El Nino Threatens Export Plans as Burma’s Rice Industry Revs Up

Hopes that Burma’s rice exports would reach 2 million tons this year look unlikely to be achieved due to the disruptive weather phenomenon known as El Nino, experts say.

Monsoonal rains needed to boost Burma’s late rice crop are expected to be lighter than usual due to the El Nino effect, leading to drier conditions.

Observers of the El Nino weather pattern, which occurs every few years due to warmer air currents generated in the Pacific Ocean, suggest it might be less severe than on previous occasions but could still disrupt various forms of agriculture across Southeast Asia. It could last until June 2015 and some meteorologists have suggested that December might be the worst month affected.

This year’s major wet season rice crops across Southeast Asia might escape the worst of El Nino, the US Department of Agriculture (USDA)’s Foreign Service said, “[but] dry season rice and corn crops, as well as palm oil, will become more vulnerable if El Nino develops and persists from October 2014 to April 2015.”

Burma exported 1.27 million tons of rice in 2013 and the Burma Rice Federation had said the figure for this year might reach the 2 million tons mark, boosted by higher demand from China and dislocation in the rice industry of rival exporter Thailand. However, even without any El Nino effect, the 2 million tons target is over-optimistic according to estimates made by the USDA.

The US agency predicted that rice production in Burma in 2014-2015 would most likely increase by 1 percent to 12.16 million tons, due to growing area expansion and improved water supply, and that rice exports would also be only marginally higher than last year—up about 1 percent to 1.31 million tons.

Burma’s government was “making an effort to provide farmers support in infrastructure development, mechanization [and] technology assistance,” the USDA said. But despite support programs, rice farmers in Burma could still not compete with other farmers in the region, including in Thailand and Vietnam, who received government support to compensate for lower prices, the agency said, citing trade sources.

Burma is forecast to be the fifth-largest rice producer in the Association of Southeast Asian Nations (ASEAN) region in the 2014-15 financial year —behind Indonesia, Vietnam, Thailand and the Philippines. But of these four, only Vietnam and Thailand are exporters.

“On the surface, rice markets remain calm and stable, but underlying market sentiments are rapidly changing because of weather disruptions in many rice-growing nations,” market watcher and rice scientist Sam Mohanty of the International Rice Research Institute said in a recent assessment.

“The global rice market faces the possibility of a production shortfall in the major rice-growing regions in South and Southeast Asia and also in China because of El Nino events. So far, the market has been quite nonchalant about this possibility because of large buffer stocks in key rice-growing countries.”

India, China and Thailand are well stocked with rice to see them through any possible disruptions in supplies, Mohanty said.

Burma’s rice federation sees China as offering the best market for expanding Burmese exports in coming years. About half of Burma’s rice exports went to China in 2013, despite the fact that the exports are technically illegal as there is not yet a health standards agreement on rice in place between the two countries.

Myanmar rice companies benefit from Thai expertise

Rice in Myanmar is not just a staple food for its people, it is also one of the country's key industries.

It is believed that in 2011 alone, Myanmar's rice sector contributed about 13 per cent of the country's GDP. That GDP figure will only grow provided Myanmar partners other reputable international rice firms, like those in neighbouring Thailand.

Nay Lin Zin, joint secretary of the Myanmar Rice Millers' Association, said: "Nowadays, Thailand people very interested to invest in Myanmar and to cooperate with us because of Thailand's political instability and the price of Thai rice, (which is) higher than other competing rice exporting countries."

In recent months, many Thai rice exporters have been introducing their clients to Myanmar companies.

Kyaw Myo Htoon, director of the Ayeyar Hinthar Group of Companies, said: "Their motivation for Thai traders is they want to maintain relationship with buyers like the Chinese, because they are very big... So in order to do that, they bring their buyers here to introduce Myanmar rice to them.

"They help us to introduce the Myanmar rice variety to the world market... Especially Chinese buyers, they buy the Myanmar rice for industrial usage like making rice noodles, making rice wine as well as they're mixing with other varieties of rice. They mix and sell it to Chinese consumers."

Such collaborative efforts will also enable Myanmar to learn from their Thai partners' technological know-how, paving the way for them to tap onto their neighbour's existing pool of rice consumers.

Nay Lin Zin added: "If the Thailand business can cooperate with us, we can give more money to our people, to our Myanmar farmers and we can produce quality rice for a new market.

"I think after 2015 by cooperating with Thailand business people, especially in the rice sector, I think we can promote our rice export and we can increase our world ranking very soon."

Rice traders said many are happy that Myanmar is now starting to export more rice overseas. That is because 70 per cent of Myanmar's population live in rural areas and they are closely associated with the rice industry.

They say that if rice farmers are happy, that will snowball into other benefits, such as the ability to purchase more expensive goods and in greater quantities.

Myanmar Rice exports falter on illicit China trade

Rice exports this year are set to fall to less than half of the government target of 3 million-tonnes as traders are withholding stock from its trading partners in an attempt to secure more favourable prices being offered by illicit Chinese importers, officials said.

U Lu Maw Myint Maung, joint secretary general of the Myanmar Rice Federation, told The Myanmar Times, that Myanmar exported nearly 1 million tonnes of rice through the first nine months of the fiscal year at the end of January, falling short of the 1.01 million tonnes of rice exported during the same period last year.

“Because of an unstable local rice price, we have not been able to speed up exports during the rainy season, he said. “If we had, Myanmar would probably have been able to export about 2 million tonnes this year, because there is enough reserve.”

He said that traders are increasingly looking to sell rice through Shan State’s Muse border, alongside China’s Yunnan Province, where they can earn as much as 28 percent more profit by dealing with tax-dodging Chinese

importers.

Though there is nothing illicit about local rice sellers trading over the borders, many Chinese traders are subject to a 17pc import tax on all rice bought from Myanmar, a tax many choose not to pay, he said. While they are then able to offer a better premium on imports, they also tend to not honour contacts and pay significantly less than promised.

“Local traders would not easily be able to reclaim their rice back because of the high transportation charges and would have to sell at the lower price,” U Lu Maw Myint Maung said. “This led to fluctuations in the local price, so that big exporters could not draw up contracts for as much as we

wanted.”

He said that the price of 25pc broken rice on the international market goes for US$315-$320 per tonne. That is compared to the 2480 yuan ($404) the same rice is sometimes sold for through the Muse border. Five percent broken rice, meanwhile, is sold for $405-$415 per tonne in the international markets, well short of the 2740 Yuan (about $446) per tonne it fetches along the Yunnan border.

In an effort to deal with the problem, the government has been in talks with Chinese authorities to try and formalise the rice trade, U Maung Aung, an adviser to the Ministry of Commerce he told The Myanmar Times.

“We have been trying to sign an MOU [memorandum of understanding] with regional governments in China to permit importing rice from Myanmar legally,” he said.

“Although they have not permitted rice imports, market demand is very big, so they seize illicit rice imports from Myanmar only sometimes,” he said.

As a result, experts believe that the price being offered by illicit traders in China would likely not begin to decrease until the end of the high trading season.

“The price [of rice exported to China] is not likely to go down until March as we are now exporting 3000 to 3500 tonnes of rice through Muse a day,” said U Thauk Kyar, an executive member of the Muse rice traders’ association.

The fiscal 2012-2013 total of 1.6 million tonnes was the highest in 46 years, thanks to the demand from China for exports via the newly booming Muse border post, which accounted for 60pc of the total 1.6 million tonnes exported last year, said U Lu Maw Myint Maung, adding that China has faced in increased demand for quality rice over the past year.

However, with Myanmar’s entry into the EU generalised system of preferences last year, Myanmar traders have started to export to Europe, said U Lu Maw Myint Maung.

“EU traders can import rice from Myanmar without paying import taxes if they can prove the country of origin,” he said.

Former joint secretary of the Myanmar Rice Federation and rice exporter U Myo Thura Aye said that 10 EU countries, including Spain, Portugal, Belgium and the Netherlands, are now buying rice from Myanmar.

“We’re exporting 5000 tonnes a month to Europe and 20,000 tonnes to Africa,” he said, adding that a smaller amount is going to the Philippines and Malaysia.

In addition, Myanmar Agribusiness Public Corporation (MACPO) announced last week that come May they will export up to 8000 tonnes of rice to Japan this year, said U Soe Tun, the company’s director.

“MAPCO is going to export … rice to Japan jointly with Japanese firm Mitsui & Co after it won a tender of Japanese government to import rice,” he said, adding that they would start importing 5pc broken rice at $470 per tonne.





By Zaw Htike

Myanmar to export high-quality rice to Japan

Myanmar will export 6,000 tonnes of high-quality rice to Japan for second time in May, according to the Myanmar Agribusiness Public Corporation (MAPCO).
“We are now preparing to export 6,000 tons of rice that have already been tender awarded. Japan is going to buy native paddy strains and Myanmar is now test exporting high-quality rice to European countries,” said Soe Tun, director of the MAPCO.
Myanmar is also exporting 25-mark high quality rice to China and Africa. MAPCO exported 5,000 tonnes of high-quality rice to Japan for the first time in 45 years and is working to export more.
Japan examined Myanmar paddy strains in all 257 kinds of laboratory tests, including insecticide tainting and samples with or without chemical substances.
Ye Min Aung, managing director of MAPCO, said that Myanmar rice dealers are now preparing to export high-quality rice to the international market. That is why rice dealers should prepare for an emerging market that specializes in quality.
“We will export r200,000 tonnes of rice to Japan in this fiscal year, cooperating with Japan’s Mitsui Company. We have a plan to export rice to Africa and other international markets,” said Ye Min Aung.
Myanmar has also begun exporting rice to European markets under an advantageous EU trade scheme.

Myanmar’s export of steamed rice

Myanmar’s export of steamed rice has reached about 1,500 tonnes every month amid increasing demands from different countries, a well-placed source of Myanmar Rice and Paddy Merchants Association (MRPMA) said.
Russia is the main importer of the rice.
Myanmar is currently exporting the steamed rice at the rate of US$515 per tonne, said Thaung Win of Shwe Zar Chi Company.
Pointing out the high demand for steamed rice, he said, “Actually, the demand is 3,000 to 4,000 tonnes per month.”
To meet the demand, more factories are being built, officials said.
The Ayeyarwady Region, which has steamed rice factories in Ainmel, Kyaiklett and Bokalay towns, is planning to raise the number of the factories to 9.

Bangladesh To Import 25,000 Tons Of Rice From Myanmar

Bangladesh is going to import 25,000 metric tons of sunned rice from Myanmar to meet the growing demand for the essential item in the local markets, officials said on Sunday.

The decision was taken at a meeting of the cabinet committee on public purchase held in the capital, Dhaka with Finance Minister AMA Muhith in the chair.

The government wants to ensure sufficient rice supply in the market, Food Minister Abdur Razzak told reporters after the meeting, adding that the government is also considering a proposal to soon import 5 million metric tons of rice.

Singapore-based Indo-Sino Trade Limited was awarded the contract to supply the bulk rice from Myanmar at the low bid rate of US$395 a ton.

The country's total production target of food grains during fiscal year 2009-10 (FY10) has been primarily fixed at 35.051 million metric tons. The actual production of food grains during FY 09 stood at 32.166 million metric tons.

Imports of food grains between July 2009 and January period ostood higher at 2.135 million metric tons, compared to 1.459 million metric tons in the same period the previous year, according to the central bank statistics.

However, stock of food grains including transit stock with the government stood lower at 1.051 million metric tons at the end of January compared to 1.308 million metric tons at the end of January 2009.

Myanmar rice

Rice: High quality rice price increased by about K1000 per bag (49 kilograms or 108 pounds) while the low-quality rice is stable. The high-quality rice price increased because some traders had begun stockpiling quantities for sale later in the year, so less rice was making its way to the market, said a spokesperson from Shwe War Mandaing rice warehouse. High-quality rice increased to between K24,000 and 24,500 per bag from K23,000; low-quality rice was stable at about K17,000 a bag.