The price of emahta white rice, which makes up better than 90 pc of the country’s rice production, is currently selling for US$488 per 100 baskets (or 2.05 tonnes) on the markets, up from $356 per 100 baskets sold one year ago, farmers said.
“The high price is the result of demand for rice from China and this year the EU’s demand for rice from Myanmar is going up because the country entered the generalised system of preferences agreement, so the price is not likely to go down in the short term,” said U Lu Maw Myint Maung, joint general secretary of the Myanmar Rice Federation.
Paddy rice prices usually fall early in the season and bounce back mid-season after most of the harvest has been sold, sapping farmers’ profits. But last November-December, prices reached an early-season record of $377 per 100 baskets and continued increasing to its current price levels.
U Kyi Aye, chair of the Myanmar Farmers’ Association (MFA) of Dedaye township, Ayeyarwaddy Region, said that high prices are driving farmers to switch out other crops in favour of rice as profits are allowing others to pay off debts accrued from years of low prices and heavy flooding.
“The current price of paddy is the best since Cyclone Nargis [in 2008]. We will be able to pay the debts that built up in previous years,” he said, adding that the land used to cultivate rice could grow as much as 20pc for the coming summer crop.
MFA chair U Soe Tun said that even though the land available for summer crop was less than a quarter of the land available for rainy-season crop, it represents one-third of Myanmar’s estimated annual rice production of 14 million tonnes.
“The current record prices are likely to stay high because of Chinese demand. I think farmers will profit, though many still worry about falling prices and bad weather,” he said.
In addition, some experts are worried that the market is unsustainable as prices are mainly being driven by illicit trading on the Chinese side of the border. Rice producers are currently withholding stock from traditional trading partners in an attempt to secure more favourable prices from China, where traders are able to offer a higher price from dodging local taxes.
While such illicit traders are able to offer a better premium on imports than those who use the legal channels, they tend to not honour contacts and pay significantly less than promised, offsetting market gains while creating an unhealthy bottleneck for exports.
As a result of the bottleneck, government officials have said that total exports for processed rice will likely fall to less than half of the government target of 3 million tonnes in the 2013-14 fiscal year.
“We know that the government is trying to deal with the Chinese regional government to make this market legal, though there has not been seen any tangible result from it yet, so this is something we need to worry about,” said U Soe Tun, adding that a shift in Myanmar’s trade policy with China could upset the entire market.
According to data from the Ministry of Agriculture, 1.6 million hectares (4 million acres) of land are currently available for the summer crop, though indebted farmers have been unable to harvest some of it.
source: The Myanmar Times
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