Agricultural input retailers play a key role in Myanmar’s agri-food system by supplying farmers with fertilizer, seed, pesticides, and other inputs necessary for successful harvests. In their research, Joseph Goeb, A Myint Zu, Nang Lun Kham Synt, Duncan Boughton, and Mywish K. Maredia utilize findings from the third and fourth rounds of a phone survey to understand how COVID-19 related challenges are continuing to affect Myanmar’s agricultural input retailers. They also provide updated policy recommendations to help agricultural input retailers maintain operations and adapt to COVID-19 challenges.
The full policy note by Joseph, A Myint Zu, Nang Lun Kham Synt, Duncan, and Mywish is available to view in English here.
Background
Farm-level input use is an important driver of yields for all major crops and shocks to the input retail sector have major implications for rural household welfare as well as food security. In response, the Myanmar Agriculture Policy Support Activity (MAPSA) interviewed agricultural input retailers in May and June 2020 as part of a five-round phone survey to determine how their businesses were being affected by COVID-19 related restrictions. The results of those surveys were published in related blog posts (May 2020 | June 2020). To trace the continuing impact of the COVID-19 pandemic on their economic activities, the MAPSA research team conducted rounds three and four of the phone survey in mid-June and early July 2020.
The results from previous survey rounds showed that input retailers experienced large disruptions from the COVID-19 crisis, including demand shocks leading to much lower sales this year compared to 2019. The surveys also showed that informal lending is an important part of retailers’ business, though they are now having difficulties collecting payments on credit they lent out to farmers.
The most recent survey rounds build on these results by (1) continuing to monitor COVID-19 related business disruptions, (2) tracking input sales and prices over time, (3) providing more information on vegetable seed sales, and (4) detailing mobile phone use by input retailers to better understand technological adaptations to COVID-19.
Effects of COVID-19 on input retailers
The effects of the COVID-19 crisis persist for input retailers. Over half of the shops surveyed continued to report experiencing at least one type of disruption in the two weeks prior to each survey (Figure 1). Major disruptions reported include receiving payment of inputs provided to farmers on credit and disruptions to demand.
To get a better sense of input demand over the course of the monsoon season, the MAPSA research team asked retailers about sales and price changes for four key categories of inputs – pesticides, fruit and vegetable seed, maize seed, and fertilizer. Figure 2 shows the price changes from mid-June to early July.
For pesticide prices, a similar share of retailers reported increases and decreases. However, there were large regional differences. Fertilizer prices and sales also decreased as the monsoon crops have been well established. On the other hand, seed prices for fruits and vegetables and for maize were mostly stable.
Retailer responses
The most common retailer response to COVID-19 was to adopt a safety practice. However, though two-thirds of respondents adopted at least one safety practice in mid-June, the share dropped 8 percentage points by early July. In general, the trend appears to show that shops are slowly dis-adopting preventative safety and health measures recommended to prevent the spread of COVID-19. The full list of retailer responses by survey round is displayed in Table 1.
Following a trend from the previous survey rounds, input retailers are continuing to increase the adoption of mobile phones to coordinate purchases and orders from suppliers and farmers in response to COVID-19 shocks. However, even for those adopting this practice, face-to-face sales are still the most common method as the median use rate of using phones to sell or take orders was only 20 percent over the past two months. Mobile payments (including bank transfers) were also relatively less common.
Policy recommendations
Based on the results from phone surveys with agricultural input retailers in five states and regions, the MAPSA team recommends the following policies:
- The government should take steps to mitigate cash-flow effects adversely affecting input retail businesses from low demand for inputs and from difficulties they face in collecting repayment from farmers on credit lent out.
- Two policies that would support input retailers are extending working capital loan support (Action 2.1.1 of the COVID-19 Economic Relief Plan (CERP) of the Myanmar government) and removing or delaying payments of business taxes and fees (CERP 2.1.3).
- Promote mobile banking applications among input retailers and farmers. This could be done partly through extension services and information campaigns. Input retailers have demonstrated a willingness to adopt mobile phone technologies in response to the COVID-19 economic crisis. They now may be more receptive to messages promoting digitization, which would have lasting benefits for the input retail business. A more powerful tool than extension to promote mobile banking may be the Myanmar Agricultural Development Bank (MADB). Thus, MADB should make mobile banking an option both for loan delivery and repayment. Once implemented, mobile banking could be incentivized with a promotional interest rate below the rate for cash loans.
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.
Related blog posts
- COVID-19 and Myanmar's agricultural inputs: What we know so far (June)
- COVID-19 and Myanmar's agricultural inputs: What we know so far (May)
Joseph Goeb is a Research Associate in the Department of Agricultural, Food, and Resource Economics of Michigan State University (MSU), based in Yangon. A Myint Zu and Nang Lun Kham Synt are Research Analysts with the Development Strategy and Governance Division (DSGD) of the International Food Policy Research Institute (IFPRI). 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 K. Maredia is a Professor of International Development in the Department of Agricultural, Food, and Resource Economics at MSU, based in East Lansing, MI, USA.
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.
