Business

Burma to Begin Rice Exports to NE India

By Kyaw Hsu Mon 15 October 2014

RANGOON — Burma and India are putting the finishing touches on a major rice export deal, set to begin this month, which will facilitate the sale of about 20,000 metric tons of Burmese rice into Northeast India every month for the coming year.

The Myanmar Rice Federation (MRF), Burma’s main independent rice industry oversight body, recently met with Indian diplomats to discuss details of the arrangement.

“The Indian Embassy [in Rangoon] announced the tender for rice imports last week, but they only received two tenders and they were very expensive. That’s why they came to us for further discussion,” said Chit Khine, chairman of MRF.

India recently opened bidding for a rice sales contract to supply parts of Mizoram and Manipur, two remote northeastern states that border Burma. According to MRF, two Burmese companies asking for US$800 per ton were the only bidders. The Indian government then approached the MRF to negotiate a counter offer at half the price.

Chit Khine said that MRF has agreed to a sale price of $400 per ton, but that sellers will only transport the commodity to the border station, from which Indian buyers will have to arrange pick-up and transport to their local warehouses.

Burmese sellers said that their initial prices were high because of difficult and expensive transport conditions, as well as an uncertain political atmosphere in Northeast India. The area has long struggled with minority insurgencies and political upheaval that often takes the form of bandhs, a popular form of protest whereby huge territories are immediately cut off by blockading one of the region’s few main roads.

“We told them that we could only bring rice to the border stations at Tamu [in Sagaing Division] or Rihkhawdar [in Chin State], because we don’t know what the situation is inside India,” Chit Khine said.

India has agreed to provide local transport once the products cross the border, and the two sides are still discussing tax rates, quality control procedures and other logistical hurdles. Chit Khine said that once those details are agreed upon, the Indian government will reopen the tender process and the Burmese firms will reapply.

Dr. Soe Tun, secretary of MRF, told The Irrawaddy that the Indian government has committed to purchasing at least 200,000 tons of rice from Burma over the next year. State media reported earlier this year, however, that India had previously vowed to buy well over twice that amount. MRF estimated that Burma is capable of exporting just over one million tons of rice per year while still meeting domestic demand.

Once the agreement is signed, Burma will begin legal rice exports to India for the first time. China currently takes the bulk of Burma’s outbound rice, but cross-border rice sales between the two are still technically illegal. Chinese officials are working with MRF to establish quality control facilities and regulations, and MRF anticipates that China will soon become a long-term trade partner once they secure a legal contract.

The World Bank has estimated that up to 70 percent of Burma’s population relies on agriculture as their primary source of livelihood. Burma is expected to be the fifth-largest rice producer in Asean during the 2014-15 financial year—behind Indonesia, Vietnam, Thailand and the Philippines. Only two of those countries, Vietnam and Thailand, are exporters.

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