From Plows to High-Tech Machinery: Will Myanmar’s Agriculture Market sustain positive growth in the future?
myanmar-agriculture-machinery
May 26, 2023
Myanmar Agriculture equipment has been growing with a growth rate of 25% between 2014 and 2020. The growth is attributed to rising labor wages in the country and increasing government initiatives toward the development of the agriculture equipment industry. However, the market has several growth restraints that hold back its growth.
So, what does the future hold for the Myanmar Agriculture machinery sector? Find out here!
1. Farm Wages Grew rapidly initially due to labour scarcity which led to an increase in Agriculture mechanization in Myanmar
Daily Labour Wages in Different Parts of Myanmar, 2020*
Trends and Comparison of Daily Wages in Myanmar, 2014, 2017 & 2020
- Farm Labour scarcity owing to migration within and outside Myanmar led to sharp increase in daily labor wages.
- During 2012-2016, wages grew between 20%-40% varying from region to region.
- This led to increase in agriculture mechanization, which led to a small decrease in wages (Overall). The wages grew for technical operators such as CH operators.
- In 2018, govt fixed minimum wage to be MMK 4,800 per day, which was valid till April 2020. This changed due to COVID-19 Outbreak.1
- Agriculture sector witnessed highest decrease in employment in Myanmar due to this. This led to decrease in wages by more than 50% in some areas.
Curious to know Farm Labor Wages Trends in Myanmar? Tap to request a free Sample Report
2. Presently, Government Initiatives, Growth In Machinery Supply, and Labour Migration have been driving the growth of the market
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Agro-Ecology of Region
- Myanmar can be broadly classified in three zones: Hilly Zone, Dry Zone and Delta Zone. Machinery demanded in any zone is influenced by Agro-Ecology of that region.
- For instance, in Dry Zone, 4W Tractors, Disc Plows, Rotary Tillers are high selling items, whereas in Delta Zone, Water Pumps, 2W Tractors, Power Tillers are highly demanded.
Growth in Machinery Supply
- Number and location of machinery supply business increased drastically in Myanmar, which led to increase in variety of machines supplied.
- The machines became more affordable due to this.
Farm Land Reforms
- Systematic Farm Land reforms such as Rectangular Plot Shape, Boundary Ratio (1:3), Equal Plot Size, Irrigation and Drainage Facilities and other key changes are undertaken
- This will help in more effective usage of farm machinery, lead to better crop production, mitigate the value chain and other benefits
Decrease in Crop Losses & Increase in Yield
- Farmer using tractor has fewer crop losses. Using tractors they are able to plant earlier and harvest earlier, avoid heavy rains and use residual soil moisture for following crop
- Yield increase as using Combine Harvester reduces the losses of grain at the time of harvesting and threshing
Government Initiatives
- Govt through its various policies and initiatives such as Myanmar Sustainable Development Plan (MSDP, Feb 2018), Agriculture Development and Strategy Plan (August, 2018), Roadmap for Myanmar’s Seed Sector (2017-20), Agriculture Mechanization Department has been strengthening the agriculture sector and penetration of mechanization.
Increasing Access to Easy Finance
- Farmland Law 2012 allowed usage of land as bank loan collateral. In 2013, Hire Purchase Agreements with commercial banks started.
- LIFT Loan Guarantee Scheme with Yoma Bank accelerated the financing process, thus increased financing penetration.
Rising Rural Wages and Labour Migration
- Laborers are migrating to developed region such as Yangon or internationally to Thailand, Malaysia and others to work in factories due to high income.
- Sharp increase in wages (15%-25%) in most regions pushed farmers towards mechanization.
Increase in Custom Work
- Custom Work demand is increasing in Myanmar. It helps farmers in getting a secondary income source.
- Majority of Farmers are now purchasing equipment for main usage of custom work instead of their own farms. Due to this they are able to pay their loan sooner.
To know how these growth drivers have impacted the market size of the Agriculture Equipment market, request a free custom report
3. However, Changing Farmer Interests, Lack of Financing / Credit are posing as challenges in the Agriculture Equipment Sector
Farming Becoming Unattractive
Real-Time Tracking
- Due to low efficiency in farming, young labor is moving to urban region such as Yangon where housing construction is booming.
- Further, international migration to country such as Thailand, Malaysia to work in tobacco factory is becoming prominent.
Low Yield due to Low Usage of Technology
- Paddy Yield in Myanmar is ~2.5 t /ha, whereas in Vietnam it is 5.6 t /ha, with total production being 10.7 Mn Ton in Myanmar whereas in Vietnam it is 27.7 Mn Ton1
- This is majorly due to low level of mechanization, usage of draft animals and dependency on old agriculture methods.
Land Rights, Conflicting Documentation
- Unlawful land grabbing, lack of information has been an issue in Myanmar.
- Processing of loan, issuing of collateral becomes difficult as the land tiles are not registered or there is lack of documentation.
Access to Water, Irrigation Problems
- Out of total sown area, only 16.2% had irrigation coverage in 2016-17. Dry Zone farmers from Mandalay, Magway and Sagaing rely on rain water for production.
- Farmers connected to national irrigation system are able to grow paddy when there is less rain, while rest have to grow crops such as Mung Beans which are economically suitable and require less water.
Poor Access to Finance
- The state-owned Myanmar Agricultural Development Bank has historically been the main source of funding for farming landowners.
- Many small farmers still have to rely on informal money lenders, family members and other sources, where average interest rate can be as high as 20% per month
Import Dependency
- There is no local production of tractors, combine harvesters and other big agriculture equipment in Myanmar. The country is completely import dependent.
- This places challenge on pricing and supply chain as little change in demand causes great impact on supply. High lead time for products is a major reason for this.
Inadequate Domestic Policies & Lack of Alternative Export Destinations
- Myanmar has high reliance on single export market and lacks bilateral trade agreement which poses challenge on domestic agriculture industry.
- For instance, in 2017 India amended its policy on import of Pulse and Beans which collapsed the farming for Mung Beans in Myanmar2
Source: Interviews with Myanmar Agricultural Equipment Industry Experts, Industry Articles, Company Websites & Ken Research Analysis
1. Kubota.com 2. mmtimes.com
4.1 Government of Myanmar has formulated various strategies to improve food security, agricultural growth, and improve farmers’ welfare
Policy Adoption for Agriculture Sector in Myanmar
The National Comprehensive Development Plan (NCDP), 2011
- NCDP prepared in 2011 comprises a series of five year plans, laid out over a period of 20 years (2011-2031). It covers policies pertaining to agriculture and rural development in Myanmar.
- Long term plans of NCDP focuses on the following objectives:
- Achieving maximum market share in the domestic and international markets
- Improve food security
- Promotes sustainable development
Framework for Economic and Social Reforms (FESR), 2012
- Formulates strategies to improve food security, agricultural growth, improve farmer’s welfare, income of farmers and their dependent families.
- For instance, the policy proposed to improve productivity of paddy through improved seed quality, better agronomic practices and integrated pest management.
National Export Strategy (NES), 2015
- Focuses on improving trade in beans, pulses, paddy, oilseeds, rubber & other categories including fishery, forestry, textile & garments.
- Aims to address the constraints in cross border trade including access to finance, trade information and promotion, trade facilitation and logistics and quality management
Other Agriculture Related Strategies
- Other plans have been formulated for agriculture sector in recent years including
- Five Year Plan 2016-17 to 2020-21
- Myanmar National Action Plan for Food and Nutrition Security (MNAPFNS)
- Myanmar Climate Smart Agricultural Strategy
- Myanmar Rice Sector Development Strategy
- Food Value Chain Road Map
- Agricultural Sector Policies and Thrusts for Second Five Year Short Term Plan of MOALI (October 2016) and Others
Source: Ministry of Agriculture, Livestock and Irrigation
Interviews with Myanmar Agricultural Equipment Industry Experts, Industry Articles, Company Websites & Ken Research Analysis
5. With Government Initiatives and Public-Private Partnerships, the industry has high potential to grow more in the future
Entities such as Myanmar Agriculture Network are Developing the Agricultural Industry
Government Initiatives
- Transform in a mechanized agriculture system by increasing the usage of quality farm machineries
- Support the process of transforming agricultural commodity value chain by implementing usage of equipment in post-harvest and value-added activities, thus enhancing quality of agricultural products
- Support Capacity Building for technological development in agro-based industry for using modern machineries and equipments in primary and value-added process.
- Form and Enact Laws, Procedures and Directives for safe use of fertilizer, pesticides, herbicides, medicines and vaccines
- Support infrastructure development and upgrading initiatives to ensure production of safe & high quality agricultural and livestock products for high end domestic and international markets domestic
- Support improved access and use of quality seeds of crops, good animal breeds and fish fingerlings to enhance the production and improve the quality of agriculture, livestock and fishery products.
| Parameters |
2018 (April- September)1 |
| Number of AMD Stations (Dec. 2017) |
119 |
| Number of Tractors Service Providing by AMD |
1440 |
| Number of Combine Harvesters Service Providing by AMD |
299 |
| Number of Transplanters Service Providing by AMD |
48 |
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