New price controls to combat the surging cost of rice are already disrupting quality and supply of Myanmar people’s staple, according to wholesalers.
The military regime fixed prices last week and warned of legal action against price gouging.
U Aye Win, chair of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), conveyed the junta’s message during a meeting of business owners in Yangon on Friday.
Wholesale rice prices set by the regime range from 72,000 kyats (around US$ 19 at the market exchange rate of 3,800 kyats per dollar) to 125,000 kyats per sack depending on quality. Retailers have been warned not to charge more than 10 percent of the fixed prices.
The prices were announced following an Aug. 23 meeting of the junta’s steering committee to stabilize commodity prices led by commerce minister Aung Naing Oo. The committee was formed in early August in a bid to control surging food prices.
A rice wholesaler and retailer told The Irrawaddy on Monday: “The order means we can sell at any price lower than their set prices, but not higher than that. So, [retailers] are now selling at fixed prices, but selling inferior stocks.”
Junta officials also met with retailers at the Wardan rice wholesale center in Yangon, a key supplier for the whole country, and warned them not to charge more than 10 percent of the fixed prices.
Retailers were ordered to comply with limits of 80,000 kyats and 140,000 kyats per sack for rice varieties such as Nga Sein, Shwebo Paw Hsan (grown in Shwebo, Sagaing), and Ayeyarwady Paw Hsan, according to rice dealers who attended the meeting.
Last week, prices at Wardan hit 84,000 kyats per sack for low-grade rice, and 130,000 to 165,000 kyats for Paw Hsan, the most popular rice variety in Myanmar.
Wardan wholesalers are obeying the junta’s edict by selling at fixed prices, but to ensure profitability they are disguising lower-quality rice as high quality, or mixing quality rice with broken or low-grade grain.
A rice merchant in Yangon told The Irrawaddy: “[Sellers] may sell Ayeyarwady Paw Hsan, claiming it as Shwebo Paw Hsan. They may also mix the rice. [Junta authorities] said they will start monitoring from September 1 and will take legal action if we don’t comply.”
Business at Wardan has now slowed as rice dealers wait to see the market situation.
In a bid to control rising prices, the junta has suspended the issuance of new rice export licenses until the harvest in October, according to the Myanmar Rice Federation. Rice can still be exported under existing licenses.
Factors behind the surging price of rice and other basic foods include post-coup armed conflicts that have disrupted farming, junta arson attacks on numerous farming villages in central Myanmar, inflation and depreciation of the kyat resulting in higher production costs, and the junta’s issuing of the 20,000-kyat note which has exacerbated depreciation.
