A phone survey was conducted in July 2024 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 12th 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 2024 monsoon planting season show generally robust demand but also continuing challenges for MSPs in Myanmar.
- The areas prepared by MSPs in the 2024 monsoon seasons and harvested in the 2024 dry season are largely comparable to 2023 seasons.
- Price increases, which had already been observed for machines and parts, have extended to fuels, repair services, and operators.
- Most MSPs have been able to pass on such cost increases to farmers by charging significantly higher hiring fees (25 and 50 percent higher for plowing and combine-harvesting respectively), and most MSPs who stayed in business have reduced debts and saw improvement in their financial standings.
- However, a significant share of MSPs also faced challenges in meeting demand due to supply-side cost shocks and/or left the business altogether. Access to new machines, attachments and spare parts are deteriorating rapidly, threatening the supply of mechanized services.
- 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 2024 season, in addition to the implications on farmers welfare and crop production.
Recommended Actions
- To mitigate the increase in costs for mechanization services, address issues with fuel costs and availability by facilitating the import and distribution of fuel.
- Reduce bottlenecks in the movement of MSPs, through improved transparency in security checkpoints, reduced permissions required, and improved security on rural roads.
- Provide trainings for machine operations to alleviate the shortage of machine operators, with emphasis on service quality to maximize farmer productivity and ensure machine health.
- 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.
