Rice mills are vital to Myanmar’s most important agricultural value chain. They are the essential link between paddy fields and rice bowls. As such, any serious disruption or shock to rice mills will impact both rural rice-producing households and urban consumers. In their research, Joseph Goeb, Yulu Tang, and Phoo Pye Zone utilize the findings from a phone survey with rice millers to assess how COVID-19 related challenges are affecting Myanmar’s rice mills. They also provide policy recommendations to improve business conditions for rice mills and help them cope with the COVID-19 economic crisis.
You can view the full policy note by Joseph, Yulu, and Phoo Pye Zone in English here and in Burmese here.
မြန်မာဘာသာဖြင့်ရေးသားထားသော စာတမ်းအပြည့်အစုံကို ဤနေရာတွင် ဖတ်ရှုနိုင်ပါသည်။
Background
Rice accounts for more than 30 percent of the value of all crops produced in Myanmar, and consumers eat between 130 and 165 kg of rice per capita per year. As such, rice mills are vital to Myanmar livelihoods and are the essential link between paddy fields and rice bowls. Through milling and processing, rice mills add substantial value to rice supply chains, which benefits farmers and consumers directly and indirectly. Therefore, any serious disruptions or shocks to rice mills will impact both rural rice-producing households and urban consumers.
Through a series of phone surveys with owners and managers of food retail shops in Yangon and Mandalay, the Myanmar Agriculture Policy Support Activity (MAPSA) is seeking to provide data and insights to government and stakeholders on the impacts of COVID-19 shocks and policy responses on Myanmar’s rice mills. This blog post presents the findings from the first round of the survey conducted in July.
Effects of COVID-19 on rice millers
Disruptions to business operations Over half of the mills initially experienced disruptions in selling milled rice and in buying paddy (Figure 1). However, those impacts have lessened considerably recently, as only about 15 percent of millers experienced those disruptions in the 30 days prior to the interview. These improvements are likely explained by the further lifting of COVID-19 related transportation restrictions.
Credit-related disruptions have persisted Collecting repayments from credit provided out is the third most common disruption since the start of the crisis and has been the most common disruption over the 30 days prior to the July survey round. The continued effects of the COVID-19 crisis on millers’ ability to acquire and offer credit may have significant implications for mill profitability, cash flow, and capital investment.
Business responses Most mills have adopted safety practices to mitigate transmission risks for employees or customers (Figure 2). Four-fifths of mills reported requiring employees to regularly wash their hands and to wear face coverings and over one-third of mills conducted temperature screenings of employees. The second most common business response – utilized by 56 percent of mills – was to reduce the mill’s operating hours, while 36 percent voluntarily closed for at least one week.
Labor patterns Despite the crisis affecting employment patterns in the mills, only 6 percent of mills reported any changes related to labor, with the largest effect being a decrease in employee earnings. However, these results may understate the effects on mill labor related to any employees being laid off before the 30-day recall period used for the survey.
Rice and rice byproduct prices
For most mills, both purchase and sales prices are slightly higher than the 2019 average. Interestingly, analyses show that prices increase more for relatively cheaper low-quality varieties than for high-quality varieties. There may be several drivers for this pattern: First, there may be the shock of COVID-19 on household incomes, which may depress domestic demand for expensive, high-quality rice. Second, Myanmar exports many rice varieties, and not all are expensive high-quality varieties. Thus, the government’s policies intended to ensure a sufficient national supply of rice may have had differential effects on the prices of different rice varieties.
In terms of sales of byproducts from paddy processing such as broken rice, bran, and husks, roughly half of mills reported no changes in prices, with the other half split between price increases and decreases. The price results show that some millers are experiencing lower margins than in 2019 and some are also suffering from large drops in byproduct prices.
Policy recommendations
From the analysis of phone survey data obtained from rice millers in Yangon, Ayeyarwady, and Bago in July 2020, the authors provide the following policy recommendations.
- Continue and expand the government relief loan program offered to small and medium enterprises – Action 2.1.1 under the COVID-19 Economic Relief Plan (CERP) of the Government of Myanmar. This would assist mills struggling with challenges related to the COVID-19 crisis. It would support these mills to stay in business despite large revenue reductions in 2020 relative to 2019, help ease the cash flow burdens arising from difficulties in recovering credit lent out to suppliers, and buffer small mills from new economic shocks during the continuing crisis.
- The government should extend tax relief to mills hard hit by the COVID-19 crisis through waivers or deferrals (CERP 2.1.3).
- Lift restrictions on rice exports and facilitate easier processes for export license procurement, such as through online licensing procedures and extending the time period for which licenses are valid (CERP 2.4.3). Millers are expecting large revenue declines in 2020 and increased export demand and higher prices for exported rice varieties would help lessen those losses and encourage continued investments in the sector.
Related blog posts
- COVID-19 and last mile delivery: Challenges for retail shops (early July)
- Crop trading during the pandemic: Lessons learned in Myanmar (Late June)
- COVID-19 and business responses: How are Yangon’s poultry farmers adapting to the pandemic? (Late July)
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.
Joseph Goeb is a Research Associate in the Department of Agricultural, Food, and Resource Economics of Michigan State University, based in Yangon. Yulu Tang is a Ph.D. student in Economics at Harvard University, based in the United States. Phoo Pye Zone is a Research Analyst 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.
