There is an urgent need to anticipate the threat posed by COVID-19 to Myanmar’s agricultural sector and to rural households that depend on farming for income and for food and nutrition security. In their research, Duncan Boughton, Joseph Goeb, Isabel Lambrecht, David Mather, and Derek Headey assessed strategies to mitigate the threat and support farmers to prepare their land and plant their crops on time for the monsoon cropping season. Recognizing that no single intervention can address the full range of vulnerabilities faced by rural households, Duncan and the research team evaluated options ranging from access to seasonal farm credit to agricultural input subsidies and cash transfer programs.
You can read the full paper by Duncan and the research team here.
Background
Myanmar is extremely vulnerable to the human and economic consequences of COVID-19. The challenges facing high density urban and rural areas are linked in many ways – epidemiological, social, economic, and political. For Myanmar, an effective mitigation strategy to counter the economic and food and nutrition security consequences of COVID-19 will require a variety of interventions, some broad and some targeted to specific sectors or vulnerable groups. These interventions are to be implemented by a variety of organizations, including private businesses, civil society, and government.
As the largest employer in Myanmar and the foundation for the country’s food and nutrition security, agriculture is a critical sector. According to the most recent Myanmar Agricultural Census, 80 percent of Myanmar farms are operated by smallholders who cultivate more than half the country’s cropland. Despite their small size, these farms are an important source of employment for landless households due to the labor-intensive nature of agriculture in Myanmar.
Given the short timeframe to influence farm household decisions for the upcoming monsoon growing season, what can the Ministry of Agriculture, Livestock, and Irrigation (MOALI) and other agricultural sector stakeholders in Myanmar do to support farm households to be successful despite the threat of COVID-19?
In their research, Duncan and the research team focused on evaluating interventions with the potential to improve the resilience of smallholder farmers in the face of imminent COVID-19 induced economic shocks, specifically to minimize adverse impacts on the food security and nutritional status of the rural population as a whole. Their arguments draw on research funded by the United States Agency for International Development (USAID) and the Livelihoods and Food Security Fund (LIFT).
Potential COVID-19 impacts on agriculture and rural livelihoods
The immediate economic threat to rural areas posed by COVID-19 is the disruption of rural labor markets. More than three-quarters of Myanmar’s population depends directly or indirectly on employment in the agricultural sector and disruptions will affect the availability of labor and the ability of farm households to hire labor.
In the short run, the largest COVID-19 impact will not be on the availability of labor services, but on the ability of households to pay for them. This is because a third of Myanmar rural households depend on remittances from an estimated 3.8 million migrants. Due to COVID-19, remittances to rural households can be expected to fall suddenly and for a prolonged period. Unless mitigated quickly, income loss from remittances will degrade the food and nutrition security of rural households as well as their ability to farm productively.
The most effective way to counter the effect of loss of remittance income and uncertainty due to COVID-19 is to increase the ability and motivation of farmers to invest in their farm production activities in the coming monsoon season.
As no single intervention can address all the complex impacts of COVID-19 on different types of rural households, Duncan and the research team examined the feasibility and potential effectiveness of three interventions to enable smallholder farmers to counter the threat of COVID-19 to rural livelihoods and to food and nutrition security.
- Expand access, increase flexibility, and lower the cost of Myanmar Agricultural Development Bank (MADB) loans.
- Improve the availability and affordability of agricultural inputs.
- Provide a cash transfer to smallholder farmers.
Interventions to mitigate COVID-19 impacts
Increased flexibility and lower costs for MADB loans
An expansion of MADB credit allocations to smallholder farmers will increase their ability to purchase labor or mechanization services, as well as other agricultural inputs. Credit allocations could be expanded in any of the following three ways: (1) an increase in the loan value per acre for different crops; (2) an increase in the cultivated area size limit beyond the current 10 acres; or (3) an increase in the number of smallholders eligible to receive seasonal credit.
Increased availability and affordability of agricultural inputs
Ensuring the availability of agricultural inputs at retail dealerships is essential. With borders closed between Myanmar and India and between Myanmar and China, there is a risk that seed, fertilizer, and agro-chemicals are blocked from entry to the country.
The importation and distribution of agricultural inputs should be considered essential activities for combatting the economic consequences of COVID-19 in the same way as medical supplies are considered essential to combatting its health consequences. MOALI should maintain close communication with major input suppliers on the availability of agricultural inputs in their dealer networks and provide weekly updates to the Working Committee to Address the Impact of COVID-19 on the Country’s Economy.
Options for government also include making inputs more affordable to farmers through a cost subsidy or negotiating directly with input importers and wholesalers to reduce the wholesale price of selected inputs and compensating them directly.
Cash transfers to smallholder farmers
Cash transfers targeted to smallholder farmers not only enable them to purchase agricultural inputs and services without taking on additional borrowing risk but also help sustain rural employment opportunities for both farm and non-farm households.
A cash transfer targeted to smallholder farmers will support those farmers who will likely have the most difficulty to finance hired labor and mechanization services to plant and harvest on time.
Because a cash transfer offers smallholder farmers the most flexibility to sustain agricultural production levels in the monsoon season, Duncan and the research team considered implementation modalities to ensure that the transfers reach intended beneficiaries in a timely, inclusive, and efficient manner. The following implementation dimensions of the design of a cash transfer were assessed in greater detail:
- Targeting of beneficiary households
- Value and scale of transfer, which determine both the outcomes for rural households and the fiscal burden to the economy
- Gender considerations
- Conditionality requirements for beneficiaries
- Method and frequency of disbursement
- Communications strategies about the program to both the public and to beneficiaries
Conclusion
There is urgent need to anticipate and mitigate the threat posed by COVID-19 to Myanmar’s agricultural sector and to rural households that depend on it for income and for food and nutrition security. Unless immediate measures are taken to counteract the shocks caused by large losses of household income, affected households will be forced to cut back significantly not only on consumption of food and other essential items but also on agricultural inputs and hired labor or mechanization services that are essential to maintaining productivity.
No single intervention can address the full range of vulnerabilities faced by rural households. However, Duncan and the research team recommended the following options to ensure adequate support to smallholder farmers: (1) expand access to and flexibility of agricultural production credit and loans; (2) increase availability and affordability of agricultural inputs through agricultural input subsidies; and (3) initiate immediate cash transfers to smallholder farmers to maintain agricultural production levels.
Dr. Duncan Boughton is a Professor of International Development at Michigan State University (MSU), Policy Advisor for MOALI, and a lecturer at Yezin Agricultural University, based in Nay Pyi Taw, Myanmar. Dr. Joseph Goeb is a Research Associate in the Department of Agricultural, Food, and Resource Economics of MSU, based in Yangon, Myanmar. Dr. Isabel Lambrecht is a Research Fellow in the Development Strategy and Governance Division of the International Food Policy Research Institute (IFPRI) and program leader of IFPRI’s Myanmar Strategy Support Program, based in Yangon. Dr. David Mather is an Assistant Professor in the Department of Agricultural, Food, and Resource Economics of MSU, based in Virginia, USA. Dr. Derek Headey is a Senior Research Fellow with the Poverty, Health, and Nutrition Division of IFPRI, based in Yangon.
This work was undertaken through funding support provided by USAID and LIFT under the Myanmar Strategy Support Program. This blog post was prepared by Michael Wang, Mickey Leland International Hunger Fellow at IFPRI.
