Rice Prices Reverse Recent Slump After Heavy Rains
By Kyaw Hsu Mon 21 November 2014
RANGOON — Rice prices have pulled back from a sharp slump in recent days, amidst a predicted rise in exports and expectations that recent heavy rains could reduce the size of this year’s crop.
Prices bottomed out at US$280 per 100 baskets (about 1.5 tons) in the middle of October, rising to $380 per 100 baskets this week.
“Due to the heavy rains earlier this month, traders thought there might be a rice shortage in the market,” Chit Khaing, the chairman of the Myanmar Rice Federation (MRF), told The Irrawaddy on Friday. “That’s why the slumped rice prices have been increasing in the last few days.”
Aung Chan, the owner of a 30-acre paddy field in Rangoon’s Mingaladon Township, said that his paddy production will be less than last year’s yields once he finishes harvesting next month.
“I expect that the paddy prices won’t decrease next month due to the heavy rain—there will be less production, which will increase prices,” he said.
The collapse in rice prices came right before the start of the harvest season, threatening a severe impact on the livelihood of farmers, already one of the poorest sectors of Burmese society.
Soe Tun, the chairman of the Myanmar Farmers Association, said that his organization had enacted a scheme to buy paddies at a fixed price above the market rate to alleviate an impending production crisis—a plan that has now been rendered unnecessary by the boost to prices.
“Prices have increased about 10 percent in the last week [from 350,000 to 380,000K], so farmers will be happy, they won’t want to sell us with our prices,” he said.
China has taken steps this year to regulate the import of Burmese rice, demanding a trade agreement guaranteeing that most rice is milled and meets certain quality and hygiene requirements.
As a result, warehouses have retained higher than usual stockpiles of rice, depressing prices to the levels seen last month.
China has long been one of Burma’s biggest customers for rice, much of which is harvested in Burma’s Irrawaddy Delta and shipped over land borders in Shan and Kachin States.
A bilateral agreement on rice standards would allow the MRF to legally export some 200,000 tons of milled rice to China, starting from early January next year. At the same time, the MRF has attempted bolster the market by encouraging a swift conclusion to the export deal.
“We’ve been encouraging to China to buy as much as earlier than January to pull up prices,” Chit Khaing said.
In October, the Myanmar Rice Federation reached an agreement with Indian rice traders to supply two states in northeastern India with 240,000 tons of rice per year at US$400 per ton, although Burmese traders will incur all costs for transporting the goods to the Indian border.
The tender for the Indian export deal will close on Nov. 26. Anticipation over the commencement of trade, along with the impending Chinese deal, has buoyed the market rate for rice this month, according to Soe Tun.
Despite the recent increase, rice prices are still well below the 2013 season rate of US$400-450 per 100 baskets.
Chit Khaing said he expects rice prices to rise to 2013 levels once export arrangements with China are finalized.
“A delegation will come here soon to check the quality of export rice to China,” he said. “I hope that paddy prices will increase as soon as the China and Myanmar bilateral trade agreement is a success.”
According to recent MRF figures, Burma exported 900,000 tons of rice to China, Europe, Japan and South Africa from April to October. The government has set an export target of 1.5 million tons for the 2014-2015 fiscal year.