Rice mills are the major link between farmers and consumers in the rice value chain. Disruptions to rice mills affect both rural rice-producing households and urban consumers. Researchers from the Myanmar Agriculture Policy Support Activity (MAPSA) have been monitoring shocks and business responses of rice millers in Myanmar with a panel phone survey since June 2020. Results from telephone interviews with 434 active rice millers conducted in March 2023, including 1) milling disruptions, 2) changes in operations such as throughput, paddy storage, wages, and working capital, and 3) trends in paddy, rice, and byproduct prices are presented in the note.
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Key findings
- High fuel costs and electricity supply remain the most commonly reported disruptions in March 2023, with medium/ large modern mills facing more issues related to transport costs, electricity supply, and transport restrictions.
- Among the disruptions, electricity access is the most significant disruption for both medium/large-scale mills and small/micro mills, followed by fuel costs and fuel access.
- Smaller mills experienced declines in throughput, while larger mills maintained similar monthly throughput and decreased paddy storage compared to the previous year. Larger mills were less willing to provide credit to farmers, and there was an increase in byproduct sales for smaller mills.
- Wages paid by mills increased by about 18 percent, working capital requirements to buy paddy rose significantly for both larger and smaller mills, and milling commission fees increased for both mill types compared to last year.
- Paddy and rice prices for Emata and Pawsan varieties have significantly increased in March 2023, surpassing prices from March 2021 and 2022 due to currency devaluation and a slight increase in global rice prices. Milling margins have also increased compared to previous years. Despite the price hikes, millers are not extracting a disproportionate share of rice prices, and the prices of main byproducts, like broken rice and rice bran, have remained healthy, presenting positive prospects for mill profit margins.
Looking forward
- The milling sector remains, overall, healthy and resilient: milling margins are stable – implying that higher rice prices are still passed through to farmers – and byproduct markets are still functioning.
- However, the decline in paddy and rice stocks suggests a more restricted supply ready to move to the market in the coming months. This may put additional upward pressure on Myanmar’s rice prices, which (even at the parallel exchange rate) have risen faster than global rice prices in the past year with negative implications for consumers.
- The share of medium/large mills providing credit to farmers declined to just 20 percent (the lowest recorded value in our surveys) during the 2022 monsoon season. If that trend continues, there will be less credit available for farm inputs during the 2023 monsoon. However, buoyant rice prices and declining input prices may allow millers to increase or restart lending to farmers in 2023.
