To understand the effects of COVID-19 and political instability on Myanmar’s crop trade sector, a phone survey of commodity traders was conducted in March 2022 with an expanded sample of 456 traders in 14 states and regions.
• More than 90 percent of traders reported increased transport costs, up by 74 percent on average over the past year, driven by fuel price increases of 168 percent. Transport cost increases were aggravated by curfews and check points related to the security situation. As a consequence, 30 percent of traders experienced difficulty contracting transport services.
• Compared to the same period last year farm prices have increased for maize (78 percent), pulses (41 percent to 55 percent) and oilseeds (27 percent to 32 percent) due to export demand and depreciation of the Myanmar Kyat. This will provide incentives to farmers in the Dry Zone and Hilly/Mountainous areas. Paddy prices at the end of March have increased by a lesser amount (23 percent), not enough to offset increases in the cost of chemical fertilizer (expected to rise by 50 percent in the coming monsoon season) and mechanization services.
• Higher farmgate prices combined with modestly increased trading volumes imply greater working capital requirements for traders. Only a small proportion have increased their lending balance sheets given uncertainty about length of time for repayment.
• Consumer prices will continue to rise steeply due to higher farm gate prices and transportation costs. Vegetable oil prices will be very high due to the combination of the Ukraine conflict and the Indonesian palm oil export ban. Increases in chickpea prices limit the options for poor consumers to maintain protein consumption by substituting away from meat and eggs to pulses. The majority of Myanmar households are now vulnerable to protein deficiency and the majority of children to Vitamin A deficiency.
• The March 2022 survey round took place before the new foreign exchange restrictions were implemented, requiring exporters to convert all foreign exchange earnings into Myanmar Kyat within 24 hours at the official rate. The difference between the official and parallel market rate is effectively an export tax that will be passed on to farmers, reducing their profitability. This can be avoided by allowing agricultural exporters to maintain foreign currency accounts.