Rice mills are vital to Myanmar’s most important agricultural value chain and are the essential link between farmers and consumers. As such, any serious shock to rice mills will impact both rural rice-producing households and urban consumers. Using a series of phone surveys, researchers from the Myanmar Agriculture Policy Support Activity (MAPSA) assess how COVID-19 related challenges are affecting Myanmar’s rice mills.
You can view the full research note in English here.
Background
Throughout 2020 and early 2021, MAPSA conducted a series of phone surveys with approximately 450 rice millers in three important rice-growing regions of Myanmar: Ayeyarwady, Bago, and Yangon. The analysis shows that COVID‑19 transportation restrictions were much less disruptive compared to what was reported in previous survey rounds. However, transport costs were still 6 to 9 percent higher than one year prior. There was also an increase in credit-related challenges as more millers applied for loans or had difficulties recovering repayment for credit they had lent out. The results also add depth to the reported declines in throughput presented in previous research notes.
This blog post presents highlights from the latest round of the rice miller survey conducted in January 2021.
Effects of COVID-19 on rice millers
Since the start of the survey rounds, the most common disruptions reported by millers have been in buying paddy and selling rice. (Figure 1). Selling and buying disruptions were reported by 34 and 30 percent of millers, respectively. On the milled rice marketing side, this is a large improvement from the 55 percent reporting such disruptions in November, suggesting that restrictions in urban areas and marketing zones lessened by January. Yet, on the buying side, disruptions increased between November and January, likely reflecting a lower supply of paddy late in the season.
Despite continued COVID-19 disruptions, miller responses in January 2021 show mixed changes (Figure 2). Smaller shares of millers changed rice sales channels (13 percent), supplier networks (11 percent), or their number of workers (13 percent). Furthermore, a smaller share adapted business services through increased use of information or communication technology (18 percent). However, adoption of safety measures appears to have increased dramatically in January, as more than 90 percent of mills adopted at least one practice to reduce transmission risks of COVID‑19.
Monsoon season
As part of the January survey round, we asked millers where they most often purchased and sold their main rice varieties during the monsoon harvest season (October-December) in 2020 and 2019. There are stark differences in the locations of purchases and sales. Purchases happen mainly within the mill’s state/region (98 percent in 2019) and predominantly in the mill’s township (74 percent in 2019). Thus, most paddy is purchased locally from the rural areas surrounding mills and a sizeable share (26 percent in 2019) is purchased directly at the mill. In contrast, rice sales typically happen in a different state/region (61 percent in 2019). Sales within the mill’s state/region occur at similar rates at the mill, within the mill’s township, and in a different township. There is a noticeable shift towards more local locations for rice sales in 2020 relative to 2019. In 2020, 49 percent of mills’ main rice sales locations were within their state/region, compared to just 39 percent in 2019.
We also asked millers about transportation costs to their main purchase and sales locations in January 2021 compared to the same time in 2020. Overall, reported transportation costs were 9 percent higher for paddy and 6 percent higher for rice. Interestingly, costs within the mill’s own township increased more in percentage terms (11 to 13 percent) than costs to other townships or states/regions (4 to 6 percent), which further confirms the more localized impacts of transportation restrictions identified in previous research notes.
Regarding throughput levels, 39 percent of millers overall reported lower throughput in the monsoon harvest season in 2020 than in the same season in 2019. Forty-four percent perceived no change, while just 17 percent reported an increase. The magnitude of average decreased throughput is 10 percent or less in each state/region. For the full sample, the decline in throughput was 7 percent, perhaps a smaller change than might be expected from the large share of millers that reported declines in throughput. This implies considerable mill-level heterogeneity. Ayeyarwady, the most distant from Yangon, has seen the largest declines in throughput (10 percent overall). Bago millers reported smaller, but still negative throughput changes each month. Conversely, Yangon millers reported an average 1 percent increase in throughput overall.
These differential impacts, together with the observation that paddy is predominantly purchased locally, suggest that the regional paddy market is likely a key determinant of throughput. While our data show that millers in Ayeyarwady and Bago were more likely to report disruptions to paddy buying, the differences are minor–about 25 percent in Yangon compared to about 30 percent in Ayeyarwady. As such, the more likely driver of throughput declines is reduced paddy production.
Rice and rice byproduct prices
The phone surveys also tracked average paddy and rice prices as well as miller margins by survey round for the two main rice varieties, Sin Thuka and Pawsan Hmwe. Between November and January, Sin Thuka rice prices increased by 14 MMK per pound, all of which was transferred to producers in higher paddy prices, holding milling margins the same. For Pawsan Hmwe, rice prices declined and paddy prices increased after the November survey, cutting down milling margins to their lowest point in our surveys.
Both paddy and rice prices were higher in January 2021 than one year earlier. Emata, in particular, had higher prices while Pawsan prices had modest increases. This likely reflects Emata’s connection to export markets whereas Pawsan prices are driven by local consumers who have diminished purchasing power during the pandemic. Paddy prices show larger year-on-year increases than rice, suggesting that mills can sustain lower paddy-to-rice margins. Higher broken rice prices–the most important byproduct in value terms–may make lower paddy-to-rice margins financially viable for mills.
Comparing the year-on-year changes in January 2021 to those in September 2020, we see that price changes for paddy, rice, and broken rice were generally higher in January. However, the biggest difference was in bran prices, which were about the same in January 2021 as they were in January 2020 but 15 percent higher in September 2020 than one year prior. The primary use of bran is as feed for fish farms, which may reflect shifts in demand for aquaculture feeds.
This blog post highlights one of the many recent surveys and research notes that MAPSA has conducted to assess the emerging constraints that key agricultural actors face and to mitigate the possible impacts of COVID-19 and recent disruptions on rural livelihoods and food security. Additional blog posts are available highlighting MAPSA’s research on the impact of disruptions on key actors in Myanmar’s agri-food system. Surveys are ongoing, and findings and recommendations will be periodically updated.
