any demand,” U Maung Myint Oo of Klohtoo Wah Co, a local trading house.

Prior to the collapse, Myanmar exported about 500 tonnes of broken rice a week to Thailand. “It also doesn’t work for the Thais that we have increased our export duties from 32pc to 52pc. The quality of Myanmar broken rice is not good enough because traders mix it with lower quality products. Therefore, the Thais are reluctant to buy it too,” said Ko Kyaw Thu, a local trader.

Despite better overall export numbers, there are also risks of a further drop in trade with China at the border. Between October 1, 2019 and July 10, border rice exports fell to just $93.6 million, which is down by $171 million in the previous period last year, according to the MRF.

This is due to China clamping down on illegal trade, and, more recently, additional precautionary measures taken to control the spread of COVID-19.