Crop traders serve as the intermediary in Myanmar’s food supply chain. They form important links between farms and food processors, exporters, and other downstream actors. However, because many of these traders purchase agricultural commodities directly from farmers, any challenges to traders presented by the COVID-19 crisis have important implications for the crop marketing channels farmers use and for the prices they receive for their crops. In their research, Joseph Goeb, Duncan Boughton, Mywish Maredia, A Myint Zu, and Nang Lun Kham Synt utilize the findings from a rapid phone survey to assess how COVID-19 related challenges are affecting crop marketing. They also provide policy recommendations to improve business conditions for traders and mitigate COVID-19 effects for both farmers and consumers.
You can view the full policy note by Joseph, Duncan, Mywish, A Myint Zu, and Nang Lun Kham Synt in English here and an analytical summary of the note in Burmese here.
မြန်မာဘာသာဖြင့်ရေးသားထားသော စာတမ်းအပြည့်အစုံကို ဤနေရာတွင် ဖတ်ရှုနိုင်ပါသည်။
The Myanmar Agriculture Policy Support Activity (MAPSA) is monitoring the impact of COVID-19 on key actors in Myanmar’s agri-food system. This blog post highlights one of the many recent surveys and policy notes that MAPSA has conducted to assess the emerging constraints that these key actors face and to mitigate the possible impacts of COVID-19 on rural livelihoods and food security.
Additional blog posts are available highlighting MAPSA’s research on the impact of COVID-19 on key actors in Myanmar’s agri-food system. Surveys are ongoing, and findings and recommendations will be periodically updated.
Background
Agricultural commodity traders facilitate the sales, transport, and purchases of raw agricultural commodities. Thus, they are likely to be negatively affected by the travel and transport restrictions imposed to mitigate the spread of COVID-19 as well as other policy measures that restrict exports or affect food retail channels to consumers.
Through a recent phone survey, MAPSA is seeking to help the Ministry of Agriculture, Livestock, and Irrigation of the Government of Myanmar and agricultural sector stakeholders understand the effects of recent COVID-19 shocks on Myanmar’s agri-food marketing system through the perspective of crop traders with the following themes:
- Understand the challenges of COVID-19 shocks to both the upstream and downstream operations of crop traders.
- Learn about the adaptations and changes that crop traders are making in response to challenges.
- Track recent (two weeks) and longer-term (last year) changes in the buying and selling prices of the commodities they trade.
Reported effects of COVID-19 on traders
As displayed in Figure 1, most traders reported that COVID-19 impacted their business in some way. There have been major disruptions in their operations both downstream (e.g. selling crops) and upstream (e.g. buying crops).
Overall, 80 percent of traders reported lower trading volumes in May 2019 compared to May 2020. The main reasons cited for the decrease in trading were lower demand and lower prices stemming from changes to marketing channels downstream.
Travel restrictions could also play a role in the lower prices by causing shifts in downstream consumer demand. However, they had a direct effect by decreasing trading activity.
In addition to upstream and downstream effects, the COVID-19 crisis response also led 27 percent of traders to close businesses for an extended period due to government mandates. A similar share also reported difficulties in collecting repayments from credit lent out (Figure 1). The latter effect has serious implications for farmers as informal credit from traders is an important component of how many farmers access agricultural inputs.
As a result of the challenges posed by COVID-19 and related regulations, traders expect lower revenues in 2020 compared to 2019 (Figure 2).
Trader responses to COVID-19
Traders have responded to the COVID-19 crisis in several ways. The most prevalent response has been to implement safety practices to reduce the probability of contracting and transmitting the virus.
As displayed in Figure 3, eighty-eight percent of traders adopted at least one safety practice, with the most common strategies being regularly washing hands (77 percent) and wearing face coverings (69 percent). After safety practices, the next most common response was a non-mandated closure of business operations for at least one week (51 percent).
Policy recommendations
These findings suggest the following policy recommendations, many of which can be incorporated into Myanmar’s COVID-19 Economic Relief Plan (CERP).
- Local and national governments should continue to lift transport restrictions affecting agricultural commodities. Formal transportation restrictions have been reduced since the May survey, but in practice, local restrictions may still be in place. A dynamic and fluid supply chain can instill a sense of predictability in the market, which can reduce price volatility both at the farmgate and for consumers.
- Wide dissemination of price and market information can also help reduce supply chain frictions. Thus, government should facilitate and encourage information sharing among traders and between traders and farmers to help ease challenges in finding sales channels.
- COVID-19 has created credit and lending gaps as traders are both less likely to offer inputs to farmers on credit and are more likely to have difficulty obtaining new credit themselves. Cash and loan support to farmers under CERP Action 2.1.7 and improved financial access for small enterprises under CERP Action 2.1.1 would help bridge credit gaps, increase food production, and allow continued investment and modernization of the trading sector.
Joseph Goeb is a Research Associate in the Department of Agricultural, Food, and Resource Economics of Michigan State University (MSU), based in Yangon, Myanmar. Duncan Boughton is a Professor of International Development at MSU, Policy Advisor for the Ministry of Agriculture, Livestock, and Irrigation of the Government of Myanmar, and a lecturer at Yezin Agricultural University, based in Nay Pyi Taw, Myanmar. Mywish Maredia is a Professor of International Development in the Department of Agricultural, Food, and Resource Economics at MSU, based in East Lansing, MI, USA. A Myint Zu is a Consultant with MSU, based in Yangon, Myanmar. Nang Lun Kham Synt is a Research Assistant in the Development Strategy and Governance Division (DSGD) of the International Food Policy Research Institute (IFPRI), based in Yangon.
This blog post was prepared by Michael Wang, Mickey Leland International Hunger Fellow in DSGD of IFPRI, based in Yangon. The analysis and opinions expressed in this piece are solely those of the authors.
