1. Dolly Kyaw, Tin Htut & Hnin Yu Lwin Yezin Agricultural University, Myanmar International Conference onInternational Conference on Agricultural TransformationAgricultural Transformation in Asia: Policy Options for Foodin Asia: Policy Options for Food and Nutrition Securityand Nutrition Security International Conference onInternational Conference on Agricultural TransformationAgricultural Transformation in Asia: Policy Options for Foodin Asia: Policy Options for Food and Nutrition Securityand Nutrition Security

2. 4. Conclusion & Recommendations 3. Identifying Key Drivers: Results from PAM 2.2 Seed Industry 2.1 Fertilizer Utilization & Distribution 2. Evolution of Input Policy ContentsContents 1. Background 2 3. Agriculture _ the major sector (cultivated land 29.7 million acres, agricultural population 25.7 million, 30% of GDP, and 13.7% of the total export earnings in 2010-2011 (MNPED, 2012) About 54% of total farmers _ small landholders (owned less than 5 acres (Agriculture Census 2011) Potential land for development in future is about 51 million acres Fig. 1 Expansion of cultivated land (Central Stat Organization) CSO various issues 3 4. Rice self-insufficiency in Chin and Mandalay region in 2010 (Myanmar Agriculture Service ) Agricultural Census (2011) points out that not only Chin and Mandalay, but also Taninthari and Yangon region faced rice self-insufficiency in 2010 MAS, MOAI 4 5. Fig.3 Poverty Incidence in Myanmar (UNDP & MNPED) Poverty incidence reduced (32% in 2005 to 25.6% in 2010) Food poverty incidence declined by half (4.8% in 2010) Rural poverty (29%), urban poverty (15%) Reduce poverty (target _ 16% in 2015) 5 6. (1) Socialist system (1962 1988) Agricultural policy _ rice self-sufficiency and surplus for export, Land tenure reform in 1964 Traditional technology with very low level of inputs used Agricultural development _ stagnant during 1962 & 1972 Under 20-year plan (1973 1993), fertilizer was subsidized along with adoption of MVs of rice Govts interventions in input and output markets resulted deadweight efficiency losses 6 7. (2) Partial Liberalization (1988 - 2010) Centrally planned economy to a market-oriented Summer Paddy Program was introduced in 1992-1993 (Farmers received subsidized chemical fertilizer and diesel fuel for pump irrigation) Fert. subsidy program was gradually reduced since 1993-94 (up to 2002) Imported on a purely commercial basis by both private and public sectors States agencies imported and distributed fert. at market price However, distribution program for paddy crop production has been substantially reduced in 2003 (New rice policy) 7 8. (CSO 2011) Fig. 4 Imported fertilizers by the states agencies 8 9. (MIS 2012) Fig.5 Trends of fertilizers prices in Myanmar ($/ton) 9 10. (Authors calculation based on CSO & MIS, FAO STAT 2012 for fert. qty.) Table 1. Urea fertilizer utilization in paddy production YEAR Utilization in paddy (000 MT) Total utilization (000 MT) Paddy & urea price ratio 1962-71 22.26 36.55 0.22 1972-81 124.04 160.14 1.17 1982-91 224.36 282.96 1.04 1992-2001 201.66 237.89 0.30 2003(FAO) NA 101.5 0.22 2010(FAO) NA 67.6 0.40 Fertilizer prices were increased at faster rate than rice prices resulting deterioration in the price ratio of rice and fertilizer (input use inefficiency) 10 11. Provision of credit from MADB covers only 10% of total cost of paddy production Smallholders cannot use fertilizers at optimum level due to limited working capital, inadequate credit, and low access to credit rely on informal credit at a high interest rate UNDP & MNPED 2011 12. (2) Partial Liberalization (1988 - 2010) Pricing and marketing system is inefficient Transaction cost of fert. is too high, profit margin of wholesalers/retailers is ranging 25% to 40% In addition, farmers have to pay back the cost of fertilizer with 2 percent interest rate per month Enforcement of the fertilizer law Illegal importation through China border Uncertain the quality of the unregistered fertilizers No cost effectiveness in use of fertilizer and low use of fertilizer (below recommended level) 12 13. (2) Partial Liberalization (1988 - 2011): Seeds Distribution Private Seed Production & Marketing ? 13 14. (2) Partial Liberalization (1988 - 2011): Seeds Distribution Certified seeds (good quality) distribution by the public sector is relatively small and insufficient Gap between the distribution of good quality seeds by the states agencies and demand of farmers (especially in rice) Public institutions (Shwetaung Farm, Yezin Agricultural Universitys Farm and Mawbi Farm) started to produce hybrid rice seeds in 2011-2012 The State Peace and Development Council enacted the Seed Law in January 2011 14 15. (2) Partial Liberalization (1988 - 2011): Seeds industry Truth in labeling is important in seeds marketing Warranty for the quality of seed (for purity of seed, trust of farmer, high yield at reasonable price) Public sectors investment in R & E (capacity building and farmers participation) is essential However, budget for agriculture sector was reduced (from 5.4% of total union budget in 1990 to 3.4% in 2010) (CSO 2011) Farmers save the seeds to grow in next season the main problem is mixed varieties of rice resulting poor quality of milled rice and thus receiving low price 15 16. Policy Analysis Matrix Monke and Pearson (1989) policy analysis matrix, an analytical framework _ to determine the comparative advantage and policy distortions in the rice sector PAM for Case Study in Ayeyarwady Region in 2008 & 2012 (due to unavailable time series data) Field survey was conducted by Aye Moe San in 2008 and by Dolly Kyaw in 2012 (to collect data on two rice varieties; HYV and fragrant local rice variety) Ave. FOB price of Manawthukha (HYV rice) is 300 USD/MT in 2008 and 334 USD/MT in 2012 Ave. FOB price of Pawsanmwe (fragrant rice) is 570 USD/MT in 2008 and 482 USD/MT in 2012 16 17. Table 2. Revenue, Inputs Cost and Profit of Paddy Manawthu kha (2008) Pawsanmwe (2008) Manawthukh a (2012) Pawsanmwe (2012) Revenues (Kyats/ha) (Kyats/ha) (Kyats/ha) (Kyats/ha) Private Prices 694643 611117 721531 642460 Social Prices 802168 868457 815331 470478 Output Policy -107525 -257340 -93800 171982 Cost of Tradable Inputs (Kyats/ha) (Kyats/ha) (Kyats/ha) (Kyats/ha) Private Prices 176176 209760 27181 13591 Social Prices 164317 195470 23919 11960 Input Policy 11859 14290 3262 1613 17 18. Table 3. Revenue, Inputs Cost and Profit of Paddy Manawthuk ha (2008) Pawsanmwe (2008) Manawthukh a (2012) Pawsanmwe (2012) Costs of Domestic Factors (Kyats/ha) (Kyats/ha) (Kyats/ha) (Kyats/ha) Private Prices 25008 262036 405244 392889 Social Prices 234786 246212 387119 376210 Factor Cost 15222 15824 18125 16679 Profits (Kyats/ha) (Kyats/ha) (Kyats/ha) (Kyats/ha) Private Prices 268458 139319 289106 235980 Social Prices 403064 426774 404293 82308 Net Policy -134606 -287455 -115187 153672 18 19. Table 4. DRC, NPC and EPC of HYV and local rice varieties Manawthuk ha (2008) Manawthukh a (2012) Pawsanmwe (2008) Pawsanmwe (2012) DRC 0.37 0.49 0.37 0.82 NPCO 0.87 0.88 0.70 1.37 NPCI 1.07 1.03 1.07 1.14 EPC 0.81 0.88 0.60 1.38 net effect of output and input tax resulted in a net taxation on value added (EPC