Agriculture and Rural Transformation in Myanmar

Implications for Development Strategywith a Spotlight on Shan State

By Ben Belton, Isabel Lambrecht, Duncan Boughton

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Outline• What do we mean by agricultural and rural transformation

(A/RT)?• Why does it matter for USAID programming in Myanmar?• How do we generate evidence on A/RT?• What is the evidence on drivers, trends and constraints to

A/RT?• Overview of findings from the Delta and Dry Zone• Spotlight on Shan State: similarities and contrasts to Delta

and Dry Zone• Implications for development strategy• Q&A / Discussion

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Agricultural and Rural transformation (A/RT) defined• A/RT refers to the process of expansion and diversification

of the rural economy in response to market opportunities and productivity growth

• Look at agricultural and rural economy transformation jointly because of strong linkages (multiplier effects) between farm and non-farm activities

• Drivers of A/RT typically include urbanization, trade, infrastructure, migration, technology, financial services

• Geography and agro-ecology shape farmer and agri-business response to these drivers as well as outcomes.

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Relevance to USAID programming

• Outcomes of A/RT processes are of direct relevance to a wide range of USAID objectives: inclusive development, poverty reduction, food and nutrition security, gender equity, and resilience

• A/RT processes can be shaped by USAID engagement and programming to improve positive outcomes and avoid/mitigate negative ones

• Example of rate of outmigration from rural areas that can have positive and negative outcomes

4

FSPP Survey Locations• 2015: Mon State Survey

• 2016: Delta Region Survey (with aquaculture VC)

• 2017: Dry Zone Survey (with pulses and oilseed VCs)

• 2018: Dry Zone Variety Adoption and Seed Demand

• 2018: Southern Shan State (with maize and pigeonpea VCs)

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Survey TopicsHousehold Livelihoods • Land access• Farm enterprises and profitability• Farm technology & mechanization• Credit access• Farm and non-farm employment• Migration• Gender• Household income shares

Off-farm value chain stages• Aquaculture• Pulses• Oilseeds• Maize• Rubber

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Summary of A/RT in the Delta and Dry Zone1) Agriculture is the largest source of rural employment and, with

growing urban demand for high quality and diversified food, a key potential driver of sustained growth in the rural economy.

2) Migration is accelerating, driving up rural wage rates.3) Remittances received by migrant households are mainly used for

day to day expenses, including health and education.4) Formal sources of credit have expanded, reducing interest rates.5) Labor scarcity and increasing wage rates, combined with bank

finance for machinery rental services, is driving extremely rapid mechanization.

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Number of agricultural machinery supply businesses by township, 1994-2018 (Delta & Dry Zone Enterprise surveys)

Spatial growth in machinery supply businesses during the past 25 years

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Summary of A/RT in the Delta and Dry Zone (2)

6) Access to a wide range of goods and services, especially transport and communications, has improved rapidly in rural areas.

7) Agriculture is under-performing relative to potential due to:• poor water control (irrigation and drainage)• Limited access to improved varieties / quality seed• inefficient use of fertilizer and pesticides• limited diversification into high value farm enterprises

(aquaculture, livestock, fruit and vegetables)• Instability in output prices, especially for products heavily traded

with India and China9

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Shan Agriculture and Rural Economy Survey (SHARES)

• Focus: Agriculture and the rural economy in South Shan, with particular emphasis on maize & pigeon pea value chains

• Household survey: 1562 HH in 99 villages in 9 townships

• Representing all village tracts where maize or pigeon pea grown

• Community survey: in 323 villages in 12 townships

COMMUNITY SURVEY

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12

Administration # villages % of villagesGeneral Administration Department (GAD) 211 65.3Pa'O Self-Administered Zone 74 22.9Danu Self-administered Zone 33 10.2Shan State Army 2 0.6Other 3 0.9

Ethnic diversity & Access Ethnically diverse• Villages contain 1 – 12 different ethnic groups (average 2, total 19)• Pa’O, Shan and Burmese+ Danu, Taungyoe, Kayan, Innthar, Lahu, Palaung, Kayin, Li Sue …• One third of communities have households with mixed ethnicities

Obtaining permission to work in areas outside of direct government control is difficult...

Half of all villages (53%) ever experienced armed conflict• 25% experienced conflict in the last 25

years

Consequence for households in these villages:• Forced to work as laborers or porters:

87%• Livestock killed / stolen: 28%• Forced to relocate : 19%

13

History of conflict

0

2

4

6

8

10

12

1419

7819

8119

8419

8719

9019

9319

9619

9920

0220

0520

0820

1120

14

Shar

e of

vill

ages

Final year of conflict

14

0102030405060708090

100Sh

are

of v

illag

es

School Post=primary school Health infrastructure Electricity Mobile internet Paved road

Infrastructure

- 54% access to paved road -> Dry Zone: 75%

- 24% access to public electricity -> Dry Zone: 35%

15

51

86

60

101

0 50 100

now, dry season

5y ago, dry season

now, wet season

5y ago, wet season

Time to nearest city (minutes)

Increasing mobility and reduced travel times, but infrastructure lags behind Dry Zone

Mobility

16

Access to finance

Informal

Formal / semi-formal

13

87

1

97

35

20

8

80

4

23

25

29

0

33

41

5

22

44

51

0 20 40 60 80 100

Village revolving fundMya Sein Yaung

CooperativesPrivate bank

MADBMicrofinance /ngo

Gold shop/pawn shopPrivate moneylenders

Friends/relativesAgri-produce traders

% villages with min. 1 household taking credit from ...Shan Dry Zone

3915 39234305

3436 34403779

0

500

1000

1500

2000

2500

3000

3500

4000

4500

2012 2015 2017

Real

wag

e (2

017

MM

K)

Men: monsoon Women: monsoon

No significant changes in real agricultural wages over time

Gender gap is smaller than other regions of the country: women earn on average 12% less than men in the monsoon season

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Agricultural wages

-> Dry Zone: ± 40% increase from 2012-2016

-> Dry Zone: 20% gender wage gap

18

10

20

17

7

6

7

5

4

0 20 40

Restaurant/bar

Prepared food stall

Betel nut stall

Teashop

% of villages with min. 12007 2012 2017

Growth of non-farm enterprises

Shan Dry Zone **

0%

17%

81%

45%

Development assistance projects

Water25%

Roads26%

Education20%

Electricity12%

Health6%

Agriculture3%

Other8%

Government projects

Water31%

Roads14%

Education19%

Electricity2%

Health7%

Agriculture

10%

Other17%

Non-government projects

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(57% of villages)(66% of villages)

Very few farmer groups, the existing ones are small and recent.

% of villages with… association Year established # members

Any farmer organizations in this village 7.1 2015 29NGO farmer group 3.4 2015 31Central Cooperative Society 0.6 2015 37Myanmar Farmers' Association 0.3 2013 5Other 3.1 2015 30

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Farmer associations

HOUSEHOLD SURVEY

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jenniehilton

High levels of access to agricultural land

77%

8%

15%Landed Farm Households

Landless Farm Households

Non-Farm Households

85% of HH have access to land (60% in DZ; 40% in Delta)22

Small landholdings

9%

24%

67%

Tercile 1

Tercile 2

Tercile 3

• Average Land Owned by Landed Farm Households

• All – 3.5 acres• T1 – 1.5 acres• T2 – 4.3 acres• T3 – 10 acres

(Smaller on average but more evenly distributed than DZ & Delta)

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(DZ 5, Delta 10)

Limited land titling

49

30

14

2 3 0.50

10

20

30

40

50

60

Form 7 Form 105 Contract TaxReceipt

AINGrant

Other

Perc

enta

ge

25%

75%

Agri: Parcels with Land DocumentAgri: Parcels without Land Documet

• Most land tenure insecure (untitled land defined as ‘wasteland’);• Cannot be used access formal credit (e.g. MADB)• Land titles overwhelmingly in name of male HH head 24

(87% of DZ parcels have Form 7/Form 105)

Document

Livelihoods in Shan dominated by farming, Agricultural labor & non-farm income < Dry Zone

Income source Landless Tercile 1 Tercile 2 Tercile 3 All

Own farm income 19 41 65 76 58

Agricultural labor income 10 12 8 3 7

Non-farm income 71 47 27 21 36

Dry Zone

28

19

52

Share of income, by source and landownership status (% of total)25

High diversity of crops grown (mean 9.7 per HH)85%

59% 58% 57%46% 45% 44%

30% 26%15%

7% 6%

Share of households growing crop type 26

Many high value crops, but mostly grown on small area 3,

100,

176

1,67

0,54

5

1,56

0,31

5

1,51

1,68

8

1,24

2,00

4

1,01

4,58

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742,

424

690,

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621,

119

613,

906

539,

863

496,

362

410,

991

405,

000

365,

882

342,

139

335,

814

310,

789

305,

805

287,

537

275,

751

254,

993

238,

217

216,

460

187,

788

171,

190

163,

398

143,

314

141,

570

141,

154

128,

232

123,

257

111,

233

109,

488

107,

921

69,3

38

67,3

53

56,0

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50,0

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46,6

67

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99

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1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

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Mean crop gross margins (MMK/acre)27

High level of subsistence consumption, but value of crops sold far outweighs value of crops consumed

36%25% 20%

17%64% 75%

80%

83%

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

. 1 2 3

Own consumptionSales income

Tercile 3

Mean value of self-consumed and marketed crops, by land ownership tercile (MMK)

Landless Tercile 1 Tercile 2

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Maize is dominant crop in terms of planted area

Tercile 1 Tercile 2 Tercile 3 AllHH growing maize (%) 35 54 77 46Maize % of total cultivated area -

maize growers (%) 67 60 61 62Maize % of total cultivated area -

all HH (%) 30 40 53 41

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Big increase in maize cultivation in past decade, accompanied by rising input use

0

100

200

300

400

500

600

700

800

900

1990 1993 1996 1999 2002 2005 2008 2011 2014 2017

Num

ber o

f HH

Star

ting

Activ

ity

First planted maize

First used compound

First used pesticide

First used herbicide

Number of HH starting activity, by year first started 30

79 82 95

18 22 17

tercile 1 tercile 2 tercile 3

Perc

enta

ge

machine draft animal

Machines have rapidly replaced draft animals, irrespective of farm size

Share of farm HH using machinery or draft animals in maize and pigeon pea production, by landholding tercile 31

Rental markets facilitate machine access

Share of farming HH using own / rented machines in land preparation and threshing 32

-

20

40

60

80

100

2007 2012 2017 2007 2012 2017 2007 2012 2017

2 WTin land preparation

4 WTin land preparation

Machineryin threshing

% o

f HH

usin

g m

achi

ne

HH using rented machine HH using own machine

Moderate levels of migration; mix of international and domestic

• 14% of HH have a migrant at present; 7% of individuals of working age are migrating (c.f. DZ 30% HH; Mon 49% HH)

• Migrants are young: 84% aged 15-29 at time of migration • Roughly even gender split – Men 53%; Women 47%• More current international migrants than domestic (65:35), but

domestic increasing rapidly• International: 88% Thailand• Domestic: 79% urban; 63% within Shan

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Most migrants send remittances, remit significant amounts

Migrant type

Migrants remitting in

past 12 months (%)

Average value of remittances

( MMK/month)All 58 66,791Domestic 39 46,037International 73 76,033Male 58 61,544Female 57 73,981

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Most remittances used to cover cost of everyday expenses

1st reason (%) 2nd reason (%)Day to day expenses 52 0Farm operating costs 9 21Medical expenses 7 17Repayment of debt 7 1Education costs 6 35Housing 6 8Child care 5 10Savings 3 3Purchase agricultural assets 5 4Donations 2 1

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Opportunities in Shan State• South Shan is promising in terms of potential for inclusive agriculture

driven growth of the rural economy, including agro-tourism. • Investments to leverage additional value from existing crop supply chains

(e.g. better varieties, greenhouse and small-scale irrigation, improvements in cold chain, packing and handling for fruits and vegetables, geographical indications, branding, organic certification).

• Livestock production system development. • Improved financial services (tailored to ways in which households use

formal and informal credit, remittances, and farm and non-farm incomes).• Formalization of trade with China and diversification of markets

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Broad Implications for A/RT programming• Regional conditions are very important for A/RT programming• Improve market responsiveness through agricultural diversification

and value addition, requiring finance and quality assurance, is key to sustained rural economic growth

• Improve trade regimes and market diversification for price stability• Increase productivity through effective private and public research

and extension systems• Improve understanding of causes of poor nutrition indicators in

highland areas and urban areas for targeted interventions• Look for ways to reduce the risks and maximize the benefits of

migration – language and skills training, loans, awareness of rights• Track impacts of recent changes in land law on smallholders with

insecure tenure 38

Thanks and time for Q&A….

Detailed reports can be found at:

www.canr.msu.edu/fsp/countries/myanmar

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