Sunday, August 20, 2017

Rice hopes pinned on China

Rice exports are set to continue rising on the back of increased shipments to China, according to U Ye Min Aung, general secretary of the Myanmar Rice Federation.

Rice farmers may receive a higher price if exports grow, though domestic consumers may suffer. Photo: AFPRice farmers may receive a higher price if exports grow, though domestic consumers may suffer. Photo: AFP

Myanmar launches its first official rice exports to China in May, and aims to export the next portion of its 100,000 tonne quota at the end of June, he said.

Rice exports to China have generally been illegal from China’s point of view, until the two sides reached an agreement last year to begin legal shipments.

With the start of the official trade with China, Myanmar exports have to meet certain health standards and can now be shipped by sea, rather than the informal trade which generally goes overland past Muse in northern Shan State.

“Official exports to China are succeeding,” said U Ye Min Aung. “The next round of official exports will start this month and in July. In the meantime, we are also expanding in African markets, so we expect next year’s exports to be stronger.

The price of 1 metric tonne of emahta rice is from US$330 to $350, an increase from about $320 last month. Rice prices traditionally climb the furthest in the year from the November-to-December harvest.

A total of 29 companies now have permission to legally sell rice to China.

Nine companies were initially approved for the trade earlier this year. At the time, industry insiders questioned the fairness of some of the firms, which have to meet China’s stringent health standards, saying many of the selected companies were small or not yet formed.

Myanmar hopes to export 2 million tonnes of rice this year. The country had previously average over 2 million tonnes of exports a year until World War II, before steadily declining until the 1990s, according to a World Bank report last year. Rice exports have since been steadily increasing, it added.

Much of the recent growth in exports has come from Chinese demand. It went from insignificant in 2011 to 747,000 tonnes in 2013, more than half of the total 1.277 million tonnes traded that year, the report said.

U Ye Min Aung said domestic exporters see bigger opportunities from growing demand along the Chinese border, even though it does not official recognise the trade.

Growing exports have been blamed for putting upward pressure on domestic prices, but U Ye Min Aung said there is still room for both exports and domestic consumption.

“High prices in the domestic market are not good for consumers,” he said.

“It is hard to handle, but we need to find ways to lower the gap between wholesale and retail prices.”

U Chit Khine, a prominent businessperson and official with the Myanmar Rice Industry Association, said prices surges do not always end up with farmers.

“Rising rice prices increase the price for paddy. When this happens, it’s good for farmers. But if there are restrictions by way of price controls, farmers don’t receive the benefits,” he said.

“Instead of the old method of restricting price rises, we should seek more exports and find other ways to import for domestic consumption, such as importing cheap rice from Thailand.”

Thailand has been attempting to sell off its buffer stocks of rice following a failed attempt to corner the global market by its previous government.

 Translation by Zar Zar Soe