CHAPTER 1

INTRODUCTION

1.1 Rice in Myanmar

Paddy is originated in the Southeast Asia. Rice is staple food for 6000 years in

this region. It is staple food and daily diet in Myanmar too. People consume various

kinds of traditional snacks made of rice, broken rice and sticky rice. Per capita

consumption of rice in Myanmar was 195 kg in 2001. Successive governments

attempted to develop the country rice economy to provide sufficient rice for domestic

consumption in line with food security for increasing population, and enhancing

income by rice export. It is noted that these successive governments have one main

interest to produce rice in surplus though they did not have same political, economical

and social objectives. Generally, these successive governments can be classified as

follows (Maung, 1982):

- Myanmar kings’ Era

- British colonial period (1826-1941)

- Japanese Occupation (1941-1945)

- Before and after Independence (1945-1961)

- Revolutionary Council Era (1962-1974)

- Socialist Economy Era (1974-1988)

- Military Regime (1988 up to now)

In the time of Myanmar kings, farmers were engaged in agriculture for

self-sufficiency for rice and other crops and for getting personnel goods. Barter

system was practiced. Myanmar kings encouraged the agricultural cultivation and

took appropriate measures, and constructed new reservoirs, lakes, canal and

maintained the old irrigation network. Starting from 1824, the British colonialists

occupied Burma for three times, and the country fell in 1885. In this era, they

established the colonial capitalist economic system. Rice area was expended to 5.07

million hectares and around 3 million tons of rice was exported from 1923 to 1940.

The highest production of paddy was over 8 million tons during this era. In December

1
1941, the Second World War II was spread into Burma, and Japanese occupation

started. Up to 1941, Burma exported 3.4 million tons of rice products annually. Burma

was not able to export rice and paddy due to SWW II, and consequently, the price of

paddy dropped sharply due to the halt of export of rice. It was estimated that only

2.63 million hectares of paddy areas were cultivated in 1944-45. When the SWW II

ended in 1945, British government took power again because they won in the war.

Burmese people tried to gain independence from British.

On January 4, 1948, Burma regained independence and parliamentary

government took place in. During this time, rice sown area had increased to 3.83

million hectares and it was produced 5.6 million metric tons of paddy in 1951-52. Over

1 million ton of rice was exported from 1947-48 to 1951-52. Parliamentary

government tried to regain the previous sown area, and implemented Eight-year

Pyidawtha Plan from 1952-53 to 1959-60. At that time, the highest level of rice export

was recorded at 1.8 million tons. In 1961-62, paddy sown area was reached 4.6

million hectares, and it was produced 6.8 million metric tons of paddy. The country’s

annual rice export was over 1 million ton. On March 2, 1962, the Revolutionary Council,

otherwise military men, took the responsibility of the state. Then rice marketing was

nationalized. No traders were not allowed to carry out purchase, storage, marketing,

milling and distribution of rice and rice products, and later on the business was

become SOE. In 1964-65, 5.11 million hectares of land was cultivated for paddy,

surpassing 5.07 million hectares of the highest sown area in 1940-41. In that year,

over 1 million ton of rice was exported and total paddy production was 8.5 million

metric tons.

During 1960’s, the Green Revolution was introduced by the world research

communities. High yielding varieties such as IR 8 and IR 5 were introduced into Burma

to increase rice production. Since that time, the Revolutionary Council adopted the

new state constitution on January 3, 1974 the state came to be known as the Socialist

Republic of the Union of Myanmar. Rice production was stagnant because of

unattractive (fixed) prices set by the government through its agencies. Food security

2
was a case to feed its increasing population. To overcome this problem, the

government launched the “whole township paddy production programme” (WTPPP)

from 1977-78 to 1985-86. It emphasized on the production rather than income

maximization for farmers, and subsidized agricultural inputs such as chemical

fertilizers, agricultural loans, etc. The country’s paddy production reached over 14

million metric tons, and the average annual rice export during that time was 0.5

million metric tons.

In 1988, people demanded to quit the socialist government due to decreasing

economy for several reasons. The State Law and Order Restoration Council (SLORC),

otherwise military regime, assumed the responsibilities of the state in 1988, and

Myanmar Agricultural Produce Trading (MAPT) was responsible for marketing of rice

and paddy. From 1988 to 2002, the SLORC carried out to sell rice to the specific

groups at reasonable price, to provide rice to the victims of natural disasters free of

charge and to reserve rice that may need in times of military, political and economic

emergencies, and to export the surplus rice to earn foreign exchange. In November

1997, the SLORC changed its name as State Peace and Development Council (SPDC).

The SPDC continued to practice as under the SLORC. MAPT disbursed advanced

payments to farmers under contracts as in the previous years. This system had been

practiced up to April 22, 2003. The SPDC announced an issue on April 23, 2003, that

it would end direct purchase of paddy from farmers beginning from fiscal 2003-2004,

and would adopt the new rice marketing policy allowing free marketing of the paddy,

rice and rice commodities. Unexpectedly, it declared that rice export is not allowed for

unidentified period for unknown reasons.

It could be seen that rice was treated as a major or as a national food in

successive era. Rice dominates the agriculture sector, and shares 49 percent of the

total crop sown area. Paddy production of different regions for 2003-04 in Myanmar is

shown in Table 1.1. Delta region shares 63 percent of total sown area and 69 percent

of the country’s rice production. It is well known as the country’s rice bowl. Although

Myanmar is rice-surplus country, and can sufficiently provide rice for domestic

3
consumption and export, the central dry zone region, Tanintharyi division in coastal

region, and Shan, Kachin, Chin states in mountainous regions are still rice deficit

areas. The average rice yield in delta region is over 3 metric tons per hectare, and that

of the rest ones range from 1.7 to 2.94 metric tons per hectares.

Table 1.1 Paddy production of different region in 2003

Region Yield (kg/ha) Harvested area Production (1000

(1000 ha) metric ton)

Delta 3188.50 3876.00 14073.00

Coastal 3000.73 516.00 1708.00

Central Dry Zone 3311.90 1252.00 4501.00

Mountainous 2647.72 884.00 2854.00

Source: MAS

1.2 Aims and Purposes of the Research

Most of the government of every country has intervened in the market pricing

of food grains to promote price stability. A number of stabilization schemes has used

in developing and developed countries. Government of Myanmar has also practiced

some form of control over prices and trade in commodity through its agency, Myanmar

Agricultural Produce Trading (MAPT). Government intervention policies could not fit to

the welfare of poor in Myanmar. The government announced it would end a 40 year

policy and permit rice to be sold privately via “free trade” in April 2003. But it was not

longer and it was revoked in 2004, it might be, not to be happen some political riot

because of its transition to democratic country. On this respect and parallel,

Myanmar’s participation in ASEAN and prosperity of Myanmar in the region need

partly on development of agriculture through transformation of its agricultural policy.

Therefore, it is needed to study Myanmar agriculture sector in all aspects.

Dorosh and Shahabuddin (2002) pointed out that “domestic rice procurement

contributed relatively little to raising domestic producer price at harvest time,

4
involved only a small percentage farmers, and incurred excessive costs following

successful harvests because of procurement prices set far in excess of market prices

in Bangladesh”. Nielsen (2003) showed that the export quota has been a very

restrictive policy tool that has kept Vietnamese rice production and exports well below

potential.

There are two major components in intervention: (1) price intervention, and

(2) institutional intervention. A set of direct policy interventions may distort prices

such as export taxes, import tariffs, trade quotas, and domestic producer and

consumer taxes and subsidies. It is relevant to examine the selected policy goals, and

efficiency and effectiveness of the overall system as a vehicle for policy

implementation in evaluating intervention. In particular, the research aims to shed

light on two key questions:

1. What were the costs and benefits associated with given policies and

intervention systems, in comparison with no intervention case?

2. Who gained and who lost as a result of intervention?

Partial equilibrium analysis is the starting point for analysis of agricultural

price policy. The partial equilibrium models equate supply and demand in one or more

markets clear at their equilibrium price levels. This makes prices endogenous. Partial

equilibrium models do not include all production and consumption accounts in an

economy, nor do they attempt to capture all of the economy’s markets and prices. The

approach allows the analyst to trace the impact of changes in one market on other

markets, but it only captures such changes in the markets included in the model.

Partial equilibrium models are best suited to analyzing sector reforms that are less

likely to have large impacts on macroeconomic aggregates.

1.3 Specific Objectives

(1) To describe the present status of physical, economic structure and paddy/rice

production system in Myanmar

(2) To estimate the paddy/rice supply and demand functions

5
(3) To examine the welfare of consumers and producers of paddy/rice, and

government net treasury position from intervention, and

(4) To investigate the further liberalization of rice markets in Myanmar.

1.4 Methodology

A variety of methods is used to examine the various research tasks. These are

descriptive analysis, time-series analysis, and econometric models for estimating

demand and supply elasticities. Each method will be further explained in the following

chapters. Data were collected both published and unpublished data from the following

sources: Myanmar Agriculture Service (MAS), Ministry of Agriculture and Irrigation

(MOAI); Department of Agricultural planning (DAP), MOAI; Central Statistical

Organization (CSO), Ministry of National Planning and Development; Myanmar

Agricultural Produce Trading (MAPT), Ministry of Commerce, and Other related local

and international institutions.

1.5 Organization

Chapter 2 examines the physical and economic structure of Myanmar. It

provides geography, climate, natural resources, population and economic structure

and summarizes the role of agriculture in Myanmar Economy.

Chapter 3 looks at the some literature review. It provides background of

government intervention, analysis of demand and supply and partial equilibrium

analysis.

Chapter 4 studies the rice production and supply. It focuses on rice production

and characteristics, classification, cropping pattern, cost of production and estimating

the elasticity of rice supply.

Chapter 5 shows the paddy/rice marketing and demand in Myanmar. It

provides paddy/rice marketing, structure of markets, rice demand and trend in

consumption and econometric analysis of rice demand based on HIES carried out by

CSO.

6
 Chapter 6 uses the partial equilibrium model to evaluate the effects of pricing

policy in Myanmar rice economy. Firstly it develops the methodology. The elasticity of

rice demand and supply is used in the model. This involves comparing the volume of

production, consumption and export evident at intervention prices with those that are

consistent with a hypothetical no intervention outcome, and evaluation of welfare for

producers, consumers and government net gain from intervention.

Chapter 7 concludes the results of the study, summarizing the effects of

pricing policy and simulation, and some recommendations are made with regard for

other studies.

7
 CHAPTER 2
THE PHYSICAL AND ECONOMIC STRUCTURE

2.1 Geography
Myanmar is geographically located between 9 Degree 58' to 28 Degree 31' N

and 9 Degree 29' to 10 Degree 10' E. Bounded by land on the northeast, north, east

and the remaining sides by sea, it stretches for about 1275 miles from north to south

and 582 miles from east to west, while approximating 261228 square miles, in total

area. Myanmar is situated in Southeast Asia and is bordered on the north and

northeast by China, on the east and southeast by Laos and Thailand, on the south by

the Andaman Sea and the Bay of Bengal and on the west by Bangladesh and India

(Figure 2.1). Myanmar's coastline defines the eastern shore of the Bay of Bengal,

running from the Bangladesh border in the down to the Malay Peninsula and Thai

territory in the southeast. Southern Myanmar consists largely of the broad river valley

of the Ayeyarwaddy. The Ayeyarwaddy rushes down through great mountain gorges in

northern Myanmar before spreading out into one of the largest river delta in Asia. Both

of Myanmar's principal cities- Yangon and Mandalay- are situated along the

Ayeyarwaddy, and 1600km river is navigable for almost two thirds of its length. The

vast majority of Myanmar's people live in the lowland regions of this river valley in the

Ayeyarwaddy basin. This fertile expense, which sits within the tropical monsoon belt,

is one of the world's great rice growing regions.

2.2 Administrative Divisions and States

Administratively, the country is divided into 7 states and 7 divisions; namely,

Kachin, Kayah, Kayin, Chin, Mon, Rakhine, Shan States and Sagaing, Tanintharyi,

Bago, Magway, Mandalay, Yangon and Ayeyarwaddy divisions. It is divided into 62

districts which comprise 324 townships and 13745 village tracts in the rural areas and

2470 quarters in the urban areas.

8
Figure 2.1 Union of Myanmar

2.3 Climate

Myanmar has two distinct dry and wet seasons. The dry season runs from

mid-October to mid-May and the rest being the wet season. Myanmar has the effect of

monsoon in different parts of the country. Temperature varies from 38˙C to 19˙C,

humidity from 82.8 percent to 66 percent. The precipitation depends on the locality,

9
elevation and months. The climatological data by regions is given in Table 2.1. The

agroclimatic conditions of Myanmar range from that of equatorial to cool temperate.

Table 2.1 Climatological data by regions for 2002

Region Annual Rainfall (mm) Temperature Relative Humidity

Max Min (%)

Delta 3870.50 32.75 22.00 78.38

Coastal 5496.50 31.25 21.75 80.35

Central Dry Zone 1117.67 33.73 21.60 70.80

Mountainous 2277.00 26.97 16.72 74.05

Source: CSO

2.4 Agroclimatic Regions and its characteristics

Generally, the country can be divided into four regions according to

agroclimatic conditions; namely, Delta, Coastal, Central dry zone and Mountainous

regions. The Delta region has the highest population density, highest land productivity

(mostly alluvial soil), moderately high rainfall, generally flat topography, and excellent

conditions for growing rice. The Coastal region can be characterized with small land

area, highest annual rainfall exceeding 4000mm per annum, and highly suitable for

growing perennial crops. The Central dry zone has lowest annual rainfall, sandy soils,

and the second highest population density. The Mountainous region has the largest

area comprising dense forest, poor road infrastructure, and low population density.

2.5 Natural Resources

Myanmar is rich in natural resources. More than half of the area of the country

is covered by dense forest which can produce valuable hard woods. Myanmar's teak is

famous in the world and in addition other varieties of hard wood are available in

abundance. Myanmar also has well-known gems, and being produced 36 types of

precious stones and gems. Production of mineral resources such as gold, silver, copper,

10
lead, tin and nickel are being carried out by private firms and SOEs. Myanmar with a

coastal line of 2832 km is also rich in marine resources. It has been estimated one

million metric tons of fishery resources could be produced annually on a sustainable

basis. Many foreign companies are investing to explore oil and gas. Presently, 7

companies had signed 12 contracts for onshore blocks and another 7 companies had

signed 8 contracts for offshore blocks. Most of Myanmar's natural resources are still

untapped. Therefore, there is great potential for exploiting natural resources in

Myanmar.

As for water resources, there are four major river basins; namely, The

Ayeyarwaddy, the Chindwin, the Sittaung, and the Thanlwin. These are flowing

north to south into the Andaman Sea. The Ayeyarwaddy basin creates a vast fertile

delta region.

Based on the parent material, physical features and vegetation, soil in

Myanmar can be classified into different types in various parts of the country. Different

soil types and suitable crops are shown in Table 2.2.

2.6 The Economic Context

2.6.1 Population and Labour Force

According to population census in 1983-84, population was 35.66 million. The

population of Myanmar in 2001-02 was estimated to be at least 51.1 million with a

growth rate of 2.02 percent. Approximately 73 percent of total population reside in

rural area and depends mainly on agriculture. The country's active labour force is

17.23 millions, and 65 percent engage in agriculture sector (Figure2.2). Delta region

has the highest number of farm families.

2.6.2 Economic structure

Nation's GDP grew 10 percent in FY2002 (ended 31 March, 2003) according

to the official estimate. In FY2003, Myanmar faced sanctions from US and EU that

constrained growth and hurt international trade and investment in Myanmar. Troubles

11
Table 2.2 Different soil types in Myanmar

Soil type Area ('000ha) Percent Suitable crop

Fluvisol 736 1.1 Pulses, Chillies, Onion, Vegetables, Groundnut

Paddy, Jute, Maize, Sesamum

Gleysol 3051 4.5 Paddy, Pulses, Sesamum, Maize, Sugarcane

Vegetables, Groundnut, Cotton, Jute, Tobacco

Gley-Gleysol 555 0.8 Paddy,Jute

Gleysol-Calcaric 55 0.1 Paddy, Chillies, Pulses, Sorghum, Maize, Cotton

Gleysol-S 2241 3.3 Paddy, Vegetables, Jute, Sugarcane, Pulses

Vertisol 482 0.7 Paddy, Groundnut, Sesamum, Pulses, Sunflower

Cotton, Sugarcane, Chillies, Sorghum, Fodder

Catena of Luvisol 1781 2.6 Paddy, Chillies, Groundnut, Sesamum, Cotton,

Pulses, Sugarcane, Sunflower, Sorghum,

Fodder, Vegetables

Acriosol 4130 6.1 Upland rice, Coffee, Tea, Vegetables, Groundnut

Sesamum, Maize, Pulses, Horticulture, Niger

Cambisol 1085 1.6 Upland crop, Horticulture, Forest, Maize, Sesamum

Ferrosol Rhodic 9971 14.7 Forest, Rubber, Pineapple, Horticulture, Mango, Tea

Coffee

Ferrosol Xanthic 8363 12.4 Forest, Rubber, Pineapple, Horticulture, Mango, Tea

Coffee

Arensol 244 0.4 Forest

Cambisol-Orthic 2461 3.6 Forest

Cambisol-Gelic 2596 3.8 Natural reserved

Cambisol-Histric 6287 9.3 Forest

Cambisol-Chromic 1370 2 Forest

Ferrosol-Plinthic 588 0.9 Mango, Durian, Rubber, Coconut, Cassava

Pineapple, Banana, Oil palm

Litholsol 241 0.4 Forest

Andosol 46 0.1 Forest

Gleysol-Humic 203 0.3 Mangrove Forest

Solonchak 42 0.1 Mangrove Forest

Cambisol 530 0.8 Horticulture, Sesamum, Groundnut, Forest, Rubber

Mango, Pineapple

Lithosol 290 0.4 Pasture

Cambisol-Orthic 2188 3.2 Forest

12
(Chin hill)

Not suitable for crop 18123 26.8

Total 67659 100

Source: Land use (MOAI)

Figure 2.2 Labour force of agriculture

Country's labor force

35%

65%

Agriculture Other sectors

in Banking sector, shortages in power made to hinder Myanmar's economy. Although

government's statistics shows 10 percent in GDP, some essential factors of production

such as sown land area, use of fertilizer, pesticides, and crude oil have been flat or

declined for at least part of that period (ADB).

The fiscal deficit, which is largely financed through central bank credit

creation because of low level of revenues, hit 4.1 percent of GDP (ADB). More than 60

percent of the overall deficit was caused by the deficits of State Owned Enterprises

(SOEs). Inflation was 24 percent in September 2003. Supply constraints constrained

to price increases. Government keeps nominal interest rate and monetizing the

budget deficit. These happens constraints to controlling inflation. According to official

data, the balance of payment was in surplus by $49.3 million in FY2002. But it was

deficit again by $38 million in the first 6 months of FY2003. In Myanmar, the parallel

13
market exchange rates co-exist with official rate with a difference over 154 times in

start of 2003 (Table 2.3). The Government of Myanmar (GOM) once tried to solve dual

exchange rate by issuing FEC and adopting the devalued customs valuation rates.

Finally this system leaded to decline in FE reserves after the Asian currency crisis

because the GOM has reinforced exchange controls by regulating foreign remittances.

Trade sanctions have been lessened because of stronger demand from neighbouring

countries. FE reserves at end of FY2003 covered 3.5 months of imports.

Table 2.3 Market exchange rate of Myanmar

No Month 1996 1997 1998 1999 2000 2001 2002 2003

1 Jan 123 165 280 325 324 442 720 1059

2 Feb 123 165 250 325 327 480 741 1064

3 March 125 165 250 335 348 512 784 900

4 April 125 160 250 335 348 591 863 923

5 May 135 170 300 345 353 700 823 974

6 June 140 180 320 340 363 605 856 967

7 July 158 200 340 340 377 602 898 960

8 August 158 220 364 350 389 649 989 1020

9 Sept 170 240 366 360 405 681 1164 975

10 Oct 170 250 358 350 419 715 1136

11 Nov 168 300 344 340 414 732 1073

12 Dec 167 310 344 343 431 728 1034

146.83 210.42 313.83 340.67 374.83 619.75 923.42 982.44

Source: From various companies

2.6.3 Investment

People's saving was increased from 1980 to January 2003. After that it was

declined because of trouble in banking crisis dramatically as shown in the Table 2.4.

FDI of permitted enterprises from various countries up to the end of 2002 is shown in

Figure 2.3. In 2003, investment represents 25 percent of total GDP. Among various

sectors, investment in agriculture is only 14.2 percent in capital (Figure 2.4).

14
Table 2.4 People's saving

FY Total saving(million)

1998-1999 162609

1999-2000 236383

2000-2001 352347

2001-2002 465005

2002-2003 415183

2003-2004 408098

2003

January 526918

February 440533

March 415183

April 391668

May 375104

June 370790

July 378643

August 380872

September 392239

October 381736

November 375739

December 380012

2004

January 374839

February 378379

March 408098

April 269034

May 451829

June 484293

Source: Central Bank of Myanmar (MOFR)

15
Figure 2.3 FDI from various countries

1800
1600
1400
1200
million $

1000 No of enterprises
800 Investment value
600
400
200
0
Thailand

Germany

Israel
Canada
China
Indonesia

Panama

India
Malaysia

Australia
Austria

Srilanka
Republic of Korea
Netherlands

Denmark
United States

Philippines
Hong Kong
France

Macau
Japan
Singapore
Britain

Bangladesh
Figure 2.4 Government Investment at various sectors in capital

14% Agriculture
13%
Energy

7% Construction

23% Transport and

communication
Social services
20%
Defence
8%
15% Others

2.6.4 Trade

GOM has supported private exporters and importers recognizing that private

sector as a prime mover of the market mechanism and pays great attention to its

development. As private sector has been in place, it could seen the volume of external

16
trade has increased in absolute terms and reached K35509 millions in 2001 (Figure

2.5). Out of total exports, agriculture sector contributes 18 percent in trade.

Figure 2.5 External trade

40000
35000
Value (million MMK)

30000
25000
20000 Total trade
15000
10000
5000
0
20 0
5

5
00
-9

-9

-9

-9

-9

-0

-0

-0

-0

-0
-2
94

95

96

97

98

00

01

02

03

04
99
19

19

19

19

19

20

20

20

20
19

Year

2.6.5 Land Utilization

Myanmar has 67.7 million hectares of total land area of which 10 million

hectares is utilized for crop cultivation. The forest area contributes 49 percent of

country's total land area. Extendable land area is approximately 7.28 million hectares,

which can be brought under crop cultivation and livestock farming (Table 2.5).
Table 2.5 Land utilization ('000ha)

Particulars 1997-98 1998-99 1999-2000 2000-01 2001-02

Net sown area 8969 9298 9673 9909 9990

Fallow land 1183 986 769 686 622

Cultivable waste land 7854 7553 7311 7205 6664

Reserved forests 10475 11618 12507 12914 13975

Other forest area 22001 20962 20269 19786 19327

Other land 17177 17242 17130 17159 17081

Total 67659 67659 67659 67659 67659

Source: SLRD (MOAI)

17
2.6.6 The Role of Agriculture in Myanmar Economy

There are four economic objectives laid down by the government, and the

first objective is to develop agriculture as the base and all round development of other

sectors. In this regard, the MOAI set the following policies and strategies for the

development of this sector;

- to allow freedom of choice in agricultural production

- to expand agricultural land and to safeguard the rights of farmers

- to encourage the participation of private sector in the commercial production of

seasonal crops and perennial crops and distribution of farm machineries and other

inputs.

Because of these favourable policies in priority of agriculture, the sector

achieved an annual growth rate of 5.6 percent (Table 2.6), and contributes about 42.7

percent to GDP (at the 1985-86 constant prices) indicating the dominant position in

the national economy. Fishery and forestry sector also achieved considerable increase

share in national GDP.

Table 2.6 Annual growth rate of GDP (%)

Particulars 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Goods 2.6 11 6 6.9 6.7 6.4 5.1 4.9 12.1 13.5 9.7

Agri 2 12.4 4.7 6.7 5.5 3.8 3 3.5 10.5 9.5 8

L&F -0.6 4.5 4.8 6 3 11.9 7.1 9.3 16.8 17.8 11.3

Forestry 8.3 -3.3 1 -14.3 -4.5 2.7 2.8 3.2 4.6 3.3 10

Mining -1.2 26.3 16.2 14.8 27.4 11.6 29.7 7 30 25.5 -7.8

Mftg 1 10.8 9.4 8.5 7.6 5 5 6.2 14.5 23.4 15.2

E power 5 31.1 24.4 4.8 6.6 10 17.8 -5.4 14.2 13.9 -5.5

Constrn 35.8 11.2 11.7 15.7 27.2 24.6 9.8 6.3 4.4 11.9 29.2

Services 4.2 6.1 8 10 9.3 8.2 8.8 7.8 8.8 13.2 15.7

Trade 2.4 8.9 4.6 7 5.7 5 5 6.3 9.5 14.1 11.1

GDP 2.8 9.7 6 7.5 6.9 6.4 5.7 5.8 10.9 13.6 10.5

Source: CSO

18
 CHAPTER 3
LITERATURE REVIEW

3.1 Government Intervention and Pricing Policy

Government interventions are designed to change prices. Government may

use prices as a vehicle to increase producer income, consumer welfare, or budget

revenues. Most government interventions have at least an indirect effect on food

prices facing farmers. These intricate and roundabout influences on agricultural

incentives are an integrating theme of food policy analysis (Timmer and others 1983).

Streeten (1987) stated that food policy is that between food prices high

enough to encourage agricultural production and low enough to protect poor food

buyers. Anderson (1986) pointed out that policies that attempt to strengthen

incentives to expand food production through higher food prices may result in reduced

incomes and severe hardships for the poor. To implement price policies government

may use state-controlled regulatory boards or logistics agencies.

Deaton (1989) found that higher prices for rice are likely to bring benefits to

rural households at all levels of living in Thailand, and there were marked regional

variations depending on the importance of the rice crop, but there is no systematic

pattern whereby higher prices favour the rural rich at the expense of the rural poor.

Morisson and et al (1991) sowed that considerable diversity in the evolution

of income distribution during adjustment in the country studies of the effects of

adjustment policies on the distribution of income in Chile, Cote d’Ivoire, Ecuador,

Malaysia, Morocco, and Indonesia. The results exposed the fatal flaws of narrowly

designed adjustment programs, and whether efficiency-focused or welfare-focused,

will fail when they do not recognize the interdependence of the three criteria of

efficiency, welfare, and political feasibility.

Ramaswami and Balakrishnan (2002) studied the food prices and the

efficiency of public intervention in India. They modelled the implications of quality

differences between public and private grain supply. As both qualities were procured

19
at similar prices, the lower quality of public grain marked the inefficiency of

government operations. As a result, a reduction in food subsidies increased food

prices and hurt the poor even when they are not major recipients of the subsidy.

Diven (2001) showed that in their study of the domestic determinants of US

food aid policy has three key findings: (1) There is a consistent relationship between

commodity producer interests and US food aid policy, (2) there is a strong relationship

between commodity stocks and food aid shipments, especially during the years when

stocks were the greatest, (3) US food aid policy-making is highly incremental.

In Madagascar, many farmers do not participate in product markets as either

sellers or buyers, and, for many others, net sales or marketable surplus is fairly small.

The roughly one-third of rice farmers who fall below the poverty line have substantial

net purchases of rice. More variable rice prices induced by economic reforms likely

imposed additional instantaneous welfare losses by threatening household food

security and destabilizing incomes (Barrett and Dorosh 1996).

Smith (1997) pointed out that an important stimulus for cereal sector has

been the massive fiscal costs of many state procurement and intervention agencies.

This has led to policies to minimize their role in the future through rapid market

liberalization and a substantially increased role for the private sector. There were

several instances in which, even with a well-developed private sector, government

intervention will be required to achieve adequate stability. Moreover, where the

private sector is not fully developed, public sector agencies can potentially play an

important, but hopefully declining, role in either performing or financing stabilization

services.

Barrett (1997) showed that the short-term effects of liberalization on the

mean and variance of food prices vary substantially by commodity, region and season.

In the long term, liberalization increases both the mean and the variance of food

prices. The abandonment of a quantity-rationed state marketing system with

administrative pricing also leaded to smaller inter-regional and inter-seasonal

differences in mean food prices and a sharp increase in price auto-correlation. Real

20
exchange rates have pronounced positive effects on mean food prices, but these

effects emerge indirectly, rather than directly, through induced changes to border

parity prices.

3.2 Partial Equilibrium Model

Partial equilibrium analysis is the starting point for analysis of agricultural

price policy. Agricultural price policy is a major instrument of government intervention

to enhance the welfare of farm households or contribution of economic development.

Schultz (1978) said that price distortions against agriculture have been blamed for the

stagnation of agriculture in LDCs. Sah and Stiglitz (1984) blamed that for the squeeze

on agricultural incomes.

Currie, Murphy, and Schmitz (1971) pointed out that the concept of consumer

surplus provides a measure of consumer welfare as the excess of the price the

consumer would be willing to pay for each unit consumed over the price which is

actually paid.

The supply and demand functions represent only part of the reaction to a

change in the price of the commodity being considered and so are referred to as

partial equilibrium models. When the commodity is important to the entire economy,

as a staple food grain or major export crop inevitably is to a developing country, these

partial equilibrium adjustments provide only an initial glimpse of the full adjustments

likely to occur when the price changes (Timmer 1986a).

Myoung and Lee (1988) evaluated the Korean market intervention system by

using partial equilibrium model. They estimated the elasticities for rice demand and

supply and calculated nominal protection coefficients (NPC), and were used to

calculate trade levels under the no intervention scenario. Then they compared actual

trade levels with those generated by the model. They found that producer welfare

gains were equivalent to US$3807.6 million and government revenues of US$25.6

million were earned as a result of intervention. However, consumers suffered an

overall loss of US$3945.2 million, and the net social welfare loss amounted to

21
US$418.4 million.

Using partial equilibrium model, Tamin and Meyanathan (1988) studied rice

market intervention system in Malaysia. They placed the demand and supply

elasticities at 0.2 and 0.3 respectively. They found that with the exception of 1974 and

1975 ‘no intervention’ supply balances show a decrease while consumption would

have increased (except 1974 and 1981). Efficiency losses generated by the system of

controls (deadweight losses) stood at M$141 million in 1974 and have tended to rise

over the 1980s. The foreign exchange cost to the nation (compared to intervention)

has been reduced by about M$190 million over 1980-86 due to the measures

enforced.

In Bangladesh, Rahman and Mahmud (1988) attempted to quantify the

benefits and costs of intervention using the partial equilibrium analysis approach.

They explored the adverse impact of higher food grain prices on the real incomes and

nutritional status of the poor, within the context of the macro-economic model of the

Bangladesh economy. Their results indicated that worker households carry most of

the burden of adjustment while large farmers enjoy the major income games.

However, the persistence of a downward trend in world grain prices has softened the

distributional impact of referencing domestic prices to border prices in the period

1982 to 1985.

Radhakrishna and Indrakant (1988) analysed the effects of rice market

intervention policies in Andhra Pradesh, India. They constructed variant of the partial

equilibrium model systematically. Their finding suggested that average producer

prices would fall from Rs.2910 to Rs.2400 per ton, while production within Andhra

Pradesh would fall by about half a million tons. The consequent loss in producer

revenue of Rs.6172 millions per year would be more than offset, though, by a cut in

government subsidy expenditures of Rs.2097 million and gains by all classes of

consumers.

Weerahewa (2004) examined the impacts of trade liberalization in

imperfectly markets in Sri Lanka. A partial equilibrium model was developed for the

22
paddy market in Sri Lanka, under oligopsony. Results revealed that losses to paddy

producers due to trade liberalization can be minimized if oligopsony power can be

eliminated simultaneously.

3.3 Analysis of Demand

The objective of analyzing individual consumer behaviour is to explain the

level of demand for the commodities an individual consumes given the structure of

relative prices faced, real income, and a set of individual characteristics such as age,

education, professional status, type of household to which he belongs, and

geographical environment (Sadoulet and Janvry 1995).

Schemes of income transfers to the poor would have a much smaller

nutritional impact and would require much larger transfers to achieve a quantum of

nutritional improvement. Behrman and Deolalikar (1990) argued this debate that

increases in income will not result in any significant improvements in nutrient intakes.

However, Strauss and Thomas (1990), and Subramanian and Deaton (1992) showed

that calorie elasticity is indeed lower than expenditure elasticity, but nevertheless

significantly positive.

The analysis of demand could suggest the determination for which

commodities to subsidize in order to minimize the budgetary cost of nutritional

improvement of the malnourished. To achieve this, an ideal commodity for distribution

is one consumed in large quantities by the poor and little by those with adequate diets,

thus minimizing leakages toward the latter (Timmer, Falcon, and Pearson, 1983).

Minot and Goletti (2000) estimated the linear approximation of the Almost

Ideal Demand System for Vietnamese urban and rural households by using regression

analysis. Their food system included the 14 food categories, and regression equations

explained between 54 and 71 percent of the variation in the budget share of rice

across households. They found that rice consumption is largely determined by the

fundamental economic factors such as income, prices, and household composition

rather than household specific habits and preferences.

23
 Weerahewa (2004) developed a demand function for cereals representing

rice, wheat and millet that are used in Sri Lanka diet. It was assumed that the utility

of cereal consumption is weakly separable from the utility derived from other

commodities. The results showed that all the elasticity estimates of demand with

respect to own prices have the expected negative sign and they are statistically

significant at one percent level.

3.4 Analysis of Supply

There are two ways to analyse a producer’s response. One is the

technological relation that exists between any particular combination of inputs and

the resulting levels of outputs; this is represented by the production function. The

other is the producer’s behaviour in choice of inputs, given the level of market prices

for a commodity and factors that can be traded, and the availability of fixed factors

whose quantity cannot be altered in the period of analysis (Sadoulet and Janvry

1995).

Nerlove (1956 and 1958) developed the supply response model, and called

Nerlovian Supply Response Model. He formulated the model in terms of yield, area, or

output response of individual crops, for instance, the desired area to be allocated to a

crop in period t is a function of expected relative prices and a number of shifters such

as private and public fixed factors and truly exogenous variables such as weather.

Cuddihy (1980) estimated a model of area response for the five major crops

of Egyptian agriculture: Egyptian clover, cotton, wheat, maize and rice. It was used

revenue per feddan (1 feddan=1.035 acres) of each crop deflated by a real wage

index. It was assumed that price and yield expectation are exogenous. The data had

26 annual observations, from 1950 to 1975. About one-third of the estimated

coefficients are significantly different from zero at the 5 percent level, and the

coefficient of determination indicated that a large part of observed variation in the

cultivated areas is explained by the model.

For the analysis of rubber supply in Sri Lanka, Hartley, Nerlove, and Peters

24
(1987) focused on the uprooting and replanting of trees as opposed to new plantings.

They specified a three equation model with replanting, production, and new plantings.

Their results showed a strong positive long-run response of replanting to variations in

the expected price and generally insignificant response to current price.

Haughton and et al (2004) estimated the rice supply for Vietnam in their

study of “the effects of rice policy on food self-sufficiency and on income distribution

in Vietnam” using Cobb-Douglas production function including sown area, the number

of labour used in cultivation and other variables such as the intensity of agricultural

extension activities, or the educational level of farmers. They found that the most

important determinant of rice output is the area of land cultivated. Their estimation

results indicated that if the wage rate rises by the equivalent of 1 kg of paddy rice per

day, or about 10 percent, then the quantity of rice will fall by 14 kg per household

(about 7 percent).

25
 CHAPTER 4
RICE PRODUCTION AND SUPPLY

4.1 Rice Production and its Characteristics

Myanmar is able to grow over more than 60 different crops since its

prevalence of different agroecological zones within the country. Among various crops,

cereal crops are main important crops constituting 50 percent of the total crop sown

area of 16.7 million hectares in 2003-04 (Figure 4.1). Rice as a national crop is grown

widely all over the country and throughout the year because of its adaptability to a

wide range of agroclimatic conditions. It could be divided into two rice cultivation

methods: dry upland and wet cultivation. The method for former one generally

practiced on the hillsides especially in the forest area. Shifting cultivation on the

hillside is almost replaced by dry land crop rotation system for subsistence production.

Figure 4.1 Percentage share of sown area for various crops

4% 1%
6%

Cereals
18% Oil crops
Peas and Beans
50%
Industrial Crops
Food crops
Plantation crop
21%

There are three distinct types in rice cultivation: partially submerged by

natural rainfall, partially submerged by irrigation in addition to rainfall, and deep

water submerged rice. Rice production in dry season is generally not feasible without

irrigation. Generally, little work and care is needed for rice cultivation in monsoon

26
season. The current major rice ecosystems include the traditional rain-fed that is

grown in monsoon season, deep water submerged rice, irrigated lowland rice and

rain-fed upland rice. Rain-fed lowland and deep water rice are mostly produced in the

lower delta region (Ayeyarwaddy and Bago), and the coastal region (Rakhine).

Rain-fed upland area is mostly in Mandalay, Sagaing and Shan states.

Irrigated rice is grown where irrigation system exists. It is not surprising that

the GOM is giving priority in constructing new dams, reservoirs and weirs in every

parts of the country where it is able to construct these because of the successful of its

neighbours such as Thailand and Vietnam. Summer paddy mainly depends on

irrigation. Net sown area and irrigated area in Myanmar is given in Table 4.1.

Table 4.1 Irrigated area in Myanmar

Year Net sown area Irrigated area Percentage

(million ha) (million ha)

1961-62 7.16 0.54 7.5

1971-72 7.96 0.89 11.2

1981-82 8.41 1.04 12.4

1991-92 8.34 1 12

1992-93 8.71 1.11 12.7

1993-94 8.74 1.34 15.3

1994-95 8.95 1.56 17.4

1995-96 9.17 1.76 19.2

1996-97 9.28 1.56 16.8

1997-98 9.28 1.59 17.2

1998-99 9.67 1.69 17.5

1999-2000 10.14 1.84 18.2

2000-2001 10.48 1.91 18.2

2001-2002 10.65 1.99 18.6

2002-2003 10.82 1.87 17.3

2003-2004 11.04 2.11 19.1

Source: DAP

Achievements in promoting higher rice production can be characterized by

27
three distinct programs launched by the MOAI: summer paddy production program,

expansion of HYVs, and paddy-fish integrated farming system. About two-thirds of the

summer paddy is produced in Ayeyarwaddy and Bago divisions.

4.2 Classification of Rice

The widely used and accepted method in Myanmar is the classification of five

rice groups, based on length/breadth ratio of rice grains (Table 4.2). Another

classification is based on life period from seeding to maturity. This system is adopted

by rice farmers since labour requirement is calculated on this system.

- Early mature varieties (less than 150 days)

- Medium mature varieties (between 150 and 170 days)

- Late mature varieties (exceeding 170 days).

Table 4.2 Dimension of paddy

Type of paddy Paddy Rice

Length (mm) Length/Breath Length (mm) Length/Breath

ratio ratio

Emata (A) type 9.41 and over 3.3 and over 7 and over 3 and over

Letywezin (B) type 8.40-9.80 2.80-3.30 6.00-7.00 2.40-3.00

Ngasein (C) type 7.75-9.00 2.40-2.80 5.60-6.40 2.00-2.40

Meedon (D) type 7.35-8.60 2.00-2.40 5.00-6.00 1.60-2.00

Byat (E) type 9.00 and over 2.25-3.00 6.40-7.35 2.10-2.50

Source: MAS

4.3 Cropping Pattern

Starting from 1992-93 and onwards, multiple cropping increased remarkably

since inception of favourable price incentives for some crops especially pulses and

increasing availability of water resources (Table 4.3). Cropping intensity of all field

28
crops with rice increased gradually from 107 percent in 1961-62 to 150 percent in

2003-04.

Table 4.3 Cropping intensity

Year Gross sown Net sown Multiple cropping Cropping intensity

('000 ha) ('000 ha) ('000 ha) (%)

1961-62 7694 7162 532 107.4

1971-72 9187 7962 1225 115.4

1981-82 10167 8413 1754 120.9

1991-92 10290 8339 1951 123.4

1992-93 11008 8714 2293 126.3

1993-94 11386 8738 2648 130.3

1994-95 12143 8951 3191 135.7

1995-96 12884 9168 3716 140.5

1996-97 12312 9277 3034 132.7

1997-98 12277 9578 2999 132.3

1998-99 13307 9673 3634 137.6

1999-2000 14805 10135 4669 146.1

2000-2001 15450 10476 4974 147.5

2001-2002 15845 10654 5191 148.7

2002-2003 16146 10818 5327 149.2

2003-2004 16624 11035 5589 150.6

Source: DAP

It could be noted that the factors contributed to higher cropping intensities are as

follows:

- Increased irrigation

- Increased use of HYVs or MVs with short growth duration

- Increased agricultural mechanization, and

- Higher crop prices, e.g. pulses, to make double cropping more profitable.

The present trend of multiple cropping could be summarized as follows:

29
- Growing a pre-monsoon crop before the main crop in rice growing area (jute,

cotton, sesame)

- Growing of some suitable crops after rice (summer paddy, groundnut, sunflower,

peas and beans)

- Growing of two suitable crops in successive on dry land with or without irrigation

(sesame, peas and beans, maize, etc)

- Mixed cropping of two crops with different life periods in the same field (sesame

and pigeon pea, groundnut and maize, etc).

In fact, rice can be grown and harvested somewhere every month of the year.

As shown in Table 4.4, December is largest harvest (about 39 percent of total), and

the three months from November to January contribute an additional about 25

percent of total production. Using 2003 production and an assumed consumption of

195 kg per capita, the rice deficit can be estimated on a monthly basis, shown in last

column of Table 4.4. The December generates a surplus of about 4.56 million tons,

while the months of February to October are the lean months. The largest deficit

(766520 tons in September) may be interpreted as rice storage requirement period

consistent with food security.

Table 4.4 Seasonal distribution of production and national rice gap

Month Production Rice equivalent Percent of annual National Rice

(metric ton) (metric ton) production gap (1000 mt)

January 1557969 934781.4 6.67 106.00

February 214704 128822.4 0.92 -699.93

March 418702 251221.2 1.79 -577.53

April 1274475 764685.0 5.45 -64.07

May 846654 507992.4 3.62 -320.76

June 634601 380760.6 2.72 -448.00

July 628670 377202.0 2.69 -451.55

August 295627 177376.2 1.27 -651.37

30
September 103712 62227.2 0.44 -766.52

October 1245122 747073.2 5.33 -81.68

November 7168955 4301373.0 30.68 3472.62

December 8978114 5386868.4 38.42 4558.12

Total 23367304 14020382.4 100.00 4061.41

Source: SLRD and owned estimation

Note: National rice gap refers to the gap between monthly production and monthly consumption, assuming

consumption of 195 kg per person per year (owned estimation).

4.4 Farm Size

Myanmar farms are relatively larger than other ASEAN countries (Vietnamese

average farm size is just 0.49 ha, Minot and Goletti 2000). The average agricultural

household has 2.3 ha of agricultural land (Table 4.5). According to agricultural census

in 1993 the number of rural households with no agricultural land is about 7 percent.

Out of total agricultural area (nearly 11 million ha), rice sown area is about 53 percent

of total sown area.

Table 4.5 Distribution of farm land holdings (2003-04)

Size of holding (ha) No of farmers Total land

Number Percent of Area Percent of

('000) total farmers (million ha) total land

Below 2 3135 63.04 3.13 27.36

2 to 4 1222 24.57 3.58 31.29

4 to 8 499 10.03 2.88 25.17

8 to 20 111 2.23 1.3 1.14

20 to 40 4 0.08 0.11 0.96

above 40.5 2 0.04 0.44 0.38

Total 4973 100 11.44 100

Source: SLRD

31
4.5 Cost of Production

The data for cost of production was obtained from MAS. The cost of

production will differ depending on the season and region. Among the purchased input,

urea is the most important, accounting for nearly 18 percent of total production. The

labour intensity of rice production also reflects variation in population densities. In the

table 4.6 for Ayeyarwady division (delta region), rice cultivation takes 153 man-days

per acre per season or more than 300 man days per hectare per season. It is relatively

higher than other ASEAN countries (Red River Delta in Vietnam has 246 man days per

hectare per season Pingali et al., 1998). That is because of farmers usually practice

transplant rice seedlings rather than broadcasting seeds to tolerate heavy rain. It,

however, takes labour consuming. In the case of fertilizer utilization, farmers in

Ayeyarwady division use 150 kg urea per hectare. The usage is relatively lower than

when comparing to Vietnam (more than 180 kg per hectare Minot and Goletti, 2000).

Also farmers in that region use FYM and bio composer to improve soil fertility.

Table 4.6 Cost of production for monsoon rice per acre for Ayeyarwady division (2003)

Cost component Rate (per acre) MMK/acre Percent of TCC

FYM 1 cart 4200 7.88

Seeds 2 baskets 2000 3.75

Pesticides 0.5 litre 1000 1.88

Urea 50 kg 8000 15.01

T-super 25 kg 2700 5.06

Potash 12.5 kg 1000 1.88

Bio composer 2 litre 2000 3.75

Hired labour 108 men day 32400 60.79

Family labour 45 men day 13500

Total cash cost 53300 100.00

Total cost 66800

Source: MAS

32
Ayeyarwady division has the highest profit than other states and divisions, and rice

production accounts two third of total production.

4.6 Constraints in Rice Production

The GOM is continually facing the problem of scarce public and private capital.

So, the GOM cut off the fertilizer subsidies to farmers in 1994. As Soe (1994a)

forecasted that of a reduction in the government’s current high expenditures to

maintain security and national stability and to support the subsidies of government

employees is considered highly unlikely in the immediate future was now become real

case in Myanmar. However, paddy production was increased although GOM has

limitations in government budget and shortages of foreign exchange reserves

because of expansion of irrigation facilities and expansion of agricultural land.

Because of these limitations, imported farm inputs such as fertilizer were inadequate

to the use of improved technology. The considerable another constraint might be the

overvalued official exchange rate for private investment particularly when imported

items are required.

On the other hand, the GOM also opened local markets for paddy farmers

after fulfilling compulsory delivery system to MAPT. So from 1990 onwards, it could be

seen farmers’ response to paddy price. In 2003, the GOM announced trade

liberalization in paddy/rice sector. But it was no longer, and again revoked the export

of rice. In respect of these factors, it’s still in question whether Myanmar rice sector

will grow rapidly or not although the country has rich capacity to potentially increase

rice production.

4.7 Conceptual Model for Supply Function

With given constraints in production as discussed in the previous section,

quantity of rice supply could be defined as follows:

___ ___

S r
= S r ( A,Y )

33
Where S r
= quantity of rice supply

___

A = rice sown area

___

Y = rice yield

From this equation, it could be obtained the price elasticity of output by summarizing

the elasticity of area and elasticity of yield with respect to price. Rice sown area is

depended on the following factors:

A = A (P , P , A
r r t −1 f
)
t −1

Where A = rice sown area

r

P t −1
= lagged rice price of paddy

P f
= Price of fertilizer

A t −1
= lagged rice sown area

Hypothesis 1: If paddy price is increased, rice sown area could be expected to

increase in coming year and vice versa.

Hypothesis 2: If the input price (fertilizer) is increased, rice sown area will be

decreased and vice versa.

Hypothesis 3: Present rice sown area depends on the lagged rice sown area.

34
The expected yield depends on the following factors:

Y = Y ( P , P , MV )
r r t −1 f

Where Y r
= the expected yield of rice

P t −1
= lagged price of rice

P f
= price of fertilizer

MV = area for modern and hybrid rice varieties

Hypothesis 1: The expected yield of rice is depends on the lagged price of rice. If the

price of rice is increased, it could be expected price will be increased or

the same price. According to favourable price, farmers may manage

well their rice fields, consequently yield might be increased and vice

versa.

Hypothesis 2: If the input price (especially of fertilizer) is increased, the expected

yield could be decreased since increase in the cost of production,

farmers may use lower rate of fertilizer and consequently yield may be

decreased, and vice versa.

Hypothesis 3: It could be expected if farmers use modern or hybrid rice varieties, yield

would be increased rather than the use of traditional varieties.

4.7.1 Empirical model of rice supply

In this section, regression analysis is used to examine the area response and

yield response functions. Area response function is as follows:

log At = α 0 + α 1 log Pt −1 + α 2 log Pf + α 3 log At −1 + u t

Where At is the rice sown area, Pt −1 is the lagged price of paddy, Pf is the

price of fertilizer At −1 is the lagged sown area, and u t

is the disturbance term.

35
 Yield response function is as follows:

log Yt = γ 0 +γ 1log Pt −1 + γ 2 log Pf + γ 3 log MVt + vt

Where Yt is the yield, Pt −1 is the lagged price of paddy, Pf is the price of

fertilizer, MVt is the area for modern varieties hybrid varieties, and vt is the
disturbance term.

4.7.2 Econometric Results

To estimate the elasticity for area response, yield response and supply, data

were collected from CSO, MAS and DAP. Price data were deflated by the general

consumer price index based on 1986 price. Supply elasticity is approximated with the

Table 4.7.Elasticity for area response, yield response and supply

Variables Area response Yield response Supply

R2 0.96 0.87

AdjR 2 0.94 0.83

Const 1.13*** 1.08***

(0.26) (0.224)

Pt −1 0.053** 0.006 0.059

(0.029) (0.037)

-0.13** -0.067** -0.197

Pf
(0.029) (0.044)

At −1 0.513*** 0.513

(0.106)

MVt 0.18** 0.18

(0.064)

***,**,* = significant at 1%, 5% and 10% respectively; figures in parentheses are

standard errors.

36
the summation of the elasticity of area response and yield response.

R 2 indicates that the model is fit both in area response and yield response.
It is 0.96 for area response and 0.87 for yield response. The estimated price elasticity

for area response function is significant at 5 percent level though its value is very

small (0.053). It could be said that there is a little response by farmers to price

changes after 1990. Hossain and Oo (1995) found that the regression coefficient of

rice price with respect to area and yield is not significant in their analysis from 1960 to

1991. Here the estimated price elasticity for yield response is not significant in this

analysis too.

The regression results indicate that paddy production is much depends on the

lagged area and the use of modern varieties or hybrid varieties. The elasticity lagged

area is 0.513 and it is strongly significant at 1 percent level. That means the

expansion of rice area much depends on the government’s program for the

agricultural development, not on the price. The elasticity for modern varieties is 0.18

and it is significant at 5 percent level. It is because of the government’s projection of

the rice production potential with increased technology (the use of MV and HYV).

It is found that the elasticity for main input (urea price) is significant both in

area response and yield response functions. It is -0.13 for area response and -0.067

for yield response, and both are significant at 5 percent level. Thus from 1990

onwards, there is a little response of farmers to input price.

37
 CHAPTER 5
PADDY/RICE MARKETING AND DEMAND

5.1 Paddy and Rice Marketing in Myanmar

Rice is staple food in Myanmar. Generally, rural consumption is higher than

urban consumption. Per capita consumption of rice is 129 kg in urban area, and 152

kg in rural area (CSO, 2001). Rice is consumed not only as rice, but also in the form

of various traditional foods. Based on household income and expenditure survey by

CSO, average per capita consumption is 159 kg. Monsoon rice in Delta region is

harvested from November to January, and summer rice is harvested from May to July.

In Central Dry zone, planting time depends on the feasibility of irrigation. Supply of

rice is related to the planting time and harvesting time. Marketing surplus of rice is

estimated based on CSO survey (Table 5.1). Though paddy is surplus for the whole

country, some regions such as Magway and Mandalay in the Central dry zone,

Tanintharyi division in Coastal region, and Shan state in the Mountainous region are

rice deficit areas. Thus rice is marketed from surplus to deficit areas.

Table 5.1 Marketable surplus of rice in Myanmar

Year Production Utilization Marketable surplus

Sown Yield Paddy Paddy (million Paddy Rice (million

(million ha) (ton/ha) (million mt) mt) (million mt)

mt)

1998 5.76 3.13 17.08 2.39 14.69 8.81

1999 6.28 3.24 20.13 2.82 17.31 10.39

2000 6.36 3.38 21.32 2.98 18.34 11.00

2001 6.45 3.42 21.92 3.07 18.85 11.31

2002 6.49 3.42 21.81 3.05 18.76 11.26

2003 6.54 3.54 23.14 3.24 19.90 11.94

Source: CSO and owned estimation

38
Note: Marketable surplus is calculated based on 60 percent milling capacity and 14 percent for seed and

losses.

5.2 Structure of Markets

This section describes the channels by which rice is marketed in Myanmar. It

covers from farm level marketing to retail market and exports (Figure 5.1 and 5.2).

5.2.1 Farm level marketing

Farmers mostly sell their paddy in their own villages or in their fields

or farms just after harvesting. But in some cases, a few farmers mill part of their

paddy using a small mill in their villages. Then, they consume themselves or sell rice

to traders or retailers or consumers in the nearby markets. Some farmer store their

crops as an expectation to get higher price and sell just before next season harvesting

time especially when the price is highest. But it depends on their financial situation

and expected price. Collectors purchase paddy from farmers starting from October to

January for monsoon paddy, and from May to July for summer paddy. Most of primary

collectors sell to millers but some sell to township wholesalers. Before 2003, farmers

have obligation to sell to MAPT about 10 to 15 percent as compulsory delivery system.

After selling to MAPT the extra paddy could be sell to market.

5.2.2 Milling sector

Three types of private mills can be categorized by small, medium and large.

Small mills with a capacity of 0.6 to 0.8 ton per hour are found in the rural areas and

play an important role. All private rice mills need to be registered with MAPT if they

have capacity of 0.6 metric ton per hour or more. Most private commercial mills have

a paddy milling capacity of 50 metric ton per day with a maximum of 70 metric ton per

day. Public mills also play an important role.

Because of new rice trading policy, government owned rice mills, storage

facilities, and lands can be rented by charges. Most millers buy paddy from farmers,

39
Figure5.1: Paddy-Rice Marketing Channels from 1990 to 2002

Farmers

Seed, storage for Excess paddy after Compulsory delivery

home consumption delivery to MAPT scheme to MAPT (10
to 15 baskets)

Primary collector MAPT mills

(milled for retail
markets)

Retail markets (small Target consumers at

amount) government
determined price

Wholesalers (milled Export monopolized by

at private and MAPT
government’s mills)

Traders (small
traders, retailers,
shopkeepers)

Domestic consumers

Remarks: Prices at the MAPT channels were at government determined prices, and
prices at private channels were at market prices.

40
Figure5.2: Paddy-Rice Marketing Channels from 2003

Farmers

Seed Primary collector Storage for home

consumption

Wholesalers

Traders

Domestic consumers

Government
procurement for
target groups

Traders can export if

there is surplus

Remarks: Prices will be at the prevailing market prices in all channels.

41
collectors, and sell the milled rice to traders. According to MAS, the average milling
capacity is nearly 60 percent. Before 2003, MAPT purchase paddy directly from
farmers with advanced payment or at government determined price for milling, and to
distribute target groups as milled rice and export surplus. But from 2004 harvest,
MAPT did not purchase directly from farmers. According to MAPT, there were 2189
registered mills with an estimate milling capacity of 50000 tons per day (Table 5.2).
Among this milling capacity, about 54 percent of milling capacity is used to process
rice at the farm level.

Table 5.2 Milling capacity of Myanmar rice mills

Milling capacity Number of mills Capacity

Type A 118 6988

Type B 159 5888

Type C 406 10799

Type D 1498 25907

Type E and F 8 385

Total 2189 49967

Source: MAPT

Type A has capability to process Super 5% rice.

Type B has capability to process Super 10% rice.

Type C has capability to process Super 25% rice.

Type D has capability to process Super 35% rice.

Type E and F has capability to process parboiled rice..

5.2.3 Wholesale marketing

Whole sale network can be classified into township wholesalers and market
wholesalers. Former plays inter-State/Division trade and mostly purchase from
collectors. Market wholesalers purchase from collectors, township wholesalers. They
sell mainly to retailers and other traders using 50 kg bags.

5.2.4 Domestic retail marketing

Retailers mostly purchase from wholesalers. A few retailers purchase from
millers and directly from farmers.

42
5.2.5 Export marketing
Government’s new rice trading policy has two-folds: removal of compulsory
quota delivery system for farmers and its replacement of purchasing paddy or rice
from millers or traders at prevailing market price, and lifting the ban on private export
of rice under certain circumstances. So, private traders can export rice if there is
surplus in the country. MAPT exported 0.1 million metric ton (approximately 60
percent of its purchase) in 2001-2002. According to MAPT estimates, it will purchase
around 70 percent of current volumes in future of which 40 percent will be reserved
for domestic sales and the other 30 percent reserved for buffer stock. MAPT will no
longer be in exporting rice in the future.

5.2.6 Quality of rice in domestic market

Rice can be classified into low, medium and high quality. These can be defined
by white colour, inert material and how much percent broken. It can be classified into
another way of old rice and new rice. Rice harvested in the previous season was stored,
and sell to the market is called old rice. New rice means milled rice of present season.
Moisture content is higher in the new rice than old rice. Consumers prefer old rice.
Traders also use their own brand. They use polyethylene bags.

5.2.7 Interregional trading

Myanmar is rice surplus for the whole country. But some regions are deficit
areas. Thus, rice is marketed among regions. The main markets and flow of rice
among markets are as follows:
- From Ayeyarwady division to Yangon division
- From Yangon Market to Mandalay and Tanintharyi markets
- From Mon state to Tanintharyi, Mandalay and Kayin markets
- From Ayeyarwady to Pakokku market in central dry zone by water way
- From Ayeyarwady to Pago (west)
- From Pyay to Magway market
- From Pyay to Shan (south) and Mandalay
- From Pago (east) to Shan (south)
- From Sagaing to Mandalay
- From Yangon market to all major markets
It could be seen Yangon and Mandalay markets are transit markets. Marketing system
is rather complex, and price depends on the quality, variety and consumers’
preferences.

43
5.3 Rice Demand
There are several reasons to get information on food and calorie consumption

patterns for the analysis of rice price policy. First, government intervention in food

policy aims at to improve the nutritional status of particular individuals and/or

households. Second, government tries to minimize budgetary constraints of

consumers to improve the welfare of particular household types. Third, information on

income and price elasticities is essential for the simulation of impact of policy changes

on rice markets. Fourth, with given production constraints in Myanmar, the

relationship between foreign exchange earning from rice export and rice consumption

is imminent debate to be sustainable for long term. Finally, there is a hot controversy

about the magnitude of the income elasticity of calorie intake compared with income

elasticity of food expenditures since other foods contribute to total calorie

consumption.

This chapter first describes the pattern in rice consumption. Then trend in rice

consumption and purchases across regions and household types are expressed.

Finally, an econometric analysis of rice demand and the effects of price and income

changes on calorie consumption are estimated.

5.3.1 Rice consumption across households

Rice consumption was measured at the household level carried out by CSO

for the household income and expenditure survey (HIES) in 1997 as nation-wide scale.

The HIES used a nationally representative sample of 5670 households scattered

across 36 townships. The survey collected information on income, expenditure,

housing, health, education, water supply, sanitation and so on.

According to HIES, rice is consumed by every households in Myanmar. It was

estimated that rice per capita monthly consumption to be about 11 kg for urban and

13 kg for rural Myanmar. Thus, per capita monthly consumption of rice for rural

Myanmar is more than 2 kg per month that of urban or 24 kg per year. Table 5.3 shows

per capita monthly consumption of rice.

44
 It was estimated that in all urban areas, per capita monthly consumption of

rice is more than 10 kg, the highest in Rakhine state about 15 kg, and the lowest in

Shan state about 11 kg. But in rural areas, per capita monthly consumption of rice is

more than 14 kg except Chin state about 11 kg, the highest in Rakhine state about 18

kg and the lowest in Chin state about 11 kg. Per capita monthly consumption of rice

for Yangon city is about 11 kg which is lower than that of Mandalay city about 13 kg.

Table 5.3 Monthly per capita consumption of rice in states and divisions

States and Divisions Rice (kg per monthly per capita)

Urban Rural

Kachin 11.69 14.76

Kayah 13.36 14.91

Kayin 10.88 13.95

Chin 12.31 11.20

Sagaing 12.48 15.68

Tanintharyi 11.82 15.76

Bago 10.97 15.59

Magway 14.23 14.36

Mandalay 12.31 14.33

Mon 14.08 16.15

Rakhine 14.61 18.32

Yangon 11.76 15.57

Shan 10.80 14.65

Ayeyarwady 13.12 14.95

Myanmar 11.18 13.21

Source: CSO

45
Table 5.4 Apparent rice consumption in Myanmar 1989-2002

Year Rice Production Rice production Net export of Population Apparent

(million mt) per capita rice (million (millions) consumption

(kg/capita) mt) (kg/capita)

1989 9.21 231 0.17 39.82 207

1990 9.32 230 0.22 40.51 210

1991 8.81 214 0.19 41.21 211

1992 9.90 236 0.20 41.93 214

1993 11.18 262 0.27 42.65 215

1994 12.14 280 0.94 43.38 216

1995 11.98 272 0.36 44.09 215

1996 11.79 263 0.93 44.80 215

1997 11.11 243 0.03 45.78 212

1998 11.39 247 0.12 46.19 216

1999 13.42 286 0.06 46.87 208

2000 14.22 299 0.25 47.54 207

2001 14.62 303 0.95 48.21 206

2002 15.19 311 0.91 48.85 205

Source: FAO

5.3.2 Trend in rice consumption

The only data on Myanmar rice consumption available for various years is

apparent rice consumption per capita (Table 5.4) from FAO, defined as net production

minus net exports minus losses, seed and feed divided by population. This rough data

provide an indicator of trends in rice consumption.

It is interesting to note that apparent per capita rice consumption is relatively

stable from 1989 to now. According to official data, per capita GDP increased about 7

46
percent annually over this period, it implies that the income elasticity of rice demand

is close to zero.

5.3.3 Determinants of rice demand

Regression analysis is used to determine systematically the determinants of

rice among Myanmar households. The log linear approximation of the rice demand

function is used to estimate the own price elasticity and income elasticity of rice. Thus,

the demand equation takes the following form:

x
log Qr = α 0 + α 1 log Pr + α i log Pi + β log + ut
p

Where Qr = quantity of rice demand

Pr = price of rice
Pi = price of other foods
X = the value of consumption expenditure per person

P = stone price index, and

ut = disturbance term.
The derivation of the demand function is given in appendix B. There is a series

of price for 6 food categories including rice described in Table 5.5. The independent

variables include per capita consumption expenditure (x/p), food prices ( Pi ) and price

of rice ( Pr ). The community prices are used for the heterogenous group of foods.

5.3.4 Results for rice demand analysis

Table 5.5 gives dependent and independent variables. In this regression

analysis, the quantity of rice consumed is used as a dependent variable, and the price

of rice, the price of meat, the price of fish, the price of cooking oil and fats, the price

of fruits and vegetables and the community price of other foods are dependent

variables.

47
Table 5.5.Dependent and Independent variables in model of rice demand

Variable Description Mean St. dev.

qr Rice quantity consumed 3.117 0.035

P1 Price of rice 3.841 0.839

P2 Price of meat 5.599 0.913

P3 Price of fish (fresh and dried) 6.000 0.988

P4 Price of cooking oil and fats 5.526 0.851

P5 Price of fruits and vegetables 4.274 0.923

P6 Community price of other foods 4.988 0.992

Y Total expenditure based on price of 1995 8.298 0.895

Source: Based on HIES (1997); all values are in logs

2
The value of R is 0.96, and it indicates that the regression equation

explains 96 percent. The result of the equation is as follows:

x
q r = 2.8 − 0.1 log p1 + 0.2 log p 2 − 0.2 log p 3 − 0.04 log p 4 − 0.04 log p 5 − 0.05 log p 6 + 0.12 log
( 0.21) ( 0.02 ) ( 0.06 ) ( 0.07 ) ( 0.02 ) ( 0.03) ( 0.02 ) ( 0.05 ) p

Figures in parentheses are standard errors. The own-price elasticity of rice demand

(-0.1) indicates that there is a very little response to the rice price and little

substitutability between rice and other foods. According to the regression result, it is

strange that there is a positive relationship between the price of meat and the

quantity of rice consumed. It might be because of the very low income of people, and

consumers want to choose meat rather than fish if the price of meat and fish would be

the same. The expenditure elasticity is statistically significant at 5 percent level and it

has a value of 0.12 reflecting that lower income of the people.

48
 CHAPTER 6
EVALUATION OF PRICING POLICY

Myanmar is a rice exporting country. The government practiced intervention

in rice marketing by using price as a wheel in production, consumption and export.

Timmer (1987) noted that “When it comes to the price of a basic necessity such as

food, few governments are willing to accept the outcome of a freely competitive

market without regard for the interests of a particular group”. Government of

Myanmar liberalized rice marketing both in domestic and international trade after its

intervention in rice marketing for a 40 years period. Thus, this paper focuses on the

evaluation of pricing policy in Myanmar from 1989 to 2003, and the impact of trade

liberalization though it is a short period. This has two interests: presently the

government is changing from centrally planned to market oriented-economy, and rice

policy is important to the 51 million inhabitants of Myanmar because rice expenditure

accounts for 15 to 20 percent of total expenditure and rice is grown by 53 percent of

total farms.

In this chapter, a partial equilibrium model is used to evaluate government’s

pricing policy. Elasticity of rice supply and demand is used in the model. This involves

comparing the volumes of production, consumption and export evident at intervention

prices with those that are consistent with a hypothetical no intervention outcome, and

evaluation of welfare for producers, consumers and government net gain from

intervention. Finally a brief epilogue is discussed for the initial impact of rice market

liberalization.

6.1 The Methodology

Agricultural price policy is a major instrument of government intervention,

with the goal of increasing the contributions of agriculture to economic development

or of enhancing the welfare of farm households. The government of Myanmar directly

involved rice marketing for several years through its agency (MAPT). MAPT’

49
involvement in trade and distribution to target groups is given in Appendices. GOM

procured 10 to 15 baskets from farmers at fixed price (lower than market price) on

production side, and on the consumption side, food subsidies to selected consumers

created heavy drain on government budgets. These distortions in agricultural and

food prices are debated political issues in Myanmar. This section examines the effects

of these price distortions by using partial equilibrium model. The model can be

explored as follows:

Myanmar could be considered as a case of small country since it consumed

large amount and the average volume of rice export is very small though export

quantity is high in some years. It could be assumed in the absence of government

intervention and no export, the price ( Pni ) will be determined at the intersection of
the national supply and demand schedules (Qni ) as in figure 6.1.

Supply

pb

p ni

Demand

q ni qb

Figure 6.1: No intervention and no export case

If the government opened the border and producers respond to an infinitely

elastic world market. Then production will expand to qb , and at the same time the

50
domestic prices will be raised and the domestic demand will suffer a considerable fall.

If it is assumed government procurement as an implicit tax on producers like

that ( pb − p d ) , to increase consumers’ welfare and its revenue, the producers will
adjust to the new price p d by reducing output to q d (Figure 6.2). Consequently,

producers will suffer a welfare loss of producers’ surplus. It includes payment of the

tax on the new level of output (rectangle a in Fig. 6.2) plus the deadweight loss

(triangle e in Fig. 6.2). Deadweight loss can be termed as the “efficiency” or “net

social loss” in production ( NSL p ) . It could be calculated as follows:

W p = qb ( p d − pb ) − NSL p

Supply

pb
a e

pd

Demand

qd qb

Figure 6.2: Producers’ welfare loss by implicit tax

The implicit tax on producers and the consequent reduction of the price will

benefit domestic consumers. Domestic consumption will increase from c b to c d (Fig.

6.3). It includes welfare gain for consumers (rectangle b in Fig. 6.3) plus the

consumer surplus (triangle c in Fig. 6.3). It could be termed as net social loss in

consumption ( NSLc ) which affects both domestic producers and foreign consumers.

51
Thus, consumers’ welfare could be calculated as follows:

Wc = c d ( pb − p d ) − NSLc

Supply

pb
b
c
pd

Demand

cb cd

Figure 6.3: Consumers’ welfare gain by implicit tax on producers

Total foreign exchange loss could be calculated by using partial equilibrium

framework (Figure 6.4). It consists of the payment that would made by

foreigners (qb − q d ) , and the loss of foreign exchange earnings for the quantity
diverted to domestic consumption (c d − cb ) . Thus it can be expressed as:
Change in FE = − p b (q b − q d + c d − cb )

The gain in government revenue (Figure 6.5) would be multiplication of the

new level of exports (after an implicit tax) with the unit tax rate ( pb − p d ) . It could be
calculated as:

Change in Government revenue = ( pb − p d )(q d − c d )

Finally, it could be calculated the total deadweight loss which is the

summation of NSL p and NSLc (Figure 6.6). Therefore, how much on the magnitude

52
of the net social loss from the market distortion of paddy/rice commodity depends on

the elasticity of national supply and elasticity of domestic demand.

Supply
pb

pd

Demand

cb cd qd qb

Figure 6.4: Change in FE by an implicit tax

Supply
pb
d

pd

Demand

cd qd

Figure 6.5: Gain in government revenue by an implicit tax

53
 Supply
pb
c e

pd

Demand

cb cd qd qb

Figure 6.6: Total deadweight loss by an implicit tax

To measure the efficiency, welfare, government revenue, and balance of

trade effects for quantitative analysis, the following should be used:

pb = border price
qb = quantity produced at the border price
cb = quantity consumed at the border price
E S = elasticity of supply
E D = elasticity of demand
Imposition of an export tax (implicit) changes the domestic price level and

the quantities produced and consumed to:

p d = domestic price after tax

q = quantity produced after tax

c = quantity consumed after tax
t = export rate of protection

Then, the net social loss in production ( NSL p ), equal to triangle e in Fig. 6.2, can be

measured as:

54
 1
NSLP = (qb − q d )( pb − p d )
2
1 q − qb pb qb
NSL p = − ( d ) ( p d − pb )( pb − p d )
2 p d − pb qb pb
1 p − pb 2
= ES ( d ) pb qb
2 pb
1
= E S t 2 pb qb
2
Where, t = NRP = NPC − 1 = ( p d / pb ) − 1
In a similar fashion, it could be obtained net social loss in consumption:

1
NSLc = − E D t 2 pb cb
2

6.2 Effects of Government Intervention

In this section, it is analyzed the effects of price intervention that can distort

producer incentives and influence the efficiency of resource allocation. The task

involves get the picture of supply-demand conditions under no-intervention scenario

by eliminating of price distortions. Firstly, border prices are set as reference points

which are the international prices of a tradable commodity at the country’s border.

Second, by using the border prices it is calculated welfare effects of price intervention

employing abovementioned methodology.

6.2.1 Effects of price interventions

Nominal protection coefficient (NPC) is the simplest indicator of price

distortion that is equal to the ratio of the domestic price of a commodity to its border

price. NPC greater than one means producers are protected and consumers are taxed,

less than one means producers are taxed and consumers are subsidized, and unity

means the protection is neutral. Otherwise, NPC which is greater than unity implies

that protective measures have been applied to encourage the domestic production of

the commodity, while NPC smaller than unity means that taxation measures

discriminate against the domestic production of the commodity in question.

55
Table 6.1.Market exchange rate, consumers and producer price series (1990-2004)

Year Market exchange Producer price (A) Consumer Price (B) B/A

rate (MMK/US$) (MMK/mt) (MMK/mt)

1990 100.00 2256.00 4660.00 2.07

1991 100.00 2256.00 5100.00 2.26

1992 100.00 2256.00 8980.00 3.98

1993 100.00 3360.00 15880.00 4.73

1994 100.00 3360.00 14820.00 4.41

1995 104.00 3840.00 21900.00 5.70

1996 146.83 6720.00 23740.00 5.53

1997 210.42 16229.76 23920.00 1.47

1998 313.83 15600.00 35480.00 2.27

1999 340.67 15600.00 46720.00 3.00

2000 374.83 15600.00 39780.00 2.55

2001 619.75 15600.00 40420.00 2.59

2002 923.42 50194.56 89154.70 1.78

2003 982.44 74985.12 127215.40 1.70

2004

Source: Various companies, MAS, CSO and owned estimation

There are two kinds of NPCs depending upon which domestic prices are used.

If farm-gate prices are used to calculate, it would be NPC for producers, and if the

wholesale prices are used, it would be NPC for consumers. Subtracting 1 from NPC

yields a nominal protection rate (NPR). NPR greater than zero means producers are

protected and consumers are taxed; NPR less than zero means that producers are

taxed and consumers are subsidized. Thus, if NPC greater than one or NPR greater

than zero implies that producers receive a price which, after direct interventions, is

above the border price, giving producers incentives to produce more of the commodity

that if the equilibrium prices prevailed.

Table 6.1 gives the market exchange rate, producer prices and consumer

56
price series from 1990 to 2004. There are two parallel markets for exchange rate in

Myanmar; official and unofficial (market exchange rate) rates. In this analysis, market

exchange rate is used because of the official exchange rate is extremely overvalued.

FOB export prices are used as border prices for Myanmar since Myanmar is exporting

country. Producer, consumer and border prices of rice are presented in Table 6.2.

Table 6.2.Producer, consumer and border prices for rice (US$/mt)

Year Producer price Consumer price Border price to Border price to

producers consumers

1990 22.56 46.60 186.00 213.90

1991 22.56 51.00 199.00 228.85

1992 22.56 89.80 181.00 208.15

1993 33.60 158.80 147.00 169.05

1994 33.60 148.20 163.00 187.45

1995 36.92 210.58 178.00 204.70

1996 45.77 161.68 194.00 223.10

1997 77.13 113.68 194.00 223.10

1998 49.71 113.05 199.00 228.85

1999 45.79 137.14 169.00 194.35

2000 41.62 106.13 151.00 173.65

2001 25.17 65.22 139.00 159.85

2002 54.36 96.55 128.00 147.20

2003 76.33 129.50 128.00 147.20

2004

Note: Border price to consumers is the border price to producer plus a 15 percent mark-up for

intermediate handling costs.

The resulting NPC and NPR for producers and consumers are given in Table

6.3. The developed countries such as US and EEC have paid their producers as much

as five times the world price for sugar; and Japan pays on average about 2 and 1/2

times the world price (Tyres and Anderson, 1986). Since Myanmar is a developing

57
country, with NPCs less than one or (negative NPRs) not uncommon. For example, the

NPC in 1995 is 0.21, and it implies that the commodity is taxed at a 79 percent rate.

It could be seen taxation on the paddy/rice in commodity is declined from 2002

onwards, but it is still in a higher tax rate position. For example, NPC for 2003 is 0.60

implies that the commodity is taxed at a 40 percent rate to producers. Government

subsidized fertilizers up to 1994 at a rate less than market price. So higher tax rate for

this period is acceptable while 1994 onwards it was an unreasonable policy. One

probable reason would be the GOM is constructing many irrigation projects as an

agricultural development program, and the farmers have no charges on water

utilization.

Table 6.3.NPC and NPR for producers and consumers (1990-2004)

Year NPCp NPCc NPR p NPRc

1990 0.12 0.22 -0.88 -0.78

1991 0.11 0.22 -0.89 -0.78

1992 0.12 0.43 -0.88 -0.57

1993 0.23 0.94 -0.87 -0.06

1994 0.21 0.79 -0.79 -0.21

1995 0.21 1.03 -0.79 0.03

1996 0.24 0.72 -0.76 -0.28

1997 0.40 0.51 -0.60 -0.49

1998 0.25 0.49 -0.75 -0.51

1999 0.27 0.71 -0.73 -0.29

2000 0.28 0.61 -0.72 -0.39

2001 0.18 0.41 -0.82 -0.59

2002 0.42 0.66 -0.38 -0.34

2003 0.60 0.88 -0.40 -0.12

2004

Source: Owned estimation

58
6.2.2 Partial equilibrium analyses of rice market intervention

By using the standard partial equilibrium framework, the effects of

government intervention on the rice market have been derived. To calculate trade

levels under the ‘no intervention scenario’, the computed NPC p , NPC c and the

estimated elasticities for national rice demand and supply are used. Then the

apparent effects of intervention are determined by comparing actual trade levels with

those generated by the model. In Myanmar, consumer price is always greater than

producer price. Border price is greater than that both of producer and consumer prices

except in 1993, 1995 and 2003 for which that of consumer price is higher than border

price.

The overall results of the partial equilibrium analyses are shown in Table 6.4

and 6.5 from 1990 to 2004. It has been evaluated the price intervention effects

calculating the welfare trade-off between consumers and producers, changes in

government revenue and expenditures, net social efficiency losses, and changes in

the foreign exchange balance. The welfare trade-off depends on the intervention and

border prices of rice using the price elasticities of national demand and supply. The

nominal protection coefficient on output is at a maximum in 2003 indicating that

decrease in price distortion though it is still high. From 1990 onwards even though the

producer loss is decreasing, the welfare for producer loss in 2002 is US$ 1029.95

million. In that year the government gained US$ 523.35 million as a result of

intervention. Consumers also gained US$ 372.98 million. The net social welfare loss

(total deadweight loss) amounted to US$ 76.38 million. But in 1993 and 1995 in which

the consumer price was higher than that of border price, both of consumers and

producers suffered losses. For producers it was US$ 1310.19 million and for

consumers it was US$ 113.29 million in 1993; and it was US$ 1777.03 million and

US$ 334.23 million for producers and consumers, respectively. But the government

gained US$ 1242.23 million in 1993 and US$ 1852.77 million in 1995. For the overall

study period from 1990 to 2003, net social loss summed up to US$ 4.31 billion.

59
6.2.3 Simulations

To quantify the effects of a few likely scenarios and policy changes because

the government of Myanmar liberalized the rice market from 2003, though it was

revoked for the export market, but in a nearly future it is expected to open the

international market like as domestic market_ the base case model is calibrated for

three cases from 2006 to 2010. These are summarized in scenarios 1-3.

Scenario 1: The assumptions employed in this scenario are:

(1) Production increase by 1 percent per annum over the 2003 level of 13.9

million metric tonnes.

(2) Export to be expected about 0.5 million metric tonnes.

(3) FOB price of Myanmar rice to be maintained at US$ 130 per metric ton.

(4) Marketing margin is assumed to be 15 percent.

The resulting outcomes are shown in Table 6.6. In this analysis, it was assumed for

the year of 2004 and 2005 is the same as 2003 because of getting data is difficult.

Under such assumptions, consumers continue to gain but the magnitude of the gain

($ 206 million) is less than before 2002 except in 2003, 2004 and 2005. Producers are

still to be lost on the other hand but its magnitude in lost is much lower than before

2002. The net gain for government is about $ 207 million. Total deadweight loss

expected to be declined from $ 76 million in 2002 to $ 8 million in 2010.

Scenario 2: The assumptions employed in this scenario are:

(1) Production increase by 1.5 percent per annum over 2003 level of 13.9

million metric tonnes.

(2) Export to be increased about 1 million metric tonnes.

(3) Myanmar’s FOB price of rice to be maintained at US$ 130 per metric ton.

(4) Marketing margin is assumed to be 15 percent.

Compared to the previous scenario, the resulting impacts indicates that a

significant decrease in producer loss from $ 1 billion in 2002 to only $ 75 million in

60
2010. However, consumers will be lost on the other hand by about $ 190 million in

2010. Net effect expected to be declined to $ 1 million comparing to the previous case.

Scenario 3: The assumptions employed in this scenario are:

(1) Production increase by 2 percent per annum over 2003 level of 13.9

million tonnes.

(2) Export to be increased about 1.5 million metric tonnes.

(3) Myanmar’s FOB price of rice to be maintained at US$ 130 per metric ton.

(4) Marketing margin is assumed to be 15 percent.

Different from the previous two scenarios, producers expected to be gained in this

case. Producers will be gained about $ 300 million in 2010. Consumers expected to be

lost about $ 600 million on the one hand. Conversely change in foreign will be started

to declined in this case. Total deadweight lost is expected to be greater than scenario

2. However government still to be gained as in the previous two cases.

61
Table 6.4.Partial equilibrium effects of rice price intervention in Myanmar (1990-1996)

Assumptions 1990 1991 1992 1993 1994 1995 1996

Elasticity of Supply 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Elasticity of Demand -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1

Production ('000 mt) 8428.98 7795.74 8761.8 9897 11109.42 10601.76 10438.2

Net Export ('000 mt) 216 199 201 265 1025 358 93

Apparent Domestic Consumption ('000 mt) 8212.98 7596.74 8560.8 9632 10084.42 10243.76 10345.2

Border price to producer (Pb) US$/mt 186 199 181 147 163 178 194

Producer price (Pp) US$/mt 22.56 22.56 22.56 33.6 33.6 36.92 45.77

Consumer price (Pc) US$/mt 46.6 51 89.8 158.8 148.2 210.58 161.68

NPCp 0.12 0.11 0.12 0.23 0.21 0.21 0.24

NPCc 0.22 0.22 0.43 0.94 0.79 1.03 0.72

Shift to No Intervention

Movement from Pp to Pb (%) 733.33 809.09 733.33 334.78 376.19 376.19 316.67

Movement from Pc to Pb (%) 354.55 354.55 132.56 6.38 26.58 -2.91 38.89

Increase/Decrease in output ('000mt) 6181.25 6307.46 6425.32 3313.34 4179.26 3988.28 3305.43

Increase/Decrease in consumption ('000mt) -2911.87 -2693.39 -1134.80 -61.48 -268.07 29.84 -402.31

Supply ('000mt) 14610.23 14103.20 15187.12 13210.34 15288.68 14590.04 13743.63

Demand ('000mt) 5301.11 4903.35 7426.00 9570.52 9816.35 10273.60 9942.89

Export 9309.13 9199.85 7761.12 3639.82 5472.32 4316.44 3800.74

Intervention outcome

Supply ('000mt) 8428.98 7795.74 8761.80 9897.00 11109.42 10601.76 10438.20

62
 Demand ('000mt) 8212.98 7596.74 8560.80 9632.00 10084.42 10243.76 10345.20

Export 216.00 199.00 201.00 265.00 1025.00 358.00 93.00

Results

Producer gain ($ million) -1882.76 -1931.92 -1897.23 -1310.19 -1707.96 -1777.03 -1792.24

Consumer gain ($ million) 941.93 925.01 729.00 -113.29 147.27 -334.23 327.86

Government Exp/Rev ($ million) 172.52 192.26 570.81 1242.23 1257.97 1852.77 1206.89

Change in foreign exchange ($ million) 1691.32 1791.17 1368.38 496.10 724.91 704.60 719.30

Efficiency loss in production ($ million) 505.13 556.44 509.01 187.87 270.40 281.33 244.98

Efficiency loss in consumption ($ million) 202.96 199.31 51.75 -0.36 1.98 0.49 6.50

Total deadweight loss ($ million) 708.09 755.76 560.76 187.50 272.38 281.82 251.48

Table 6.5.Partial equilibrium effects of rice price intervention in Myanmar (1997-2003)

Assumptions 1997 1998 1999 2000 2001 2002 2003

Elasticity of Supply 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Elasticity of Demand -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1

Production ('000 mt) 9834.72 10084.68 11884.8 12592.14 12941.52 13083 13881.6

Net Export ('000 mt) 29 122 55 254 949 910 44

Apparent Domestic Consumption ('000 mt) 9805.72 9962.68 11829.8 12338.14 11992.52 12173 13837.6

Border price to producer (Pb) US$/mt 194 199 169 151 139 128 128

Producer price (Pp) US$/mt 77.13 49.71 45.79 41.62 25.17 54.36 76.33

Consumer price (Pc) US$/mt 113.68 113.05 137.14 106.13 65.22 96.55 129.5

63
 NPCp 0.4 0.25 0.27 0.28 0.18 0.42 0.6

NPCc 0.51 0.49 0.71 0.61 0.41 0.66 0.88

Shift to No Intervention

Movement from Pp to Pb (%) 150.00 300.00 270.37 257.14 455.56 138.10 66.67

Movement from Pc to Pb (%) 96.08 104.08 40.85 63.93 143.90 51.52 13.64

Increase/Decrease in output ('000mt) 1475.21 3025.40 3213.30 3237.98 5895.58 1806.70 925.44

Increase/Decrease in consumption ('000mt) -942.12 -1036.93 -483.19 -788.83 -1725.75 -627.09 -188.69

No Intervention outcome

Supply ('000mt) 11309.93 13110.08 15098.10 15830.12 18837.10 14889.70 14807.04

Demand ('000mt) 8863.60 8925.75 11346.61 11549.31 10266.77 11545.91 13648.91

Export 2446.33 4184.34 3751.49 4280.81 8570.33 3343.79 1158.13

Intervention outcome

Supply ('000mt) 9834.72 10084.68 11884.80 12592.14 12941.52 13083.00 13881.60

Demand ('000mt) 9805.72 9962.68 11829.80 12338.14 11992.52 12173.00 13837.60

Export 29.00 122.00 55.00 254.00 949.00 910.00 44.00

Results

Producer gain ($ million) -1235.59 -1731.37 -1662.28 -1554.41 -1808.68 -1029.95 -741.17

Consumer gain ($ million) 749.76 811.73 369.20 535.91 821.15 372.98 -20.61

Government Exp/Rev ($ million) 357.13 628.28 1083.92 800.92 448.29 523.35 738.15

Change in foreign exchange ($ million) 468.96 808.40 624.71 608.05 1059.37 311.53 142.61

Efficiency loss in production ($ million) 86.20 225.83 197.96 177.09 335.55 66.52 23.91

Efficiency loss in consumption ($ million) 37.84 44.56 7.70 17.70 63.66 9.86 -0.14

Total deadweight loss ($ million) 124.04 270.39 205.65 194.78 399.21 76.38 23.77

64
Table 6.6.Scenario 1

Assumptions 2004 2005 2006 2007 2008 2009 2010

Elasticity of Supply 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Elasticity of Demand -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1

Production ('000 mt) 13881.6 13881.6 14020.42 14160.62 14302.23 14445.25 14589.7

Net Export ('000 mt) 44 44 0.5 0.5 0.5 0.5 0.5

Apparent Domestic Consumption ('000 mt) 13837.6 13837.6 13837.6 13837.6 13837.6 13837.6 13837.6

Border price to producer (Pb) US$/mt 128 128 130 130 130 130 130

Producer price (Pp) US$/mt 76.33 76.33 100 100 100 100 100

Consumer price (Pc) US$/mt 129.5 129.5 115 115 115 115 115

NPCp 0.6 0.6 0.77 0.77 0.77 0.77 0.77

NPCc 0.88 0.88 0.88 0.88 0.88 0.88 0.88

Shift to No Intervention

Movement from Pp to Pb (%) 66.67 66.67 29.87 29.87 29.87 29.87 29.87

Movement from Pc to Pb (%) 13.64 13.64 13.64 13.64 13.64 13.64 13.64

Increase/Decrease in output ('000mt) 925.44 925.44 418.79 422.98 427.21 431.48 435.80

Increase/Decrease in consumption ('000mt) -188.69 -188.69 -188.69 -188.69 -188.69 -188.69 -188.69

No Intervention outcome

Supply ('000mt) 14807.04 14807.04 14439.21 14583.60 14729.44 14876.73 15025.50

Demand ('000mt) 13648.91 13648.91 13648.91 13648.91 13648.91 13648.91 13648.91

Export 1158.13 1158.13 790.31 934.69 1080.53 1227.83 1376.59

Intervention outcome

Supply ('000mt) 13881.60 13881.60 14020.42 14160.62 14302.23 14445.25 14589.70

65
 Demand ('000mt) 13837.60 13837.60 13837.60 13837.60 13837.60 13837.60 13837.60

Export 44.00 44.00 0.50 0.50 0.50 0.50 0.50

Results

Producer gain ($ million) -741.17 -741.17 -426.89 -431.16 -435.48 -439.83 -444.23

Consumer gain ($ million) -20.61 -20.61 206.15 206.15 206.15 206.15 206.15

Government Exp/Rev ($ million) 738.15 738.15 207.56 207.56 207.56 207.56 207.56

Change in foreign exchange ($ million) 142.61 142.61 78.97 79.52 80.07 80.62 81.18

Efficiency loss in production ($ million) 23.91 23.91 6.28 6.34 6.41 6.47 6.54

Efficiency loss in consumption ($ million) -0.14 -0.14 1.42 1.42 1.42 1.42 1.42

Total deadweight loss ($ million) 23.77 23.77 7.70 7.76 7.82 7.89 7.95

Table 6.7.Scenario 2

Assumptions 2006 2007 2008 2009 2010

Elasticity of Supply 0.1 0.1 0.1 0.1 0.1

Elasticity of Demand -0.1 -0.1 -0.1 -0.1 -0.1

Production ('000 mt) 14089.82 14301.17 14515.7 14733.44 14954.44

Net Export ('000 mt) 1 1 1 1 1

Apparent Domestic Consumption ('000 mt) 13837.6 13837.6 13837.6 13837.6 13837.6

Border price to producer (Pb) US$/mt 130 130 130 130 130

Producer price (Pp) US$/mt 125 125 125 125 125

Consumer price (Pc) US$/mt 143.75 143.75 143.75 143.75 143.75

NPCp 0.96 0.96 0.96 0.96 0.96

NPCc 1.11 1.11 1.11 1.11 1.11

66
 Shift to No Intervention

Movement from Pp to Pb (%) 4.17 4.17 4.17 4.17 4.17

Movement from Pc to Pb (%) -9.91 -9.91 -9.91 -9.91 -9.91

Increase/Decrease in output ('000mt) 58.71 59.59 60.48 61.39 62.31

Increase/Decrease in consumption ('000mt) 137.13 137.13 137.13 137.13 137.13

No Intervention outcome

Supply ('000mt) 14148.53 14360.76 14576.18 14794.83 15016.75

Demand ('000mt) 13974.73 13974.73 13974.73 13974.73 13974.73

Export 173.80 386.03 601.45 820.10 1042.02

Intervention outcome

Supply ('000mt) 14089.82 14301.17 14515.70 14733.44 14954.44

Demand ('000mt) 13837.60 13837.60 13837.60 13837.60 13837.60

Export 1.00 1.00 1.00 1.00 1.00

Results

Producer gain ($ million) -70.60 -71.65 -72.73 -73.82 -74.93

Consumer gain ($ million) -191.21 -191.21 -191.21 -191.21 -191.21

Government Exp/Rev ($ million) 267.65 274.52 281.49 288.57 295.75

Change in foreign exchange ($ million) -10.19 -10.08 -9.96 -9.85 -9.73

Efficiency loss in production ($ million) 0.15 0.15 0.15 0.15 0.16

Efficiency loss in consumption ($ million) 0.94 0.94 0.94 0.94 0.94

Total deadweight loss ($ million) 1.09 1.09 1.09 1.10 1.10

67
Table 6.8.Scenario 3

Assumptions 2006 2007 2008 2009 2010

Elasticity of Supply 0.1 0.1 0.1 0.1 0.1

Elasticity of Demand -0.1 -0.1 -0.1 -0.1 -0.1

Production ('000 mt) 14159.23 14442.41 14731.26 15025.9 15326.42

Net Export ('000 mt) 1.5 1.5 1.5 1.5 1.5

Apparent Domestic Consumption ('000 mt) 13837.6 13837.6 13837.6 13837.6 13837.6

Border price to producer (Pb) US$/mt 130 130 130 130 130

Producer price (Pp) US$/mt 150 150 150 150 150

Consumer price (Pc) US$/mt 172.5 172.5 172.5 172.5 172.5

NPCp 1.15 1.15 1.15 1.15 1.15

NPCc 1.33 1.33 1.33 1.33 1.33

Shift to No Intervention

Movement from Pp to Pb (%) -13.04 -13.04 -13.04 -13.04 -13.04

Movement from Pc to Pb (%) -24.81 -24.81 -24.81 -24.81 -24.81

Increase/Decrease in output ('000mt) -184.69 -188.38 -192.15 -195.99 -199.91

Increase/Decrease in consumption ('000mt) 343.34 343.34 343.34 343.34 343.34

68
 No Intervention outcome

Supply ('000mt) 13974.54 14254.03 14539.11 14829.91 15126.51

Demand ('000mt) 14180.94 14180.94 14180.94 14180.94 14180.94

Export -206.39 73.09 358.17 648.97 945.57

Intervention outcome

Supply ('000mt) 14159.23 14442.41 14731.26 15025.90 15326.42

Demand ('000mt) 13837.60 13837.60 13837.60 13837.60 13837.60

Export 1.50 1.50 1.50 1.50 1.50

Results

Producer gain ($ million) 281.34 286.96 292.70 298.56 304.53

Consumer gain ($ million) -595.39 -595.39 -595.39 -595.39 -595.39

Government Exp/Rev ($ million) 332.25 350.66 369.43 388.59 408.12

Change in foreign exchange ($ million) -68.64 -69.12 -69.61 -70.11 -70.62

Efficiency loss in production ($ million) 1.85 1.88 1.92 1.96 2.00

Efficiency loss in consumption ($ million) 7.30 7.30 7.30 7.30 7.30

Total deadweight loss ($ million) 9.14 9.18 9.22 9.26 9.30

69
 CHAPTER 7
CONCLUSIONS

Historically Myanmar rice sector showed rather complex. The results indicate

that rice production responded to the 1990s contract system and advanced payment

system as an unsuccessful implementation. Even though the system is in question,

the production area was increased under the government program for area expansion.

Government intervened in the market by using price as a wheel. On production side

the government set a price (predetermined price) well below the market price. On the

consumption side, some target group of consumers were subsidized. This intervention

system made the government to use huge amount of government budget. All

combined forces in the economy pushed the government to liberalize the rice market

eventually in 2003. But this was not longer. It was revoked in 2004 for export market

unexpectedly though domestic trading would be freed.

So what has been the effect of this intervention system? It is usually argued

about liberalization but not on the previous history. From 1990 onward who bear the

burden of government policy testing? Who gained in the government’s game? There

were no clear estimates of these effects over time. This study uses a partial

equilibrium model to evaluate the impact of government’s pricing policy focusing in

particular on the effects of welfare for producers and consumers from 1990 to 2003.

The results indicate that producers are losers and hurt the rural people who especially

grow rice. At the same time consumers get benefit from the intervention almost every

year except in 1993, 1995 and 2003. The model also highlights that the impact of

intervention depends on the elasticity of national supply and demand.

Nominal protection coefficients (NPC) indicate that government made

70
heavy tax on producers. For example NPC in 1995 is 0.21 means that the commodity

(rice) is taxed at a 79 percent rate. Even in 2003, NPC for producers (0.66) indicate

that producers are still heavily taxed of 34 percent. NPC is the simplest indicator of

government pricing policy distortion. It could be imagined how much burden of lost

burdened on the producers by seeing this simplest indicator.

Moreover the study evaluates the welfare for producers, consumers, net

treasury gain for the government, change in foreign exchange and deadweight loss by

using a partial equilibrium framework. The welfare trade-off depends on the

intervention and border prices of rice using the price elasticity of national demand and

supply. It was found that NPC is declining (price distortion is decreasing) from 1990

gradually though the protection rate is still higher even in 2003. The welfare for

producer loss in 2003 is US$ 741 million. Consumers gained from intervention except

in 1993, 1995 and 2003 on the other hand. For the study period from 1990 to 2003,

net social loss summed up to US$ 4.31 billion.

Policy Implication

GOM is now moving to liberalize rice markets. In April 2003 restrictions on the

internal movement of rice and export market were opened. Unexpectedly, however,

export market was revoked again in 2004. So the impact of trade liberalization is still

unclear. It is heard that military is now closed the movement of rice from Ayeyarway

and Bago divisions (main rice growing regions) for the sake of military stock while it is

writing this conclusion (beginning of 2006). So its policy context is rather complex. Its

71
decision seems to be irrational. But from the study point, the following implications

would be suggested. According to the simulation results, the future growth of rice

sector depends on the rice export. In turn effective marketing system with

information transparency should be developed in order to expand rice market. In

order to develop such a system private sector’s participation is important. But there

will be some constraints of credit and information. More generally, support from the

government and credibility of government’s announcement are the key factors to be

able to create such an effective system.

As partial equilibrium analysis is only suitable for overall results it should be

carried out other research for regional and distributional dimensions in the analysis of

policy reform. Multi-markets at different regions should be considered to identify and

quantify the trade-off between regions and groups. For all round development of

agriculture sector it is better to study a chain of policy rather than only focusing on

food policy.

72
 References
Anderson, Kym. Hayami, Yujiro, and others. 1986. The Political Economy of

Agricultural Protection. Allen and Unwin, Sydney, London and Boston.

Barrett, C.B. and Dorosh, P.A. 1996. Farmers’ Welfare and Changing Food Prices:

non-parametric evidence from rice in Madagascar. American Journal of Agricultural

Economics. 78 (August 1996): 656-669.

Barrett, C.B. 1997. Liberalization and Food Price distributions. ARCH-M evidence from

Madagascar. Food Policy, Vol. 22, No. 2, pp. 155-173, 1997.

Behrman, Jere, and Anil Deolalikar. 1990. The Intrahousehold Demand for Nutrients in

Rural South India: Individual estimates, Fixed effects, and Permanent Income.

Journal of Human Resources 25, 665-96.

Cuddihy, William. 1980. Agricultural Price Management in Egypt. Staff working paper

No. 388. Washington, D.C.: World Bank.

Currie, J. John Murphy, and Andrew Schmitz. 1971. The Concept of Economic Surplus

and Its Use in Economic Analysis. Economic Journal 18: 741-98.

Deaton, A. 1989. Rice Prices and Income Distribution in Thailand: A non-parametric

analysis. The Economic Journal, Vol. 99, No. 395, Supplement: Conference Papers

1989, 1-37.

Diven, P.J. 2001. The Domestic Determinants of US Food Aid Policy. Food Policy 26,

2001: 455-474.

Dorosh, Paul, and Shahabuddin, Quazi. 2002, Rice Price Stabilization in Bangladesh:

An analysis of policy options, MSSD discussion paper no. 46, IFPRI.

Hartley, Micheal, Marc Nerlove, and Kyle Peters. 1987. Analysis of Rubber Supply in

Sri Lanka. American Journal of Agricultural Economics 69: 755-61.

Haughton, J., and et al. 2004. The Effects of Rice Policy on Food Self-sufficiency and on

73
Income Distribution in Vietnam. Department of Economics, Suffolk University, Boston,

USA.

Hossain, Mahabub, and Marlar Oo. 1995. “Myanmar Rice Economy: Policies,

performances and prospects.” Workshops on Projections and Policy Implications of

Medium and Long-Term Rice Supply and Demand Project, Beijing, China.

Maung, Win. 1982. History of Rice Marketing in Myanmar. Myanma Agricultural

Produce Trading, Ministry of Commerce.

Minot, N, and Goletti, F. 2000. Rice Market Liberalization and Poverty in Vietnam.

Research report 114, IFPRI.

Morrisson and et al. 1991. Poverty and Income Distribution during Adjustment: Issues

and evidence from the OECD project. World Development Volume 19, Issue 11,

November 1991, PP. 1485-1508.

Myoung, Kwang-Sik, and Lee, Jun-Hwam, 1988. Evaluation of the Korean Market

Intervention System. Asian Development Bank. 1988. PP. 37-89.

Nerlove, Marc. 1956. Estimates of Supply of Selected Agricultural Commodities.

Journal of Farm Economics 38: 496-509.

Nerlove, Marc. 1958. The Dynamics of Supply: Estimation of Farmers’ Response to

Price. Baltimore: Johns Hopkins University Press.

Nielsen, Chantal Pohl. 2003. Vietnam’s Rice Policy: Recent Reforms and Future

Opportunities. Asian Economic Journal 2003, Vol. 17, No. 1. University of

Copenhagen and Danish Research Institute of Food Economics.

Pingali, P. L., V-T. Xuan, N. T. Khiem, and R. V. Gerpacio. 1998. Prospects for sustaining

Vietnam’s reacquired rice exporter status. Food Policy 22 (4): 345-358.

Radhakrishna, R, and Indrakant, S. 1988. Effects of Rice Market Intervention Policies

in India: The case of Andra Pradesh. Asian Development Bank: 1988. PP. 237-321.

74
Rahman, A, and Mahmud, W. 1988. Rice Market Intervention in Bangladesh. Asian

Development Bank. 1988. PP. 151-236.

Ramaswami, B, and Balakrishnan, P. 2002. Food Policies and the Efficiency of Public

Intervention: The case of the public intervention system in India. Food Policy 27.

2002. 419-436.

Sadoulet, E, and Janvry, A.D. 1995. Quantitative Development Policy Analysis. The

Johns Hopkins University Press, Baltimore and London.

Sah, Raaj, and Joseph Stiglitz. 1984. The Economics of Price Scissors. American

Economic Review 74: 125-138.

Schultz, Theodore, ed. 1978. Distortions of Agricultural Incentives. Bloomington:

Indiana University Press.

Smith, L.D. 1997. Price Stabilization, liberalization and Food Security: Conflicts and

resolutions?. Food Policy. Vol. 22, No. 5, 379-392.

Soe, Tin. 1994a. Economic environment of Myanmar agriculture: Markets and prices,

Myanmar Business and Economic Review, Ministry of Trade, Yangon, pp. 21-23.

Strauss, John, and Duncan Thomas. 1990. The Shape of the Calorie Expenditure

Curve. Economic Growth Centre Discussion paper no. 595. New Haven: Yale

University.

Streeten, P. 1987. What Price Food? Agricultural Price Policies in Developing Countries.

London: Macmillan.

Subramanian, Shankar, and Angus Deaton. 1992. The Demand for Food and Calories:

Further evidence from India. Unpublished paper: Princeton University Research

Program in Development Studies.

Tamin, M, and Meyanathan, S. 1988. Rice Market Intervention System in Malaysia:

Scope, Effects and the Need for Reform. Asian Development Bank. 1988. 91-150.

75
Timmer, C.P., Falcon, W.P., and Pearson, S.R. 1983. Food Policy Analysis, Johns

Hopkins University Press for the World Bank, Baltimore.

Timmer, C.P. 1986a. Getting Prices Right: The Scope and Limits of Agricultural Price

Policy, Cornell University Press, Ithaca.

Tyers, R. and Anderson, K. 1986. Distortions in World Food Markets: A Quantitative

Assessment , World Bank, Washington, D.C.

Weerahewa, J. 2004. Impacts of Trade liberalization and Market Reforms on the

Paddy/Rice Sector in Sri Lanka. MTID Discussion paper no. 70. IFPRI.

76
 Appendices

Appendix 1.MAPT’ Involvement in Trade and Distribution to Target Groups

Year Total MAPT’ Percent Export (tonnes) Domestic distribution (tonnes)

Production Purchase Share Rice Broken Rice Broken Bran

(million (million

tons) tons)

1988 13.16 1.79 13.62 23684 24104 567855 56957 74716

1989 13.80 1.31 9.52 155839 12435 194724 84776 95319

1990 13.96 1.50 10.77 120836 11210 746616 52557 64442

1991 13.20 1.56 11.80 168959 14156 635370 92991 92220

1992 14.85 1.60 10.74 189386 3306 779137 82119 114635

1993 16.75 1.92 11.49 249185 12643 750573 44580 77887

1994 18.20 2.03 11.16 806016 29309 843082 72551 122020

1995 17.95 1.93 10.77 353106 197 803985 99413 145390

1996 17.67 1.52 8.61 91790 900 848351 125059 117577

1997 16.70 1.02 6.13 15874 760 792726 67719 75665

1998 17.07 0.21 1.28 99000 9037 672250 44815 50722

1999 20.12 0.22 1.09 58000 11127 685380 87962 112205

2000 21.32 0.21 0.99 215000 41376 590248 81854 99044

2001 22.25 0.21 0.95 952000 82805 577653 147748 162773

2002 23.36 0.21 0.88 455570 127930 677570 174858 177660

Source: MAPT

77