A phone survey was conducted in July 2023 to understand the effects of political instability on Myanmar’s mechanization service providers (MSPs) that are crucial for enabling smallholder farmers to undertake a range of power-intensive farm and post-harvest operations in a timely manner. This note reports on the results of this survey, which is the 11th in a series of phone surveys, as well as on trends from earlier surveys.
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Key Findings
- The observed conditions on the ground in the 2023 monsoon planting season show signs of improvement and recovery of the sector, as well as continuing challenges for MSPs in Myanmar.
- The area prepared by MSPs in the 2022 monsoon seasons and harvested in the 2022 dry season increased compared to the two previous years.
- Despite the slow-down in price increases for fuel and repair services, rising prices of machines, parts, and operators (despite their improved availability) continue to raise the cost of mechanization services.
- There are signs of improved demand for services compared to 2022, potentially due to the rising price of paddy and falling prices of certain other inputs and crops, and most MSPs who stayed in business have reduced debts and saw improvement in their financial standings.
- Given the increased lack of agricultural credit, some MSPs are increasingly providing additional financial assistance to farmers as to fill this void.
- However, a significant share of MSPs also faced challenges in meeting demand due to supplyside cost shocks and/or left the business altogether.
- Persistent rises in costs, combined with political instability, remain a significant source of uncertainty for MSPs, which requires close monitoring for the remainder of the 2023 season
Recommended Actions
- To mitigate the increase in costs for mechanization services. reduce taxes on imported equipment and fuel and fees temporarily, including on imported goods like fuels or equipment.
- Reduce bottlenecks in the movement of MSPs, through improved transparency in security checkpoints, permissions required, and repairing of rural roads.
- Provide training for machine operations to alleviate the shortage of machine operators.
- Access to formal credit through the MADB or through microfinance institutions should be expanded to help ensure farmers’ access to affordable mechanization services, as farmers are likely to continue facing significantly increased costs in the 2023 season. The rising fees of mechanized services for farmers can reduce monsoon season production.
