‘Illegal’ Shipments to China Dominate Burma’s $340m in Rice Exports

By Kyaw Hsu Mon 26 December 2014

RANGOON — Rice shipments across the Sino-Burmese border, considered illegal in China, accounted for more than two-thirds of total rice exports over the last nine months, the Ministry of Commerce announced this week.

Though total rice exports reached nearly 915,000 tons from April 1 through the second week of December, overseas exports totaled only 198,698 tons (US$70.1 million), while border exports to China and Thailand reached 716,272 tons ($272.6 million).

Chit Khine, chairman of the Myanmar Rice Federation (MRF), said Burma’s rice exports across the Sino-Burmese border constituted the highest bilateral trade total, despite a Chinese ban on Burmese rice imports.

“Rice exports, from our side, are legal, but on the China side these exports are illegal, that’s why we’re discussing with the Chinese government to legalize rice exports. One of our business missions will go to China in the second week of next month,” he said.

Early this year, China officially banned rice imports from Burma, demanding that a trade agreement be signed guaranteeing that most rice is milled and meets certain quality standards. China had long been—and continues to be—one of Burma’s biggest customers for rice, much of which is harvested in the Irrawaddy Delta and shipped over land borders in Shan and Kachin states.

According to government figures, rice exports to China through the Burmese border town of Muse to Ruili in China accounted for the vast majority of overland exports, at 700,000 tons, while overseas rice shipments to China reached 11,000 tons.

“That is why the business delegation from the MRF and the government will talk with the Chinese government next month to buy our rice legally over the borders,” Chit Khine said, adding that he expected the legalization of rice exports to China would further accelerate export growth.

A bilateral agreement on rice standards would allow the MRF to legally export about one million tons of milled rice to China, starting in January.

Dr. Soe Tun, chairman of the Myanmar Farmers Association, said that China would continue to hold its position as the No. 1 buyer of Burma’s rice next year.

He added that a China Certification and Inspection Group would open an office in Rangoon soon, pending its obtaining a company license from the government, and will serve to monitor the quality of Burmese rice before exporting to China.

“We expect that the rice export volume will reach 1.5 million tons in this 2014-15 budget year. We expect 2 million tons for next budget year,” he said.

Burma’s rice exports totaled 1 million tons in the 2013-14 fiscal year.

Rice prices are also on the rise, with the grain selling for $400 per ton, up from $350 per ton last month, after a heavy monsoon season lowered yields in Burma.

In October, the MRF reached an agreement with Indian rice traders to supply two states in northeastern India with 240,000 tons of rice per year at $400 per ton, although Burmese traders will incur all costs for transporting the goods to the Indian border.

Paddy yields in Burma are among the lowest in Southeast Asia, at 2.5 metric tons per hectare. Most rice mills used outdated machinery that produces rice with a high portion of broken grains, making it unsuitable for high-value foreign export markets such as the European Union and Japan.