Myanmar's Long Road to National Reconciliation (29 page)

Since 1980, the agricultural sector investment and financing profile has decreased by an estimated 40 per cent to 14 per cent of overall investment.
Strong support for water resources and irrigation, which occupy 3 per cent of total land area, reflects government priorities. The Myanmar Agricultural Development Bank is the only formal source of financing for small farmers and levels of loans are low, often covering only 10 per cent of production costs.

The performance of the agriculture sector has been uneven and the rural poverty profile may be rising. The increasing number of landless rural householders, currently estimated at around 30 per cent of all rural householders, is becoming a matter of significant concern. However, if the GDP growth profile is used as an indicator, the agricultural sector must have experienced significant overall growth in recent years. The contribution of livestock to overall agricultural GDP is estimated to be 20 per cent.

Crop production contributes 45 per cent of GDP and 18 per cent of export earnings, and employs some 63 per cent of the national labour force. The priority crops are paddy, oilseeds, pulses, and industrial crops such as cotton and sugar. As the use of fertilizer is low, there is growing concern on the one hand about the removal of vital nutrients from the soil (soil nutrient mining), and, on the other, about imbalances caused by adding nutrients. Limited use of improved seed varieties means crop yields are not as great as they could be. In the dry zone, efficiency of irrigation water use is an issue. River-pumped systems supply 45 per cent of all irrigation water. Intensification of crop production will increase farm incomes in the short to medium term, but for intensification, expansion, and diversification of crop production to occur, changes need to be made in land and irrigation policies, in the delivery and conduct of extension services, in communication of information about market signals, in provision of infrastructure to provide access to markets, and in supply of inputs. At the same time, efforts need to concentrate on the high value crops where Myanmar has a comparative advantage.

The livestock sector supports crop production by providing draught power and natural fertilizers. Pigs and poultry are the species most widely held, and are especially significant among the landless householders and
poorer members of rural communities. Commercial livestock production is carried out on a relatively small scale and is underdeveloped. Traditional low-input livestock production using a natural feed base is the norm. Foot and mouth disease (FMD) of ruminants and pigs is the disease of greatest economic importance, followed by Newcastle disease in village poultry. Extension capacity is limited due to lack of trained staff and transport for field activities. With some exceptions, all components of the agricultural sector have limited data sets for planning purposes.

The fisheries sector provides two-thirds of animal protein in the diet of people. Capture fisheries provide the main supply of fish. Marine resources are now considered to be fully exploited, and new growth will probably come from aquaculture and inland fishing resources.

Agro-processing often operates below full capacity due to electricity shortages and old equipment. Utilization rates in the public sector are around half that of the private sector.

Technical constraints are of major significance for the development of agriculture. In all agricultural sectors there is a lack of appropriate technology packages for smallholders. Research and extension programmes often do not match the needs and priorities of rural communities because there has been a top-down approach in the past. The low level of use of improved seed varieties, due to the lack of seed multiplication capacity in the public sector, is an important factor, and is compounded by the lack of significant private sector seed multiplication. A major constraint for the intensification of all facets of agriculture is the lack of available finance for high-value and high-input activities.

The limited resources available to the livestock sub-sector compromises the development of an improved animal health and production status. The presence of animal diseases such as foot and mouth disease constrains export of livestock products.

Agro-industry, as with other industries, suffers severely from the lack of suitable infrastructure support, such as modern equipment in agricultural institutions (both for research and for agro-processing), adequate electricity supplies for processing, transport facilities, support and training for staff, and an effective national wholesale marketing system.

There are also important policy constraints, such as the controls on the Rural Financial System, the absence of tradeable land rights, controls on crop production and restrictions on trade, the impact of state economic enterprises on the market system, and the limited role of local communities in their own resource management.

One policy issue that impacts strongly on the agricultural sector is that farmers only have cultivation rights to the land they occupy; they have no legal right to sell the land, to use land as a collateral asset, or to lease or dispose of land rights to other farmers, thus preventing consolidation of farms. The strict control of the conversion of rice lands for other use, such as for aquaculture, is a major constraint on the development of freshwater aquaculture. Other important policy constraints relate to rural financial services, international trade complexities, and directed production.

Financial constraints on agriculture are significant. The general economic environment in Myanmar, with distortions in exchange rates, a high rate of inflation, and an underdeveloped banking sector, all combine to limit development of the agricultural sector.

Human and institutional constraints also hamper development. The number of landless rural households is large (30 per cent) and a significant proportion of smallholders (37 per cent) own less than two hectares. Public sector staff are often under-utilized and lack sufficient resources to undertake their responsibilities. The government’s research and extension system, which focuses on commodities, has limited impact on the mixed-farming systems practiced by smallholders, and hampers significantly growth in all sub-sectors.

Agricultural growth provides the most opportunities for poverty reduction, as long as the poor are deeply involved in the decision-making process. This is particularly the case in Myanmar with its predominantly rural economy. An advantage for Myanmar is also its low population density, as compared with other Asian countries. There are good opportunities for Myanmar to produce value-added goods and services which would provide employment opportunities and a better quality of life for the rural community. The cost of distortionary or restrictive policies is often greater than the cost of technical limitations, and if the technological and policy
constraints could be reduced, the prospects for Myanmar’s agricultural sector would be encouraging.

Myanmar receives some international assistance for agricultural development, but not nearly enough given the economic importance of the sector, its significance in poverty alleviation, and the vital role such assistance can play in achieving much-needed reforms. The following list of international donor support to Myanmar is likely to be incomplete.

Agencies of the United Nations have provided long-term assistance to Myanmar’s agricultural sector, often with the Food and Agriculture Organization (FAO) as the main implementing agency.

•   The FAO Bay of Bengal Programme links Myanmar with all countries sharing the marine fisheries resource.

•   UNICEF supports capacity building, widespread support for rural health support and an area development focus with participating NGOs. The programme budget is US$63 million over five years.

•   The United Nations Development Programme (UNDP) focuses on grass-roots community development and on education and community development projects in remote areas. An important project has been the Human Development Initiative Project. There are two other possible new projects, one in community development and the other in rural micro-finance. UNDP has supported microfinance projects for several years.

•   The United Nations High Commissioner for Refugees (UNHCR) supports an Agricultural and National Resource Management Project in Rakhine State which is implemented by FAO.

•   The World Food Programme (WFP) has been providing assistance to refugees involving support of agricultural activities for the last ten years.

Other multilateral agencies that provide assistance to Myanmar include the following.

•   The International Office for Epizootics (OIE) through the OIE South East Asian Foot and Mouth Subcommission is supporting subregional control of Foot and Mouth Disease programme involving Myanmar, Thailand, and Malaysia.

•   The South East Asian Fisheries Development Centre (SEAFDEC) provides training research activities on marine and freshwater activities and linkages to Asian fisheries scientists.

•   The Asian Development Bank (ADB) has been active in investigating investment opportunities in Myanmar.

•   The OPEC Fund has agreed to support a project on oilseed and oil palm research, seed and material multiplication, farmer extension, processing, and policies. An estimated US$15 million has been allocated to the project. The OPEC Fund is also considering support with finance for two other projects, one on agricultural education and training, and a second on water resource management and small scale irrigation.

The Consultative Group for International Agricultural Research (CGIAR) has several research institutions relevant to Myanmar. The involvement of the CGIAR research institutions has been small-scale in the past, but is now increasing. The agricultural research institutions that could assist or are assisting Myanmar are listed below:

•   The International Rice Research Institute (IRRI) based in the Philippines, has several large donor-funded projects throughout Asia, including in Laos and Vietnam. This Institute is the premier rice research institute in the world and has a mandate to improve rice production in Asia. Given the importance of rice in Myanmar, IRRI could assist with the technological, social and policy issues that relate to rice production in mixed-farming systems. The identification and multiplication of appropriate improved rice varieties that suit the smallholder farming system would have a major positive impact. IRRI has the world rice germplasm bank.
IRRI also has an active training programme which would enhance the human resource capacity in research and extension in Myanmar.

•   The International Water Management Institute (IWMI), based in Sri Lanka, has an Asian focus in improving the management of irrigation systems. Again, given the considerable investment in irrigation systems by the Government of Myanmar, IWMI could provide useful assistance in training staff, design of irrigation systems, and efficient water management strategies for existing irrigation systems. Efficient water management would have national significance.

•   The International Crops Research Institute for Semi Arid Tropics (ICRISAT), based in Hyderabad, India, and has the mandate for research on pulses. Linkages to ICRISAT would provide access to improved germplasm, management practices and post-harvest systems.

•   The Centre for International Tropical Agriculture (CIAT), although based in South America, has an increasing profile in Southeast Asia and has a regional office in Laos. The Centre’s emphasis on improving smallholder farming systems, including livestock, makes its expertize highly appropriate for the large majority of smallholders in Myanmar. CIAT is following up opportunities to increase activities in Myanmar.

•   The World Fish Centre (WFC) based in Malaysia, has a mandate for developing sustainable fish management techniques, with a strong emphasis on environmental issues. Given the importance of fish as a supplier of animal protein in Myanmar, and the extensive marine and freshwater resources, WFC could make a positive contribution to the welfare of coastal, landless, and small householders.

•   The Centre for International Forestry Research (CIFOR), which is based in Indonesia, has a mandate for research and development of tropical forests. Myanmar has around 50 per cent of its land-mass still forested, a major natural resource that is envied by many other Asian countries. CIFOR could assist with the sustainable management of this rich asset.

•   The International Food and Policy Research Institute (IFPRI), based in Washington, may be able to provide some important policy options relevant to the agricultural sector.

There are other CGIAR centres, but their relevance to the Myanmar agricultural sector seems limited.

Bilateral official development assistance (ODA) has declined since the 1990s, and in 2000 amounted to US$22 million for all sectors. Countries that have provided the most support for Myanmar in agriculture are Japan, the People’s Republic of China, India, Singapore, Thailand, and Israel.