Rice mills are the most important link between farmers and consumers in the rice value chain. Hence, it is important to monitor the shocks to milling as it will impact both farmers’ incomes and food security of the urban consumers. This is the highlight of the result from the 9th Research Note in a series examining the effects of COVID-19 and political instability on rice millers in Myanmar. Researchers from the Myanmar Agriculture Policy Support Activity (MAPSA) present evidence from interviews with 388 rice millers in the main rice-growing regions of Myanmar–Ayeyarwady, Bago, and Yangon–conducted in September 2021.
You can view the full research note in English here.
In the Research Note, we present evidence of the current situation in relation to previous survey rounds, including 1) disruptions in milling caused by the political and health crises; 2) changes in operations–throughput, monsoon season credit, paddy and rice storage, and profits; 3) expectations for the coming monsoon harvest and marketing season; and 4) prices of paddy, rice, and byproducts.
Key findings
▪ Banking sector disruptions remain the most significant challenge for rice millers in September 2021 (reported by 70 percent of respondents) and receiving payment for rice and making payment for paddy are among the most frequently cited disruptions.
▪ Expected monsoon season paddy harvests and milling throughput in 2021 are lower than 2020 (55 percent and 74 percent, respectively).
▪ Mills are in an increasingly difficult financial situation. Working capital dropped by 24 percent compared to September last year and fewer mills sold milling byproducts–rice bran and broken rice–which are important for profitability. Overall, 68 percent of millers expect monsoon milling profits in 2021 to be less than in 2020.
▪ Lending to farmers declined in the 2021 monsoon season compared to 2020. Fewer millers offered credit to farmers and the average value of credit-out was 21 percent lower.
▪ Increased transportation costs and transportation restrictions were also widespread challenges in September 2021. Diesel prices have increased by 31 percent since December 2020 and by 10 percent since June 2021.
▪ COVID-19 safety practices jumped following Myanmar’s third wave of cases: ninety-eight percent and 97 percent of millers adopted face coverings and regular handwashing, respectively.
▪ Mill-level rice sales prices increased between June and September, following their normal season trends. Compared to last year, milling margins were higher for Emata varieties and lower for Pawsan, but overall milling margins in 2021 have been similar to their 2020 levels. Thus, milling margins are not a major contributor to changes in retail rice prices paid by consumers this year compared to last year.
Recommendations
▪ Credit guarantees to enable banks or MFIs to expand working capital to the milling sector should be considered to ensure the financial viability of rice milling.
▪ Easing transport restrictions and re-opening export markets would bring much needed stability to rice markets while relaxing the financial and production constraints that millers are experiencing.
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.
