Asia Crisis

Fall in rice price hurts Myanmar exporters, farmers

YANGON, Jan 9 (Reuters) - The fall in world rice prices is hurting exporters in Myanmar, who say they are shipping grain at a loss, and is adding to the problems of poor farmers struggling to recover from Cyclone Nargis.

"A tonne of our 25 percent broken rice now fetches only $250 in the international market," one rice exporter told Reuters.

"With a 10 percent deduction for export tax, we get only $225 per tonne, compared with about $260 a tonne we had to pay in the domestic market a few months ago," the exporter said, asking not to be identified.

Vietnamese 25 percent broken rice, an Asian benchmark, was quoted at around $335 per tonne this week. Rice from Myanmar is generally of inferior quality because of poor milling. The main buyers are Bangladesh, Sri Lanka and African countries.

After a bumper harvest in Myanmar, a tonne of 25 percent broken rice in the domestic market now costs around $230.

That's a little better for exporters but not much good for farmers, who say they are selling below cost price, with the result that some are being forced off the land.

"With soaring costs for inputs and labour, and falling rice prices, it's no longer commercially viable for us to grow rice," farmer Ba Tin from the cyclone-hit Kawthmu Township said, adding some farmers in the region had lost their land to private firms.

Army-ruled Myanmar earned $100 million from exporting 358,500 tonnes of rice in fiscal 2007/2008 (April/March) -- a fraction of what it sold in its heyday as the world's largest rice exporter, before independence from Britain in 1948.

In its best year, 1934, when it was called Burma, it exported 3.4 million tonnes. Thailand, today's top exporter, shipped around 10 million tonnes last year.

Myanmar had stood to benefit from a jump in world prices and a panic about supplies in 2008, when some big exporting countries restricted sales to ensure their people had enough to eat.

In February 2008 it agreed to sell 300,000 tonnes a year to Bangladesh.

But then Cyclone Nargis struck in May, and the generals banned rice exports from that month to preserve stocks.

Officials say the ban was eased from July and government data shows Myanmar exported 127,600 tonnes worth $43 million in the first seven months of the fiscal year from April to October 2008. Around 101,000 tonnes was sold in April, before the cyclone.


Prices have since collapsed. Thailand's benchmark 100 percent B grade white rice traded at $550 per tonne this week, barely half the record high of $1,080 seen in April 2008.

Sein Win Hlaing, secretary general of Myanmar's Federation of Chambers of Commerce and Industry, said the export market was being liberalised to help the sector. Trade has until recently been controlled by exporters close to the junta.

"We do realise the grave consequences of plunging rice prices. We have relaxed some restrictions to forge the export drive. Small-scale exporters are being allowed," he said.

But economists said problems were piling up.

"Falling rice prices in the world market are only partially to blame. The main thing is we have to cut costs for the growers. We need to provide them with soft loans and subsidised inputs," said a former Yangon University economist, declining to be named.

The fall in domestic prices is not all bad news, though, with many people in Yangon relieved at cheaper food.

"After Cyclone Nargis we were worried that rice prices would go up," food stall owner Kyaw Myint said. "Now I'm very glad to be able to sell steamed rice to my customers, all in the lowest income bracket, at very low prices." (Editing by Alan Raybould)