Junta officials are trying to lower the retail price of rice but are using the same strategy – arresting merchants – that backfired in the gold and currency exchange markets last month, business people say.
All that the junta’s latest crackdown on retail prices has accomplished is that Yangon’s largest rice wholesale market was mostly shut on Monday, three days after the arrests were reported by local media.
Authorities began arresting and interrogating rice millers and sellers, both retail and wholesale, last week. Even staff of a rice warehouse were arrested on Friday, local media reported.
The junta’s Ministry of Information confirmed in a statement on Saturday that it was interrogating members of the Myanmar Rice Federation. It said it was interrogating federation members responsible for setting prices.
Media reports said they included federation chairperson U Ye Min Aung. A rice seller with knowledge of the crackdown said U Ye Min Aung was briefly detained, interrogated and released. When contacted by The Irrawaddy on Tuesday, U Ye Min Aung declined to comment.
Reports also said that U Lu Maw Myint Maung, a member of the executive committee of the country’s largest business lobby group, the Union of Myanmar Federation of Chambers of Commerce and Industry, was also being questioned. He is the son of a brigadier general and had been a minister in previous military regimes.
Other business people predicted that the junta’s crackdown on rice prices will be as ineffective as its previous crackdowns on the currency exchange and gold markets. It will increase market volatility, they said.
The junta capped retail prices for rice at 70,000 kyats (about US$ 15) per 48 kilogram sack of ordinary rice and 145,000 kyats per sack of premium rice on Monday. Market prices are, however, higher. A sack of ordinary rice was selling for 90,000 kyats in Yangon earlier this week, while a sack of premium rice was retailing for 178,000 kyats.
The last time it tried to cap the retail price of rice, in August of last year, it created turmoil instead.
Although rice was still selling at retail shops earlier this week, most sellers in Bayintnaung Wholesale Market did not open on Monday and Tuesday. The few that were open were limiting sales to 30 to 50 sacks per customer to reduce losses at the prices they were forced to sell at.
The Myanmar Rice Federation on Monday invited retail consumers to buy one sack of ordinary rice for 72,000 to 75,000 kyats or a sack of premium rice for 135,000 to 145,000 kyats from wholesalers. However, these prices only apply to a single sack of rice per household per month and buyers are required to submit photocopies of their household registration and National Registration cards when they make the purchase, a statement from the federation said.
A rice merchant in Bayintnaung Wholesale Market said the offer was just “for show.” Consumers can’t afford the taxi fare to get them to and from the wholesale market for a single sack of rice, he explained.
The junta began targeting merchants in the currency exchange and gold markets last month as the kyat plunged and the price of gold hit an all-time high. The kyat hit a record low against the US dollar on May 30, falling to 5,020 per greenback. Following a crackdown on currency exchangers, the kyat briefly recovered to 4,200 per US dollar before starting to fall again. On June 24, it cost 4,500 kyats to buy one US dollar.
After hitting a record high of more than 5.8 million kyats per tical (16.33 grams), the price of gold briefly declined after the junta launched its crackdown on gold merchants. As of June 24, however, the price of gold was back to 5.3 million kyats per tical.
Junta officials keep blaming merchants and traders for price volatility. On June 1, a junta statement accused “greedy traders” of manipulating gold prices through social media platforms to disrupt the country’s economy. Authorities subsequently arrested 21 gold brokers and merchants on charges of engaging in illegal trading to manipulate prices, leaving the market in turmoil.
Business people and economists say the generals don’t understand how markets work.
The owner of a rice warehouse in Ayerwaddy Region’s Hinthada Township said farmers have to pay more to grow rice now than they did before the coup and these higher costs are reflected in rising retail prices.
A report by the United Nations Development Program identified several causes of inflation in post-coup Myanmar. “Increasing money supply, depreciation of the kyat, and global commodity price rises are all contributing to the rapidly rising inflation,” the report “Poverty and the Household Economy of Myanmar” said.
Economist U Moe said that if the regime wants lower prices it needs to understand how markets work. It can introduce regulations at various points in the supply chain or provide incentives to reduce costs if it wants to lower retail prices, he said.
“In that way, the regime can navigate the entire market for rice or gold or foreign exchange, and it can try to pull the prices down softly and slowly,” he said, adding: “It may be able to lower prices overnight, but the [lower prices] won’t last even for a week.”
The UNDP report, subtitled “A Disappearing Middle Class,” suggested that the damage done by the junta’s economic mismanagement might be irreversible.
It noted that the price of rice increased by 45 percent in 2022. Rice accounts for 51 and 62 percent, respectively, of the calories consumed by urban and rural families, it said.
Myanmar’s middle class has collapsed. The report notes that almost 50 percent of the country’s citizens were living below the poverty line of 1590 kyats a day at the end of last year. “Myanmar’s middle class has shrunk by 50 percent over the past three years,” the report said, adding: “The economy has suffered a permanent loss in output.”
One result is a surge in what UN agencies refer to as “food insecurity” and what the poor know as hunger.
