Although demand for chicken and eggs is gradually returning to normal, poultry farms in the Yangon peri-urban area are still facing challenges due to the COVID-19 pandemic. In their research, Peixun Fang, Ben Belton, Hnin Ei Win, and Xiaobo Zhang utilize findings from a second round of phone surveys to understand how COVID-19 related challenges are continuing to affect poultry farmers. They also provide updated policy recommendations to help poultry farmers maintain operations and adapt to COVID-19 challenges.
You can view the full policy note by Peixun, Ben, Hnin Ei Win, Khin Zin Win, and Xiaobo in English here and in Burmese here.
မြန်မာဘာသာဖြင့်ရေးသားထားသော စာတမ်းအပြည့်အစုံကို ဤနေရာတွင် ဖတ်ရှုနိုင်ပါသည်။
Background
The Myanmar Agriculture Policy Support Activity (MAPSA) originally interviewed poultry farmers by telephone in early June 2020 to determine how their businesses were being affected by COVID-19 related restrictions. The results of that survey were published in a related blog post. To trace the continuing impact of the COVID-19 pandemic on their economic activities, a second phone survey was conducted in late June 2020.
This blog post highlights one of the many recent surveys and policy notes that MAPSA has conducted to assess the emerging constraints that key agricultural 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.
Though some poultry farms reopened over the past two weeks, numerous farms closed their businesses due to an inability to recover operational capacity.
Reported effects of COVID-19 on poultry farmers
The reopening rate of broiler farms has now overtaken the closure rate thanks to the increasing demand for chicken in June. On the other hand, there are still more layer farms closing their businesses than reopening. Overall, the share of closed poultry farms remained the same as in the first half of June.
As was observed in the first survey round, the most cited reason for closing business in June was cash flow. Whereas cash flow slightly improved for broiler farms due to recent increases in demand, the situation slightly worsened for layer farms in the second half of June. Thus, we see more layer farms closing than broiler farms in June.
The number of hired regular workers in operational poultry farms has further decreased from eight to seven workers per farm on average in the past two weeks. Taking closed farms into consideration, total job losses among the 275 surveyed farms is 900, which makes up about 39 percent of the total labor in 2019 for the farms surveyed. With cash flow problems it will be difficult for poultry farms to maintain the number of workers they require and severe job loss in the poultry sector would adversely affect rural livelihoods. Fortunately, the COVID-19 Economic Relief Plan (CERP) of the Government of Myanmar is implementing measures to alleviate these issues.
Closures of broiler and layer farms are still the main drivers for the supply reduction of chicken and eggs. Even if the currently operational farms shorten their production cycle, broiler production in 2020 could still decrease by 28 percent if the closed farms do not reopen or if no new broiler farms are established. Furthermore, because of additional layer farm closures over the past two weeks, egg supply is expected to further decrease by 5 percent, cumulatively by 15 percent compared to 2019.
Interestingly, though more broiler farms in the second half of June expected their total revenue to increase compared with their expectation in the first half of June, more broiler farms also expected their total revenue to decrease (Table 1). Our data shows broiler farms that procured day-old-chicks in the last two weeks were more likely to expect their revenue to increase than broiler farms that did not (62 percent vs. 48 percent). For layer farms, there is little change between our two survey rounds; more than 80 percent of layer farms continue to expect their revenue to decrease in 2020 compared with 2019.
However, the share of broiler farms expecting their operational capacity level to decrease rose from 42 to 52 percent between the first and second survey rounds. This is likely due to a recent shortage in day-old-chicks. Broiler farms have sought to increase their operational capacity to meet the current unmet demand for broilers. However, 70 percent of broiler farms were unable to do so because they could not access day-old-chicks (Figure 1).
This new bottleneck stems from the low demand for broilers over the past several months. Some breeder farms reported lowering day-old-chick production by either selling breeders as meet or producing and selling more eggs instead of incubating them.
Fortunately, the Government of Myanmar has temporarily allowed 1.9 million broiler chicks for import between mid-May and mid-July to fill in such a supply shortage gap. This measure is crucial for the broiler supply to recover and can be phased out after breeder farms regain their previous day-old-chick production levels.
Policy recommendations
Based on the analysis of the second survey round, all the policy recommendations developed from the first survey round still stand – temporary income support to poultry farms; participation in government credit guarantee schemes; tax exemptions or deferrals; and liftin restrictions on transportation of livestock and livestock products. Two of these recommendations are stressed below, and a new recommendation regarding day-old-chicks is added.
- Though poultry farms reported having few problems in selling products thanks to increasing demand, cash flow remains a major problem for both the farms that closed in the second half of June and for some operational farms. Therefore, the recommendation from the first survey round still stands – providing temporary income support based on either the number of employees or the sales from last year would help operational farms buffer COVID-19 related shocks for several months and help some closed farms resume operations. The support should extend to both registered and unregistered farms and falls within CERP Action 2.1.7(b).
- As the labor market for the poultry sector continues to worsen, support to help poultry farms maintain workers should now be provided. Therefore, this recommendation from the first survey round also stands – include livestock farmers as beneficiaries of government credit guarantee schemes, conditional upon maintaining or rehiring workers. This would help livestock farmers ease cash flow problems and maintain their regular workforce. This measure could be implemented prior to the temporary income support measures and falls under CERP Action 2.1.2.
- Currently, the supply shortage of day-old-chicks is a significant bottleneck to increasing broiler production. A temporary waiver of the import ban on day-old-chicks could mitigate the shortage. However, to protect domestic breeder farms and related businesses, the total supply of day-old-chicks should be monitored and temporary import waiver measures phased out when domestic breeder farms return to their normal production capacity. This should be in about three months, assuming breeder farms started increasing their production in mid-May.
Related blog posts
- COVID-19 and business responses: How are Yangon’s poultry farmers adapting to the pandemic? (July)
- COVID-19 and business responses: How are Yangon’s poultry farmers adapting to the pandemic? (June)
Peixun Fang is a Research Analyst in the Development Strategy and Governance Division (DSGD) of the International Food Policy Research Institute (IFPRI), based in Washington, DC. Ben Belton is Associate Professor, International Development, in the Department of Agricultural, Food, and Resource Economics, Michigan State University. Hnin Ei Win is a Research Analyst in DSGD of IFPRI, based in Yangon. Xiaobo Zhang is a Senior Research Fellow in DSGD of IFPRI and Chair Professor of Economics at Peking University.
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.
