* 3 mln tonnes annual export target seen unrealistic
* Rice production hurt by bad weather
* Infrastructure, laws a headache for foreign investors
By Aung Hla Tun
YANGON, Aug 28 Shrinking global demand, poor
infrastructure and hesitant investors could leave Myanmar far
short of its rice export target this year, dealing a blow to its
ambitions of competing with the world's top shippers of the
Industry experts and government officials say the 3
million-tonne target for the current fiscal year ending March
2014 is unrealistic and Myanmar, the world's top rice exporter
under British rule in 1934, faces multiple hurdles in revamping
an industry that withered during 49 years of military rule.
"It's quite impossible to export 3 million tonnes of rice
... simply because we can't expect dramatic increase in rice
production this year," an expert at the Agriculture Ministry
told Reuters, requesting anonymity because he was not authorized
to speak to media.
Myanmar's quasi-civilian government wants to utilise the
abundant fertile land of the strategicaly located country.
Myanmar borders booming economic growth areas - India,
China, Thailand-ASEAN, has sea ports in Indian ocean, and will
have a deep sea port in Dawei that will allow shipments through
a narrow stretch of the Thai peninsular to the Pacific ocean.
In terms of land, the Irrawaddy delta is huge and fertile,
and has big agricultural potential but lacks the infrastructure
to boost production and exports.
Part of that is privatising the rice industry, in line with
a slew of reforms introduced since 2011, when a quasi-civilian
government replaced a military junta that decimated an economy
squeezed for two decades by Western sanctions, most of which are
Myanmar generated $124 million from 320,000 tonnes of rice
exported from April to July this year, Commerce Ministry data
shows. It shipped 1.45 million tonnes of the grain in 2012/2013
and traders forecast about 1.5 million tonnes for 2013/2014.
The Agriculture Ministry official said water was the main
source of the production problem, with either too much, or too
little of it. Long-lasting floods had swamped paddy fields in
the southern delta, while the summer crop in the central region
was hit by low water levels in dams.
Myanmar has invited millers and exporters from neighboring
Thailand, until recently the world's biggest rice shipper, to
bring expertise and capital to the industry, which exports just
41 percent of the amount it shipped at its peak 79 years ago.
Investors are hesitant however, like many foreign firms
interested in Myanmar but frustrated by the protracted passage
of new investment laws and unclear regulations on the
agriculture sector, which is among several with restrictions.
Myanmar's decades of poverty and isolation under the
military have also left it with vastly underdeveloped
infrastructure and a power grid unable to fully support even its
biggest city - problems many foreign firms do not want to face.
"We're concerned about energy and electricity, which are not
quite stable at this stage," Manas Kitprasert, president of the
Thai Rice Millers Association, told Reuters. "We also need a
better logistics system to export smoothly at manageable costs."
According to traders, most of the rice Myanmar produces is
the low quality 25-percent broken grain, about half of which is
sold to neighboring China.
The U.S. Department of Agriculture (USDA) has forecast
Myanmar rice production at 11 million tonnes in the 2013/2014
fiscal year, up from 10.6 million tonnes a year earlier, but
only just above the 10.25 million tonnes expected to be consumed
by the estimated 60 million people in Myanmar, where rice is the
That would leave a surplus of just 750,000 tonnes for
export. Even if Myanmar manages to produce more rice in the next
few years, it might not be able to find buyers for it.
Chit Khine, president of Myanmar Rice Industry Association
said demand for Myanmar's rice was flat while the world's
biggest exporters had plentiful rice stocks.
Players like Thailand, India and Vietnam, which have better
quality grains than Myanmar, are struggling to sell because
importing countries have grown more rice this year.
In addition, a government intervetion scheme in Thailand has
made its rice uncompetitive in the international market,
resulting in massive stockpiles of unsold rice.
Thailand is sitting on rice stockpiles of 17 million tonnes,
almost double a normal year's exports and nearly half of annual
global trade of 38 million. Thai 5 percent broken rice
RI-THBKN5-P1 is trading around its lowest in three years.
"They're well-stocked so we don't expected to see any huge
demand over the next few years," said a Bangkok-based
businessman who trades Myanmar rice.
(Additional reporting by Apornrath Phoonphonpghiphat in Bangkok
and Naveen Thukral in Singapore; Editing by Martin Petty and Ed