Myanmar Agriculture Sector at a Glance and its Evolution: Opportunities and Challenges

1. Myanmar Agriculture Sector at a Glance and its Evolution: Opportunities and Challenges San Thein Freelance Consultant Paper presented to “Investing in Sustainable Agriculture in Myanmar” Yangon, July 20th 2014 email:usanthein@gmail.com

2. Planning Process • This presentation is part of the Agriculture Master Plan formulation. As a preliminary exercise before the formulation of Myanmar Comprehensive Development Vision (MCDV) for Agriculture Sector, our team has constructed “Overall Framework of Setting Vision, Goals, Policies, Strategies and Measures”. • The previous policy objectives will first be reviewed briefly before going into the policy planning process of the present paper.

3. Review of previous visions, mission, and objectives and of adopted strategies of agriculture sector in Myanmar • Agriculture was and is still considered as major GDP earner for the country by the successive regimes. • It is the most intervened sector by the authorities in various hierarchal order from the top to the village tract over the country.

4. Policy Objectives, Carried over about 50 Years • Development of agriculture was prioritized as the base and all round development of other sectors of the economy as well. • Rice self- sufficiency is over-emphasized at each local level of the country. The government had driven maximization of crop output without regard to maximization of farmers’ income. • The following main objectives of the agriculture sector were pursued during the period from 1990s to 2010 by the previous ministers of MOAI; • To provide surplus paddy for domestic food security and for promotion of exports, • To achieve self-sufficiency in edible oils, and • To expand production of beans and pulses, and industrial crops for export.

5. Strategy package Following five strategies were officially spelled out by the previous Government as: • Development of land resources; • Increased provision of irrigation; • Expansion of small scale agricultural mechanization; • Transfer and application of new and improved technologies; • Increase supply of agricultural inputs including quality seeds.

6. Recent reform measures in new democratic government • MOAI has pushed the crop productivity with the following ministrial objectives: • Use of high yielding seeds • Application of good agricultural practices • Balanced uses of farm inputs, agro-chemicals and biofertilizers • Minimize the production costs and transaction costs in each supply chains • Maintain a sustainable market to ensure benefit and profitability

7. Naypyitaw -based Measures for Agriculture Development • The present Minister of MOAI has been pushing and implementing the following measures ( particularly the first three)to achieve his set objectives; • Hybridization (focus on hybrid rice) • Mechanization (focus on land improvement to permit mechanization and large scale farming) • Irrigation • Training and education • Privatization

8. Institutional Transformation over Years • From the post independent years to mid-socialist period, agriculture sector was under the policy guidance and jurisdiction of the Ministry of Agriculture and Forest. It included livestock and fishery components also. The Ministry had pursued the integrated and coordinated objectives of the complimentary nature of the agriculture sector. • The Institutional Structure was disintegrated into three different separate ministries during the period of the State Law and Order Restoration Council (SLORC).

9. Complementary Nature of Agricultural Components Crops Husbandry Fishery and Aquaculture Animal Husbandry Forests

10. Disintegration and Separate Administration in each Sector of Agriculture MOAI MoECaF MLFR Ministry of Agriculture and Irrigation (MOAI) Ministry of Environmental Conservation and Forestry (MoECaF) Ministry of Livestock, Fishery and Rural Development (MLFR)

11. Comparison of Structure and Authority JAPAN MYANMAR MAFF Minister Minister MOAI Ministry of Agriculture and Irrigation (MOAI) Ministry of Agriculture, Fishery and Forestry (MAFF)

12. JAPAN MYANMAR • Decision making process is not solely vested in the Minister. His power could be restricted by the strong bureaucratic body and permanent secretary in the Ministry. Professional staffs are strong in the Ministry. • There are several farm legislations and the Minister may not have in-depth understanding and he may be in trouble to handle these laws without consulting relevant competent officers. • His authority is limited to recruit to his personnel assistant, but not new DG or MD easily. • The Minister’s policy may be the policy of the Ministry. • Up to the end of the Military Regime, there is no law or legislations in the Ministry except for the Pesticide law and the old laws promulgated during the colonial period. The Minister rules the Ministry with his instruction. Most ministers are allergy to the policy or law. • The Minister could recruit officers such as new MD or DG of his former loyalty to follow his new office of MOAI. • There is often not pressure group out side his Ministry.

13. Changing Trend to Large Scale Farming under ABCs. • Since the time of SPDC rule, large scale land concession to the private agricultural business companies (ABCs) was carried out throughout the country. • Virgin and Waste Land Instruction was reinforced by promulgating the Virgin, Fallow and Vacant Land (VFVL) Law for promoting the large scale farming by ABCs. • Up to March 2013, a total of 377 national companies and about 18000 small and medium farmers (SMF) were allocated 1.5 million ha of VFV and deep water land and 0.36 million ha of forest lands for a total of 1.89 million ha. • The new Farmland Law was passed in 2012 allowing the sale, transfer, mortgage and rent the land among users. The law promotes the private investment but does not provide legal provisions for the protection of small farmers for the land tenure security. • Land grubbing by the military camps, government projects and encroaching companies had led to eviction of small farmers with weak land tenure security.

14. Need for Redesigning Agricultural Development: Vision, Strategies and Business Models • Myanmar Comprehensive Development Vision (MCDV) has been envisaged by the Japanese economic development team from ERIA (Economic Research Institute for ASEAN and East Asia). • Before MCDV was approved, the Ministry of National Planning and Economic Development attempts to design National Comprehensive Development Plan (NCDV). • Both are known to be not finalized yet. • Under the MCDV program, our team conceived the inclusive growth -oriented agricultural business models within the scope of the new vision and strategies.

15. Overall Framework of Setting Vision, Goals, Policies, Strategies and Measures Develop Visions (Agriculture Sector) Setting Goals Review and assessment of previous and existing national policies, measures and practices of agricultural development Development Issues Priority Setting

16. Setting Goals Goal # 1: Improved food security Goal # 2: Pro-poor and inclusive growth Goal # 3: Investment-based development Goal # 4: Green-growth and sustainable development Sector-based approach Area-based approach Commodity-based approach Development of objectives and strategies (for Goal 1, 2, 3, etc.) • Key measures

17. Vision • Agriculture sector, not only being capable to maintain, reaffirm and strengthen the role of achieving food security, food safety and the nutritional well- being of the nation and its growing people in an inclusive and sustainable ways • but also could emerge as globally linked competitive agro-industries and outstanding Myanmar brand of global supplier of foods and processed agricultural commodities and • thereby increases the export earning and stimulates the economic growth and prosperity of the country.

18. Mission • To ensure sustainable food security, food safety and nutritional well being of the nation • To enhance the structural transformation of agriculture proper into the agri- business structure by increasing the industrial scale process of value –adding to primary agricultural commodities and thereby will act as an interface between agriculture and industry and foster the industry development and economic growth • To foster the shared –growth oriented business models which maintain economically well- being of small farm holders through voluntary integration to contract production or to corporate organization through vertical coordination of the agribusiness process of assembly of outputs, transfer, transform and value added processing of agricultural commodities.

19. Vision Development At least three dimensions will be based Environment Social Bearable Equitable Sustain- able Economics + (Economic Integration) Viable Based on the holistic concept of long-term sustainable development, including economic, Social and ecological dimensions

20. Policy Planning Framework National Political & Economic Reform National Economic Goals Integration to Regional Economic Corridors Increasing Detail Agri. Development Vision, Goals, Objectives, Strategies Regional, Sectoral, Area-based Plans Area of Intervention Master Plan Technology, Investment, Markets, Trade, Production Factors, Supply chains management, Land Laws & Land Use Planning, Crop Planning, Rural Financing, Industrial Restructure, Food Safety, Agri-business structures, Climate change resilient measures, natural resources management, Pro-poor strategies

21. A Case Study: Cane & Sugar Industry • This case study will help explain how inclusive growth could be attained in a sustainable way in one aspect of agriculture sector, i.e. sugar industry. • The problem of sugarcane growing will be considered from the business aspects of “ How to survive sugar industry by paying farmers high purchasing cane price and by selling sugar to consumers at globally competitive price. Present factory sizes are ranging from 1500 to 2000 tons cane crushing capacity (TCD) which are to small to be economical. The size should be at least 4,000-5,000 TCD in a cane supplying area of 30,000-40,000 acres. If investment is afforded, factories should be scaled up to 15,000 TCD as in the case of Thailand and other global sugar producers.

22. Percent cane growers’ share in sugar industry in different years (In Thailand, growers’ share is 70%).

23. Myanmar cane procurement is approaching ceiling limit

24. Compositions of sugarcane farmers with respect to farm holding sizes

25. Farmers with Upstream and Downstream Backup for Inclusive Growth in Sustainable Development of Sugar Industry Sugar Factory Bank Payment transfer upon cane delivery from farmers Contract Farming Financing Cane supply Sell in Install -payment Farm Machinery Companies Cane Growers’ Association Small and Medium Farmers 1. Negotiation for cane contract 2. Strengthen can price 3. Lobbying government 4. Ensure farmers for regular can supply and product traceability Technology Capacity Building Factory Govt. Extension International NGOs International NGO 1. Financial Management 2. Conflict Management 3. Conservation Agriculture INGO INGO

26. Integration of different layers in resource allocation and utilizing cycles Policy Umbrella Asian Development Bank Loan • Sugar Policy • Investment Policy • Monetary Policy • Infrastructures and services link The World Bank Repayment Government Tax Government Departments Policy Regulation Sugarcane and Sugar Council (Government + Private) • Establishment of large-scale sugar mill • Expansion of sugarcane growing areas • Production of sugar and downstream commodities Sugarcane Growers Association Private Investors • Technology and Agriculture Services • Sugarcane Growers • Agro-based Industry Banks • Market competitiveness • Establishment of sustainable sugar industry  All Stakeholders from Sugar Industry

27. Conclusion • There is a pathway for sustainable agriculture development with inclusive growth. • It requires the comprehensive improvement of all sectors and stakeholders involved in the development process. • Development opportunities in sugar industry case study has shedding light on the potential business model of other agricultural commodities and services.

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