Economic Reforms and Agricultural Development in Myanmar

Abstract

This article examines the impact of economic reforms on the development of the agricultural sector in Myanmar It begins with a brief presentation of the major elements of economic reforms since 1987, and examines the agricultural sector in the light of these policy reform measures as well as of other more direct measures undertaken by the state. The authors also present some of the issues which need to be reviewed in order for the agricultural sector to have rapid but sustainable and equitable growth. I. Introduction Myanmar is the largest country in mainland Southeast Asia. The total land area of the country is 676,577 square kilometres and its population in 1994 was about 44 million. Although Myanmar is situated in the monsoon region of Asia, its climate is greatly modified by geographical position and topography. The coastal regions receive annually about 5,000 mm of rain, while the delta regions receive nearly 2,500 mm of rain. In the Dry Zone, average rainfall is less than 1,000 mm (40 in) and in some places as low as 500 mm (20 in) resulting in significant soil moisture deficiency throughout those areas. For an agricultural country like Myanmar which relies rather heavily on the monsoon rains, climatic changes and the economic environment affecting agriculture are very important since agriculture is the major source of income and employment for the majority of its population. The agricultural sector accounts for nearly 54 per cent of gross domestic product (GDP) and provides employment to about 65 per cent of the labour force. While it is often noted that only about half of its cultivable land area of 45 million acres is under cultivation, what is often left unobserved is that perhaps as much as a third of rural households mainly engaged in agriculture have neither land nor livestock. This article will examine the impact of economic reforms on the development of agriculture sector in Myanmar. It will begin with a brief presentation of the major elements of economic reform since 1987. The development of the agricultural sector will then be examined in the light of these policy reform measures as well as of other more direct measures undertaken by the state which, according to its objectives, is promoting the development of the agricultural sector. Before concluding, we will consider some of the key issues which need to be reviewed in order for the agricultural sector to have a rapid but sustainable and equitable growth. II. Economic Reforms in Myanmar Reform measures in Myanmar may be said to have taken off with the liftting of the twenty-one year old restrictions on the procurement and domestic trade of rice and eight other crops such as wheat, maize, pulses, cotton, rubber, and sugarcane in September 1987. After the State Law and Order Restoration Council (SLORC) took over the reins of government in September 1988, one reform measure quickly followed another, as shown in Table 1 below. Of the many policy reform measures mentioned above, the decontrol of prices of major agricultural products, the removal of restrictions on private sector participation in domestic and foreign trade and regularization of border trade have, more than any other, changed the way the agricultural sector operates. Unlike in the past and except on paddy land, farmers can now freely choose the crops they grow and can also process them and sell them freely. Distribution of farm inputs like chemical fertilizer, pesticides and seeds, formerly handled solely by the Myanmar Agriculture Service (MAS), is also being gradually transferred to the private sector, and subsidies on farm inputs such as fertilizer are being scaled down. Finally, except for rice and some industrial crops, private exports of agricultural produce have also been permitted. Thus, the modus operandi in the agricultural sector has certainly changed. But, it is as yet neither fish nor fowl. On the one hand, market mechanism and the price signals would determine many of the decisions made by individual farmers. …