Myanmar Rice Market Theingi Myint YAU _ Monday Seminar November 23, 2015.

Myanmar Rice Market

Theingi Myint

YAU _ Monday SeminarNovember 23, 2015

2

1. How was the past rice market?

2. Where we are now in the

region?

3. How about Demand, Supply &

Market?

4. How to do for the future?

Outline

3

1. How was the past rice market?

4

2. Where we are now in the region?

5

Cambodia

Lao PDR

Myanmar

Thailand

Vietnam

Poverty headcount, %, in 2014

National poverty line 17.7 23.2 26.5-36.7 12.6 17.2

International poverty line ($2/ day, PPP)

33.2 62.0 n/a 1.6 12.1

GDP per capita, $ (2011 PPP)

2,944 4,677 n/a 13,932 5,125

We are Poorer than our Peer Competitors

Source: World Dev Indicators, EAP Poverty Portal.

6

We are Agrarian Economies where Agriculture has Macro/Poverty Impacts

Cambodia Lao PDR

Myanmar

Thailand Vietnam

Share of agriculture in GDP, % (2013)

26 27 37 12 18

Share of agriculture in labor force, % (2013)

51 66 52 40 47

Labor use for rice production, man-days/ha

50 110 60-110 5-10 23-60

Share of arable land under paddy, % (2013)

62 (WS)74 (WS +

DS)

6066

5868

5973

68104

Share of spending on rice in HH food expenditures, %

33 23-39 21 4 22

Source: World Dev Indicators, USDA, Poverty Assessments.

7

Rice is an important food in Southeast Asia

Cambodia

Lao PDR

Myanmar

Thailand

Vietnam

Share of spending on rice in HH food expenditures, %

33 23-39 21 3 22

Food calories coming from rice, %

63 61 66 40 52

Source: FAO and Poverty Assessments.

8

CLM are the Last “Agrarian” Countries in East Asia

Source: World Bank

9

We Have Good Agricultural Potential

Cambodia

Lao PDR Myanmar

Thailand

Vietnam

Arable land per person, ha

0.27 0.22 0.21 0.25 0.07

Average paddy yields, wet season, tons/ha

2.9 3.0 2.7 3.0 5.5

Best farm paddy yields, tons/ha

3.5 4.0 3.5 5.7 7.0

Cropping intensity 120% 110% 115% 200% 250%

Ag GDP, $/ha (2013) 1,174 1,939 1,942 4,920 4,900

Source: World Dev Indicators

10

CLM Share Many Common Features

We are Net Exporters of Rice

Data are averages for 2008-2010. Raw data from FAO (2013).

Rice production per person vs. share of crop area devoted to rice, ASEAN

Rice export % of production (2010-2013)

Cambodia 25

Lao PDR 5-7

Myanmar 10

Thailand

44

Vietnam

26Source: USDA for Vietnam and Thailand, World Bank estimate for CLM

11

3. How about Demand, Supply & Market?

12

Rice is the most important crop and food in Southeast

Asia

Rice is the Largest Staple in CLM/SEA

Total From Rice

% from Rice

Cambodia 2,411 1,520 63

Lao PDR 2,356 1,436 61

Myanmar n/a n/a 66

Thailand 2,757 1,109 40

Vietnam 2,703 1,397 52

Dietary energy supply and dietary energy from rice (Kcal/person/day), 2012-2014

Source: FAO.

14

Year Production Consumption Exports Ending Stocks

2008/2009 11,200 18,800 1,052 548

2009/2010 11,642 10,890 700 600

2010/2011 11,060 10,100 1,075 485

2011/2012 11,473 10,200 1,357 401

2012/2013 11,715 10,400 1,163 553

2013/2014 11,957 10,450 1,688 372

2014/2015 12,600 10,550 2,000 422

Source: USDA – FAS –PSD Online

Myanmar National Rice Balance , ‘000 tons, milled rice

equivalent

15

Comparative Rice Production and Exports (2014/15)

Source: Myanmar Economic Monitor 2015 - USDA, WDI, WB Staff Estimates

2013/14 2014/15 2019/20 2024/25

MYANMAR 1.30 1.30 1.60 1.77

USDA Rice trade long-term projection (Million MT)

Source: USDA Agricultural Projections to 2024 (2015)

16

Large Scope for Raising Yields

Average paddy yields, tons/ha Source: USDA.

17

Measure Indicator Cambodia

Laos Myanmar

Thailand Vietnam

Access to affordable fertilizers

Urea price at farm gate, $/ton

425 450 460 426 357

Urea price to paddy price (in dry equivalent)

1.8 1.6 2.3 1.1 1.6

Availability of seeds

No. of new rice varieties released during 2009-2014

3 n/a 19 18 34

% of demand met by supply of good seeds

10 9 0.4 117 100

Depth of seed market

% of farmers using purchased seeds

20-80 10 9 60 53

Depth of fertilizer market

% of farmers using urea

70-98 40 90 100 100

% of rice farmers using NPK

80 20 30 90 100

Input Supply

18

Large Scope for Increasing Rice Profitability

Wet Season ($/ha) Dry Season ($/ha)

Myanmar 135 278

Thailand 1,253 1,267

Vietnam 774 560

Profits rice in main producing areas, 2013/14,

Source: World Bank and Phil Rice

19

Farm Production, Land Productivity


Laos Myanmar

Thailand

Vietnam

Land productivity

Yield, wet paddy 3.2*3.0**

4.0***

3.1* 6.1*2.6**2.3***

7.4*6.5**

Yield, dry paddy 2.8*2.7**

3.4***

2.5* 5.0*2.2**1.9***

6.8*6.0**

Seed technology used

Transplanting, % of paddy area in wet season

60 90 70 7 0

Fertilizer use

Kg of Nitrogen/ha 32 12 55 79 230

Actual vs. optimum fertilization (90 kg)

-64% -87% -39% -12% 156%

Extent of mechanization

% of rice farmers using oxen power

24 21 58 0 0

% of rice farmers using machinery for land prep

76 78 45 100 100

% of rice farmers using machinery for harvesting

68 low 18 100 100

* Ordinary rice, ** Aromatic rice, *** Glutinous rice

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Farm Production, Land Profitability


Laos Myanmar

Thailand

Vietnam

Remuneration

Farm-gate price, $/ton (dry paddy)

272*351**

324***

246*386**

376*504**401***

240*267**

Conversion factorsWet paddy moistureDry paddy moisture

Impurity

0.8840.220.140.02

0.8490.220.140.05

0.8140.250.140.05

0.8240.280.140.02

0.9170.200.140.03

CostsProduction costs, $/ha 482*

491**1,150**

*598* 1,031* 602*

ProfitProfitability, $/ha 387*

491** 145***166* 1,521*

670**905*

Higher-valued added opportunity

Land under fragrant/aromatic rice, %

35 small small 13 28


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Farm Production, Labor Productivity


Laos

Myanmar

Thailand

Vietnam

Labor intensity

Labor use, days/ha 52 100 130 6 23

Cost of labor, $/day 4.0 6.3 2.2 9.5 7.2

% of hired labor in total use

60 70 54 55 43

Labor productivity

Yield/labor use, kg/day 54 34 19 836 294

Profit, $/day (ordinary rice)

7.5 1.4 1.3 253.5 39.3

Profit, $/day (fragrant rice)

9.4 111.7


22

Farm Production, Dry Season


Laos Myanmar

Thailand

Vietnam

Risk of high seasonal volatility

% of dry season paddy in total paddy production

23 13 18 43 54

Opportunity for producing second rice crop

% of paddy area equipped with irrigation

34 11 18 100 100

% of paddy area actually irrigated in dry season

85 10 9 95 100

Cropping intensity

Paddy area in dry season/paddy area in wet season x 100

119 110 118 124 154

23

Large Scope for Increasing Milling Efficiency

Rate, %

Myanmar 60

Lao PDR 60

Cambodia 64

Thailand 66

Vietnam 66

China 70

Source: USDA.

Average Milling Efficiency, 2013/14, %

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Rice Mills


Laos Myanmar Thailand

Vietnam

Existence of competitive market

No. of rice mills (exc. Hullers)

12,148 34,632 n/a 2,730 249,058

No. of registered mills (medium and large)

60 8,778 n/a 560 150

Competitive edge

% of mills with FDI 18 (2014)30 (2015)

<5 <5 0 2.7

Efficiency

Total running period, hours/year

1,944 n/a 2,016 5,400 4,855

Average milling ratio, % 64 60 60 66 66

Capacity utilization, % 50 50 50 58 71

Cost competitiveness

Milling costs, $/ton 26-30 35-39 23 22 21

Electricity price, $/kW 0.16-0.23 0.08 0.08-0.16 0.12 0.08

% of mills using gasifier 50 5 5 0 0

% of mills running on diesel 30 5 35 0 0

25

Country Export Processing Costs, $/ton

Cambodia 16.7

Myanmar 9.8

Thailand 2.3

Vietnam 8.8

Export processing costs need to be reduced

Source: World Bank, various reports.

26

Exports

Measure

Indicator Cambodia

Laos Myanmar

Thailand

Vietnam

Export sizeRice export, tons (2013) 1,859,000 76,000 1,230,000 10,434,200 6,592,439

Cross-border trade

% of cross-border trade in total rice exports

73 93 70 0.4 26

Trade with paddy

% of paddy exports in total rice exports

70 30 0 0 0

Openness to trade

% of rice export in production

39 5 10 37 23

Extent of competition

No. of FOB exporters 86 n/a 30 200 150

Share of 5 largest exporters in total exports, %

42 n/a 89 54 34

27

Export ProfitabilityMeasure Indicator Cambodi

aLaos Myanmar Thailan

dVietna

m

Composition of exports

Exports, % of total

Paddy (in milled rice equivalent)

79 0 0 0

Ordinary rice (5% broken or less)

8 8 32 37

Ordinary rice (10%-25 broken)

0 88 4 46

Parboiled/steamed rice (5% broken)

1 2 34 0

Aromatic and jasmine rice (5% broken)

11 0 28 12

Glutinous rice0 100 0 3 5

Export profitability

FOB price, $/tonPaddy (in milled rice

equivalent)344 0 0 0

Ordinary rice (5% broken or less)

450 350 466 410

Ordinary rice (10%-25 broken)

430 339 434 352

Parboiled/steamed rice (5% broken)

490 453 478 434

Aromatic and jasmine rice (5% broken)

850 0 1,096 507

Glutinous rice0 0 911 600

Effective export price, $/ton412 335 656 404

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Export Costs


Myanmar Thailand Vietnam

Sihanoukville Yangon Koh Sichang

HCMC

Port efficiency

Port costs, $/20,000 ton vessel

22,743 145,000 65,000 34,539

Post disbursement account 17,700 65,000 45,000 22,755

Stevedore 5,043 80,000 20,000 11,784

Cost of export procedures

Costs, $/ton 16.69 2.80 2.34 8.75

SPS certificate 1.25 0.10 0.07 0

Export license 6.50 0.60 0 0

Inspection fees 7.00 0.60 1.32 0

Fumigation certificate 0.95 0 0.95 0.55

Certificate of origin 0.41 0 0 0

Informal charges 0.58 0.10 0 8.20

Other costs 0 1.40 0 0

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Farm-

Gate Price

Wholesaleand Mill

Prices

Export

Price

World market price up

With public investments/regulations

No public investments/regulations

World market price down

With public investments/regulatio

ns

No public investments/regulatio

ns

Higher farm profits are possible even with declining prices

Farm Profit

or

30

Trade Structure (Quality Segments) Changing

World Trade: Est. Changes in Quality since Mid 1990s

(millions of tons, milled equiv.)Quality mid 90s 2005-07 2010-12Basmati .89 2.00 3.64Jasmine 1.20 1.90 2.52Jasmine Bkns NA .69 0.73Glutinous .28 .34 .46Japonica 1.50 2.58 2.42Rough .50 2.45 2.36Brown .60 0.70 .64Parboiled 2.15 6.93 6.07High 3.20 5.10 8.14Medium 2.50 3.07 2.97

Low 3.86 5.27 4.63Brokens .83 1.82 2.01 Total 17.50 32.85 36.60

Source: Personal Communication Tom Slayton and USDA

Imports by Key Markets (million tons)

2011 2012 2013 2014

Bangladesh 1.49 .05 .30 0.70

China .58 2.90 3.00 4.30

Indonesia 3.10 1.96 1.50 1.30

Iran 1.87 1.70 1.50 1.65

Iraq 1.04 1.48 1.40 1.15

Ivory Coast .94 1.45 1.15 1.20

Nigeria 2.55 3.40 2.90 3.20

Philippines 1.20 1.50 1.50 1.70

Senegal .81 1.20 1.00 1.20

Others 22.69 23.51 25.75 26.52

TOTAL 36.25 39.15 38.60 42.90

Key Importers Changing - Opportunities

Source: Tom Slayton and USDA

EU: imports 1.5MMT/annum; EBA – duty free, quota free; 2013 – E175 or USD228/MT

China: Increasing Paddy support prices- 2012 $381/MT, 2013 420/MT (~620/MT rice wholesale);TRQ – 5.32 MMT (duty 1% cf outside TRQ 65%)

32 Destination Group

White Rice Parboiled Glutinous Brokens Total

Qty (MT)

%Qty (MT)

% Qty (MT) %Qty (MT)

%

European Union

74,605 36.5 9,458 4.6 120,292 58.8 204,355

ASEAN 71,520 71.9 1,825 1.8 26,085 26.2 99,430

(ASEAN) Plus 3

1,136,070

81.0 656 0.0 17,790 1.2 246,430 17.5 1,400,951

Middle East 29,043 86.9 100 0.2 4,270 12.7 33,413

Africa 2,350 79.6 600 20.3 2,950

Other 77,407 77.8 6,051 6.0 16,030 16.1 99,488

TOTAL MYANMAR

1,390,995

75.5 18,090 0.9 17,790 0.9 413,707 22.4 1,840,588

Rice Export by Destination Groups and Types of Rice :

MYANMAR FY2014/15, CAMBODIA CY2014

Destination Group

White Rice Parboiled Glutinous Fragrant Total

Qty (MT)

%Qty (MT)

% Qty (MT) %Qty (MT)

%

TOTAL CAMBODIA

157,417 40.7 19,050 4.9 210,593 54.4 387,060

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BORDER TRADE POSTS & TRADE FLOWS OF RICE IN MYANMAR

Tamu

KanpiteteLwejel

Htee Khee

Chin Shwe Haw

Muse

Mau Taung

Myawaddy

Hantalan

Rhi

MaiLar

Maung Daw

Tarchilate

Kawthaung

Maung Daw*

Myawady*

Muse*

*Kanpitete

Lwejel*

*

*

*Chin Shwe Haw

Mailar

Tarchilate

Flow of rice

Border Trade

Rice Exports

Hubs

* Border Trade Posts/ Crossing

34

Country2012/13 2013/14 2014/15

% %/ %

Thailand Border 9.9 1.0 0.2

China Border 90.9 98.2 99.5

Bangladesh Border 0.8 0.4

Total Border Trade 814,876 871,799

1,379,463

Rice Cross-Border Trade by Country : 2012/13 to 2014/15

Source: Compiled from Customs and MOC ‘s Commerce Journal – in collaboration with MOC Technical Support Team

36

EMATA HQ

EMATAMQ

EMATALQ

NGASEIN MQ

NGASEIN LQ

PAW SAN HQ

PARBOILED GLUNTINOUS BROKEN TOTAL

% % % % % % % % % % Muse:CY2014 1.6 5.2 51.1 0.1 28.3 0.0 0.1 2.0 11.5 87.1 FY2014/15 1.6 4.3 45.3 0.1 34.5 - 0.1 1.6 12.5 88.1

LwejelCY2014 52.4 38.5 0.0 9.1 9.9 FY2014/15 44.0 51.4 4.7 8.6

ChinShweHawCY2014 92.5 0.7 6.7 2.1 FY2014/15 90.1 1.0 8.9 1.6

KyaingTong/MaiLar% 4.6 95.4 0.9 % 4.6 95.4 1.2

ALL% 1.4 4.6 52.5 0.1 28.5 0.0 0.1 1.8 11.0 100.0 % 1.4 3.8 46.7 0.1 34.8 - 0.1 1.4 11.6 100.0

n.b. Kanpiteti hardly recorded any trade due to security situation over the period. There was also a small but

insignificant amount of Paw San HQ recorded in Muse over the period.

Source: Compiled from Customs and MOC ‘s Commerce Journal – in collaboration with MOC Technical Support Team

China Border Trade by posts and grades: 2014

37

1. How to do for the future?

• Yangon & Mandalay are the two growth poles

• Linked via economic corridors that also support growth hubs

• Corridors provide internal and external connections to ports/SEZ as well as border posts

• Cross-Border rice trade strategy should leverage and dovetail into this

NCDP’s Two Polar and Economic Corridors Growth Model

East-West EconomicCorridor

Southern EconomicCorridor

Mekong River

Nay Pyi Daw

Vientiane

Bangkok

Phnompenh

Hanoi

Mawlamyaing Pakse

Fue

Da Nang

Hai PhongChiangrai

VungtauHo Chi Ming

Thailand

Laos

Viet Nam

Myanmar

Trat

YangonNong Khai

Savannakhet)

Kunmin

カンボジア

Dawei

Myawaddy

Sittwe

Kyauk Phyu

Tilawa

Oil & Gas Pipeline, Railroad

Aizawl

Tilawa

• Establishment of two pipelines of appx. 8,000 km from this port to Kunming, in Yunnan Province, as well as railroad (on hold for time being)

• River port 16km away from Yangon River mouth - located in the center of Yangon, Tanlin and Chaungtha Township• This port was planned due to the lack of sites for Yangon Port• Establish SEZ (5,000 acre) and synergistic effect is expected for the relation with this port – Japanese-Myanmar Consortium• Official opening 23 Sept 2015

Dawei

Sittwe

Kyauk Phyu

• This port development is underway in Tanintharyi Division. Italian-thai (Thailand) possesses development rights – Japan announced funding as part of Abe’s initiative in GMS infrastructure

• There is a plan to establish SEZ around the port and also to connect the port with Bangkok via road and railroad• A gateway from Thailand to Indian Ocean directly, not via Strait of Malacca

• This port development gives India access from Kolkata to Aizawl via Kaladan river

• There is a plan to establish a pipeline from Shwe Gas Field, located in offshore of Sittwe, to Kolkata via Bangladesh

Myanmar and GMS Connectivity

CHINA - National Trunk Highway System (NTHS)

Current Railways in China

2011 – Chong Qing to Duisburg (Germany)

2014 - Yiwu (near Shanghai) to Madrid 13,000 km, 82 containers, 1,000MT, 21 days

China’s ‘One Belt and One Road’China’s efforts at Modern Silk Routes and recent ambitious ‘One Belt and One Road’ initiative spanning Eurasia – linking 60 countries, 4.4 billion people, accounts for 29% of world’s GDP – expected to be completed by 2025

Asian Infrastructure Investment Bank (AIIB) – 24 Oct 2014 - 21 countries signed - 22 Mar 2015 – 36 countries (incl non-regional members) - starting with $100 Bil.

42

Agriculture Development Model

Modern Agricultur

e

43

Infrastructure Improvement

Commercial ProductionStrategic Crops in Region Market Assess

Domestic MarketExport MarketTrade Agreement

Value Chain and Financial Development

Farmer Organization & Business Partners

Small Scale Farmers Large Scale Farmers

Seed and Input Sector Development

AC

TIO

N-I

NIT

IATIO

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FAC

ILIT

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REG

ULA

TIO

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BY

PP

P A

ND

DEV

ELO

PM

EN

T P

AR

TN

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Market Led Agricultural Sector Development

AG

RIC

ULT

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AL T

EC

HN

OLO

GY

D

EV

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PM

EN

T, D

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INATIO

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44

Looking forward to the interesting discussion!

Thank you for your attention!

Myanmar Rice Market Theingi Myint YAU _ Monday Seminar November 23, 2015.

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Transcript of Myanmar Rice Market Theingi Myint YAU _ Monday Seminar November 23, 2015.