Economy

El Nino Threatens Export Plans as Burma’s Rice Industry Revs Up

By William Boot 3 October 2014

Hopes that Burma’s rice exports would reach 2 million tons this year look unlikely to be achieved due to the disruptive weather phenomenon known as El Nino, experts say.

Monsoonal rains needed to boost Burma’s late rice crop are expected to be lighter than usual due to the El Nino effect, leading to drier conditions.

Observers of the El Nino weather pattern, which occurs every few years due to warmer air currents generated in the Pacific Ocean, suggest it might be less severe than on previous occasions but could still disrupt various forms of agriculture across Southeast Asia. It could last until June 2015 and some meteorologists have suggested that December might be the worst month affected.

This year’s major wet season rice crops across Southeast Asia might escape the worst of El Nino, the US Department of Agriculture (USDA)’s Foreign Service said, “[but] dry season rice and corn crops, as well as palm oil, will become more vulnerable if El Nino develops and persists from October 2014 to April 2015.”

Burma exported 1.27 million tons of rice in 2013 and the Burma Rice Federation had said the figure for this year might reach the 2 million tons mark, boosted by higher demand from China and dislocation in the rice industry of rival exporter Thailand. However, even without any El Nino effect, the 2 million tons target is over-optimistic according to estimates made by the USDA.

The US agency predicted that rice production in Burma in 2014-2015 would most likely increase by 1 percent to 12.16 million tons, due to growing area expansion and improved water supply, and that rice exports would also be only marginally higher than last year—up about 1 percent to 1.31 million tons.

Burma’s government was “making an effort to provide farmers support in infrastructure development, mechanization [and] technology assistance,” the USDA said. But despite support programs, rice farmers in Burma could still not compete with other farmers in the region, including in Thailand and Vietnam, who received government support to compensate for lower prices, the agency said, citing trade sources.

Burma is forecast to be the fifth-largest rice producer in the Association of Southeast Asian Nations (ASEAN) region in the 2014-15 financial year —behind Indonesia, Vietnam, Thailand and the Philippines. But of these four, only Vietnam and Thailand are exporters.

“On the surface, rice markets remain calm and stable, but underlying market sentiments are rapidly changing because of weather disruptions in many rice-growing nations,” market watcher and rice scientist Sam Mohanty of the International Rice Research Institute said in a recent assessment.

“The global rice market faces the possibility of a production shortfall in the major rice-growing regions in South and Southeast Asia and also in China because of El Nino events. So far, the market has been quite nonchalant about this possibility because of large buffer stocks in key rice-growing countries.”

India, China and Thailand are well stocked with rice to see them through any possible disruptions in supplies, Mohanty said.

Burma’s rice federation sees China as offering the best market for expanding Burmese exports in coming years. About half of Burma’s rice exports went to China in 2013, despite the fact that the exports are technically illegal as there is not yet a health standards agreement on rice in place between the two countries.

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