Crop traders in Myanmar serve as important links between farms and food processors, exporters, and other downstream actors. Thus, challenges for crop traders caused by the COVID-19 crisis have important implications for crop marketing and crop prices. In their research, Joseph Goeb, A Myint Zu, Nang Lun Kham Synt, Phoo Pye Zone, Duncan Boughton, and Mywish Maredia utilize the findings from a second phone survey with crop traders to assess how COVID-19 related challenges are affecting crop marketing. They also provide updated 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, A Myint Zu, Nang Lun Kham Synt, Duncan, and Mywish in English here.
Background
Crop traders comprise the mid-stream of Myanmar’s food supply chains, forming important links between farms and food processors, exporters, commodity exchange centers, and urban food markets. Many traders have strong and direct ties to farmers, often providing farmers with agricultural inputs on credit to strengthen relationships and to build business later in the year when crops are harvested and sold. These connections to the farm have important implications for any challenges that traders face due to the COVID-19 crisis. Effects on traders will be felt upstream by farmers through both their post-harvest crop marketing activities and challenges to crop trading will be felt downstream by consumers.
Through a second phone survey of crop traders, the Myanmar Agriculture Policy Support Activity (MAPSA) is seeking to better understand the effects of COVID-19 shocks on Myanmar’s agri-food marketing system. This blog post builds on the findings from the first round of the survey of crop traders in May, found in this blog post, and reflects on two additional themes: credit offered out by traders to farmers and trader’s use of mobile phones.
Effects of COVID-19 on traders
As displayed in Figure 1, over half of the traders were still experiencing COVID-19 related disruptions in late June and early July. The biggest hurdle of traders in the month prior to the interview, experienced by almost one-third of traders, was lower demand and difficulty selling crops. However, this effect does not appear to be affecting all crops in the survey sample areas of the Dry Zone and Shan.
Traders experienced challenges with low crop demand in both export and local markets. Trade flows have slowed due to closures at border crossings with neighboring countries and domestic movement restrictions and holiday cancellations. However, demand appears to have improved in June compared to earlier in the crisis. Accordingly, two-thirds of traders reporting low crop demand also noted that the challenge decreased in June.
Traders were also experiencing difficulties collecting repayments on credit lent to farmers. This was the second most common disruption experienced in the 30 days prior to the interview with 22 percent of traders experiencing this disruption. Despite this finding, most traders did not see credit repayment as one of the main challenges of the COVID-19 crisis.
The third most common disruption experienced in the last 30 days was difficulty buying crops. Transport restrictions have been the major driver of these challenges. Interestingly, the effects of transport restrictions were not consistent within states/regions or even within townships. However, where transport restrictions were in place, traders reported difficulties transporting crops from the village to the city, which disrupted both buying and selling.
Overall, crop trading decreased dramatically compared to 2019 both for wholesale traders who buy crops and resell them and for brokers who trade crops on commission (Figure 2). Sixty percent of wholesalers and 71 percent of brokers reported that their trading activities were lower in June 2020 compared to June 2019.
Trader responses to COVID-19
Traders have responded to the COVID-19 crisis in several ways. These responses are listed in Table 1. The most widely reported response was the adoption of safety practices such as washing hands, wearing masks or face shields, and maintaining social distancing. Sixty-five percent of traders were practicing safety measures, though traders in Shan state showed a very low adoption of safety practices with only 33 percent taking any extra safety precaution.
In terms of business or service adaptations, traders from all states and regions surveyed increased cellphone use for buying and selling. Traders from all states reported using mobile payments for buying and selling, and 6 percent on average employed the practice. Traders were also found to use cellphones to check crop prices and coordinate sales over the phone. Furthermore, none of the traders using cellphones for mobile payments expect to reduce their use of the technology next year and more than 20 percent expect their use of mobile payments to increase.
Policy recommendations
From the analysis of the most recent survey findings, we arrive at the following four recommendations to mitigate the impacts of the COVID-19 crisis on crop traders.
- First, in late June, the transportation restrictions were implemented at the local level with no standardized or consistent policies across townships and regions. These restrictions negatively affected traders and farmers. For the ongoing second wave of COVID-19, the government should minimize the transport restrictions that hinder the movement of agricultural commodities in Myanmar. Where restrictions are deemed necessary, governments should coordinate their policies and make them consistent across townships and regions to reduce uncertainty and to allow the movement of essential goods, such as agricultural crops.
- Second, the government should work to formalize agricultural trade agreements and to facilitate crop exports through the land borders to Myanmar’s neighbors. Many traders reported that uncertainties around border trade depress prices and affect the entire crop marketing system.
- Third, the government should provide cash support to farmers – Action 2.1.7(b) under the COVID-19 Economic Relief Plan of the Government of Myanmar. This would support traders through increased repayment by farmers of the inputs that they received from the traders on credit – a persistent challenge faced by traders.
- Finally, promote the continued growth of mobile phone use among traders, particularly for mobile payments.
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.
Related blog posts
- Crop trading during the pandemic: Lessons learned in Myanmar (May)
- COVID-19 and business responses: How are Yangon’s poultry farmers adapting to the pandemic? (Late July)
- How COVID-19 affects agricultural production in the Dry Zone (June)
Joseph Goeb is a Research Associate in the Department of Agricultural, Food, and Resource Economics of Michigan State University (MSU), based in Yangon, Myanmar. A Myint Zu is a Research Analyst with the Development Strategy and Government Division (DSGD) of the International Food Policy Research Institute (IFPRI), based in Yangon. Nang Lun Kham Synt is a Research Assistant with DSGD of IFPRI, based in Yangon. Phoo Pye Zone is a Research Analyst with DSGD of IFPRI, based in Yangon. Duncan Boughton is a Professor of International Development in AFRE 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 AFRE at MSU, based in East Lansing, Michigan, 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.
