Roadmap of EU Office, Myanmar Corn Farmers' Association

ROADMAP OF MYANMAR CORN FARMER’S ASSOCIATION

7 SEPTEMBER 2016 EU OFFICE OF MYANMAR CORN FARMERS’ ASSOCIATION

Friezenstraat 17, 3604AE, Maarssen, The Netherlands

OUR CONTIBUTION TO FARMERS OF MYANMAR

Roadmap, a contribution to farmers of Myanmar

1

CONTENTS

1. Background Information ................................................................................................................................................... 2

1.1 Myanmar Agriculture Sector ................................................................................................................... 2

1.2 Myanmar's Farming Systems and agricultural productivity ..................................................... 3

1.3 Myanmar Farmers, their Profits and Income ................................................................................... 4

1.4 Investment and Resources: ...................................................................................................................... 5

1.5 Corn .................................................................................................................................................................... 6

2. Contract farming ................................................................................................................................................................... 8

2.1 General Introduction of contract farming ................................................................................................. 8

2.2 Contract Farming Models ................................................................................................................................ 9

2.3 Benefits and risks ............................................................................................................................................. 10

3. Contract Farming in Myanmar ..................................................................................................................................... 11

3.1 Background Information ............................................................................................................................... 11

3.2 Lessons learnt from similar countries which are applicable to Myanmar context ............... 11

3.3 Challenges and potential challenges of CF in Myanmar13................................................................ 12

4. The Roadmap, a contribution to farmers of Myanmar ...................................................................................... 13

4.1 MCFA Organizational Information ............................................................................................................ 13

4.2 Proposed Contract farming system in Myanmar ................................................................................ 14

4.3 Role of Myanmar Corn Farmers Association in Contract Farming in Myanmar .................... 14

4.4 Contract farming Roadmap .......................................................................................................................... 17

5. National Quota-based cultivation and production .............................................................................................. 18

6. Second part of the roadmap ........................................................................................................................................ 199

Agro-ecological Zones_Myanmar ..................................................................................................................................... 20

MCFA’s activities gallery ..................................................................................................................................................... 21

Supply Change Of Corn/ Maize……………………………………………………………………………………………………24

Theory of Change……………………………………………………………………………………………………………………….25

Conclusion………………………………………………………………………………………………………………………………....26

References…………………………………………………………………………………………………………………………………28


2

1. BACKGROUND INFORMATION

1.1 MYANMAR AGRICULTURE SECTOR

Agriculture is a major sector of Myanmar's economy, contributing to 37.8% of country's GDP and

25-30% of total export and employs 70% of labor force in 201515 (61.2% in 2013-14).14 Agro-industrialization is the key to effectively develop Myanmar economy. Myanmar is rich in land, water and human resources, however, various challenges such as macroeconomic policy (credit, market and land policy), technology and infrastructure are obstructing its progress in development.14

Along with political transition and continuous opening up of its economy, Myanmar has great opportunities for its agricultural sector development which can significantly contribute to reduction in poverty especially among its 70% of population living in rural area. It has the agriculture land of about 12 million (Ha) and the Arable land of about 10.6 million Ha. Rice, pulses and beans, sesame, groundnut, rubber, corn, cotton, sugarcane, chili, oil palm, tomato, onion, potato, cabbage, garlic and melon are major crops in Myanmar.1 (Table 1)

Table 1. Area and production by different crop groups 2006/7 - 2013/14

Source: Ministry of Agriculture and Irrigation, Myanmar (MOAI)

Ministry of Agriculture and Irrigation (MOAI) set the following agriculture policy objectives:14,15

To emphasize production and utilization of high-yielding and good quality seeds.


3

To conduct training and education for farmers and extension staff on advanced agricultural techniques.

To implement research and development activities for sustainable agricultural development. To protect farmers rights and benefits. To assist farmers to get fair price on their produce. To assist in lowering production costs, increasing high quality crop production, developing

and strengthening of markets. To encourage transformation from conventional to mechanized agriculture, production of

crops appropriate with climate and extension of irrigated area. To undertake renovation and maintenance works on old irrigation, pumping and

underground water systems. To support rural development and poverty reduction activities through development of

agriculture sector. To encourage local and international investment in agriculture sector for the development

of advanced agricultural technology and commercial agricultural production. To justify and amend existing agricultural laws and regulations in line with current

economic situation.

1.2 MYANMAR'S FARMING SYSTEMS AND AGRICULTURAL PRODUCTIVITY

Reliable and sufficient data is not properly available, however, some literatures show that Myanmar's farming system is highly diverse and productivity is very low and so, not contributing enough for poverty reduction and shared prosperity.1,2

Discussions with the farmers groups pointed out that the choice of crops to produce does not depend on the domestic and/or international market demand. All these factors lead to unbalanced needs and excess for country food consumption and no international market as well as highly unstable prices and market.19

A study to assess potentials for growth and development of vegetable, fruit and flower sub-sectors in Myanmar conducted by the Dutch government in 2015 found the followings: 23

1. Lack of technical capacity: individual and institutional 2. Limited technical knowledge transfer to the farmers: Farmers/growers receive trainings from

the Department of Agriculture but frequency is low and trainings do not always include up-to-date knowledge or comprehensive. They also get advice from retailers and most growers completely relied on these brief advices without proper knowledge. In addition, most growers are not used to reading instructions.

3. Pesticide management: problems of illegal and fake pesticides, loose implementation and control of the national Pesticide law and the committed international convention obligations (Stockholm Convention on Persistent Organic Pollutants, Montreal Protocol on Substances that deplete the Ozone Layer). Use of Personal Protection equipment (PPE) is very poor and there is no management system for empty containers. Most insecticides in use are highly toxic and are harmful for the environment.

4. Integrated Crop Management (ICM) and alternative management strategies practices are limited to only a few farmers. ICM is a 'whole farm approach' which is site specific and includes e.g. the use of crop rotations, appropriate cultivation techniques, careful choice of seed varieties, minimum reliance on artificial inputs such as fertilisers, pesticides and fossil fuels, maintenance of the landscape and the enhancement of wildlife habitats.


4

5. Phytosanitary issues: inadequate knowledge, data and surveillance, lack of adequate facilities and resources.

Low productivity is the result of multiple factors including1,2,3:

inadequate research and use of poor quality seeds: highly insufficient public supply of good seeds and unfavorable situation for private sector to import

farmers' poor knowledge, primitive farming practices and inappropriate usage of fertilizers and chemicals,

relatively low coverage of pubic irrigation system (15% of crop area)

low labor productivity and land productivity

Farm Practices in Myanmar is still highly labor-intensive while labor availability and use of technology are low.

1.3 MYANMAR FARMERS, THEIR PROFITS AND INCOME

An estimate of over 50% of the farmers in Myanmar are landless and are among the poorest, who are working as farm workers.9 [Small land holders who possess less than 1-5 acres of land represent 56% of Myanmar's farming population (FSWG 2011)]. 13 In general, profit from producing crops are low (mostly) to average (some) while that of paddy is lower. A small holder farmer who owns one hectare of farmland and producing two crops a year cannot rely on agricultural income to pull all members of their households out of poverty.2 (Table 2)There even is a perception among farmers that agriculture is not profitable.9

Table 2: Agricultural income is insufficient to pull small farms out of poverty


5

Low labor productivity and land productivity, losses during harvesting and limited access to credit and high financial costs (high interest rate for working capital) are common causes of low income among Myanmar farmers. 1,2,3 Labor productivity in Myanmar is at only about $1,300 per worker/year compared to about $2500 in Thailand and Indonesia.24 (Figure 1) As the daily wages are very low and insufficient for the living, farmers chose to migrate (to urban or abroad) for better-paying jobs, leading to decrease in labor availability.1,2,3 Policy measures such as training and investment in human capital, technology and productivity-enhancing capital facilities will boost labor productivity in Myanmar. 24

Figure 1. Labor Cost and Labor Productivity24

According to field discussions, farmers mentioned that they have to buy the seeds, fertilizers and other farming materials using borrowed money with very high interest rate credited by brokers and crop dealers. Seeds and fertilizers are sold through various brokers with much higher price. At the time they have to sell their products, highly unstable market prices and manipulation by brokers resulted in very low profit or no profit or even loss of income for these farmers. Illegal market through brokers also affects the government by losing tax money.19

Near term interventions are recommended to be better irrigation, diversification of crops, use of improved seeds and access to adequate financing. For longer-term, smaller-scale farming of high-value crops such as flowers, vegetables, tea, etc, is recommended in combination with large-scale farming to reduce the cost and generate profits.9

1.4 INVESTMENT AND RESOURCES:

Foreign investment in agriculture sector is only 0.44% of total, accounting at the lowest share (2013/14). Myanmar government has been inviting investments for agricultural input, production and processing, wholesale market and service industries.14 Human resource is the big constraint in agriculture in Myanmar. Several international UN, INGOs and private sector have high interest and some have already established their presence in the country. There has been some progress in agricultural education transformation and international support for raising capacity. However, it


6

takes time and still in much need of more intensive and locally appropriate means to achieve the competency of Myanmar staffs and actors.4,5

1.5 CORN

An agricultural commodity which can be used as food for humans, livestock feed and bio-fuel, corn is the third largest planted crop after wheat and rice and is a globally prioritized industrial flex crop. The forecast of global corn production for 2016 is 1027 million tons, which is 2.1% higher than previous year. Global utilization is also increasing: 3.4% in feed use of corn which is 588 million tonnes.20 According to a study, in 2020, 852 million MT of corn will be required globally, 72% of which will be by developing countries. 69% of corn will be used for feed, 15% for food and 16% for non-food/feed industrial uses. While only 5% of corn will be used for food purposes in industrial countries, it will be 22% in developing countries.22 Global annual maize supply was less than the demand for livestock feed, with Asia's demand reaching 100million tons by 2009.7

While growing in importance, corn is still a minor crop in Myanmar, with cultivation area of 10% compared to beans/pulses and 6% of paddy.2 About 90% is cultivated in the northwest and eastern parts of the country. 17 (54% in southern interior and 46% in northern interior ecoregions of Shan State.)2 So far, Myanmar government does not have any subsidy program for corn production. Farmers primarily use high-yield hybrid seeds (90%)2,17 and the productivity rate is 60.15tin/acre. Currently, 70-80% share of Myannmar's hybrid corn seed market is taken by CP Group and about 8% by MOAI. 17,18

According to USDA report, Myanmar corn production is growing for domestic consumption and international export. Domestic corn consumption is expected to grow in recent years according to growth of Myanmar's livestock industries, especially poultry and swine and most of corn supplies are delivered to feed mills in Yangon, Mandalay and Shan State. In recent years, there was strong demand from China. Corn production is expected to reach 2MMT and its export is expected to increase in 2016/17. For corn export, there are no trade restrictions. 17

Government and trade sources mentioned that 95-97% of Myanmar's corn exports are taking place along Myanmar-China border.17 However, recent discussions with the corn farmers and traders revealed that the China border transport route has been almost closed and the farmers are facing great difficulty. 19 Corn export in 2013-14 was 933600 MT, with the value of 285.8 million Kyats. (Table 3) According to November 2016 data from MOAI, the total cultivation area of corn is 1069190 acre, production is 54979154 tin (about 1.34 million MT) with productivity rate of 60.15 tin (1.624 MT)/acre.18 (Average yield of maize was 3.95 tons/ha.)2


7

Table 3. Export of major agricultural commodities

Figure 2: Snapshot of the trade sector24


8

2. CONTRACT FARMING8

2.1 GENERAL INTRODUCTION OF CONTRACT FARMING

1. "Agricultural production under contract between producers and their buyers has long been practiced for many agricultural commodities, in most countries around the world. Through contract farming, food processors, traders, distributors and other purchasers of agricultural products organize their procurement systems in accordance with their specific needs for quantity, quality and timing of delivery, among other supply chain management requirements. Contracts may also specify the desired processes for agricultural crop production or livestock rearing, often to comply with domestic and international quality and safety standards for food and agricultural production and trade."8 (FAO, 2015)

2. "Contract farming is a well-known mechanism to coordinate agricultural production and trade, and its use has increased noticeably in recent years. The growing interest in contract farming is associated with recent transformations in food and agricultural systems which make it increasingly difficult to meet consumer demands under more traditional, open market-based procurement strategies. Demographic changes (in rapidly urbanizing areas for example) and rising living standards have required increased food quantities. This increase in demand has led to scientific and technological developments, which in turn have significantly contributed to changes in market demand, the operation of supply chains and the production of raw commodities. The use of contract farming is expanding in developing countries. It opens important opportunities for economic and social development by providing local producers with access to markets and support in the form of technology transfer and credit facilities. Furthermore, contract farming is seen as a potential tool to reduce poverty, contribute to rural development and employment, and increase food security."8 (FAO, 2015)

3. "Under a broad economic approach, “contract farming” generally refers to “a particular form of supply chain governance adopted by firms to secure access to agricultural products, raw materials and supplies meeting desired quality, quantity, location and timing specifications. Contracting is an intermediate mode of coordination, whereby the conditions of exchange are specifically set among transaction partners by some form of legally enforceable, binding agreement. The specifications can be more or less detailed, covering provisions regarding production technology, price discovery, risk sharing and other product and transaction attributes”."8 (FAO, 2015)

4. "This definition of contract farming focuses on the coordination between the different parts of a supply chain, involving various participants and contract modalities. However, contract farming is different from direct sales between producers and buyers through open market spot transactions where the product is delivered immediately against a price. Indeed, contract farming relies on agreements that are made either during production or, more often, before it begins, thus providing certainty for the future delivery and supply of the product. Various contract patterns serve this function in practice. While some contract patterns rely upon traditional relationships, either based on the future sale of the produce or entitlement to the produce arising from granted use of land or


9

animals, contract farming is among the new forms that have developed to meet the changing needs of the economic environment." 8 (FAO, 2015)

5. "While acknowledging that the concept of contract farming can be very broad and focuses on a particular modality of agricultural production based on an agreement between a producer and another party – typically an agribusiness company. Under this agreement, which is designated as an “agricultural production contract”, the producer undertakes to produce and deliver agricultural commodities in accordance with the contractor’s specifications. The contractor, in turn, undertakes to acquire the product for a price and generally has some degree of involvement in production activities through, for example, the supply of inputs and provision of technical advice."8 (FAO, 2015)

2.2 CONTRACT FARMING MODELS: 8,16

Different models of CF are used for different context and commodity:

1. Centralized model: The centralized contractor buying from a large number of small producers typically with strict quota allocation and tight quality control. The level of involvement of the contract may vary and this model might be used for crops such as Tobacco, cotton, barley, sugar cane, banana, coffee, tea, cocoa and rubber.8,16

2. Nucleus estate model: Although similar to the centralized model, under the nucleus estate model, the contractor also manages a central estate or plantation which is used to guarantee downstream customer commitments in the case of shortfalls from producers, or to ensure a certain level of minimum throughput for processing plants. This can also be used for research, extension or breeding purposes. Mainly used for tree crops but can also be used for, e.g., fresh vegetables and fruits for export. 8,16

3. Multipartite model: can involve several partners including government and non-governmental bodies or private companies (including those responsible for credit provision, quality management, processing and marketing, potentially all jointly participating in contracts with producers). It is common in China and governments of Mexico, Kenya and West Africa also invested actively. 8,16

4. Informal model: describes the case where individual entrepreneurs or small companies make simple, verbal agreements with producers on a seasonal basis, perhaps benefiting from government sponsored extension services to support producers. This model has high risk of loss and is usually used for crops which require only a minimal amount of processing or packaging for resale to the retail trade or local markets (vegetables, watermelons, fruits). 8,16

5. Intermediary model: represents a variation on the aforementioned models where a collector (or other intermediary such as a NGO) is used for dealing between the producer and contractor. Sponsors agreed with intermediaries such as collectors, farmer groups, NGOs with a formal subcontract of production and the intermediaries have their own informal arrangements with farmers. It is common in South East Asia (Thailand, Indonesia). 8,16

Important points to note for CF

Compliance with safety requirements

Fast and efficient coordination with the marketing stage

Keeping the quality high and the product safe

Compliance with the standardized protocols


10

Need for application of control and intervention procedures under the hygiene and food safety regulations of destination markets (follow the good agricultural practices)

Need of skills on the producer’s part and strict compliance with quality conformity and traceability obligations.

Intense level of support by the contractor to provide specialized inputs, technical assistance and supervision.

Large capital investment in facilities and other fixed assets such as equipments for production and post-harvest operations

2.3 BENEFITS AND RISKS13

Even though the relationship is not completely equal, through contract farming, benefit is shared as well as the risk.13

Benefits:

Potential to sustain and develop the production sector by contributing to capital formation, technology transfer, increased agricultural production and yields, economic and social development and environmental sustainability

Final customers, as well as all participants in the supply chain, may also draw substantial benefits from varied and stable sources of raw material supply and efficient processing and marketing systems.

Agricultural development

Increase private sector investment and public-private partnership

Farmers: exposed to modern/improved agro-technology which will increase productivity, guaranteed and fixed pricing structure, access to reliable markets, access to some form of credit to finance production inputs, regular crop monitoring, access to technical advice, access to capacity development opportunities

Problems/Risks:

Farmers Sponsors

to balance the prospect of higher returns with the possibility of greater risk

introduction of new crop might cause disruption to the existing farming system

introduction of sophisticated machines may result in a loss of local employment and overcapitalization of the contracted farmer

contractors may manipulate quality standards in order to reduce purchases

staff exploitation monopolistic tendency

danger of the investment money in cases of farmer-landlord disputes

when management chooses farmers who are unable to comply with strict timetables and regulations because of social obligations.

risk of farmers withdrawing from projects

sale of products by farmers to a third party, outside the conditions of a contract, can be a major problem

use of supplied inputs for purposed other than conditions stated in the contract


11

over-reliance on advance money

3. CONTRACT FARMING IN MYANMAR

3.1 BACKGROUND INFORMATION

In 1991, a national scheme to increase large scale commercial entrepreneurial activity was introduced in Myanmar and has attracted some investors from its neighboring countries.13 Since 2005, Myanmar Government encouraged investments for contract farms from China, Thailand, Bangladesh and Kuwait and high-end private businesses. However, only the Thais were believed to have formal agreement to farm 120,000 acres along the Thai-Burma border. Bangladesh and India also expressed interest. In 2008, Bangladesh was reported to have been awarded 50,000 acres of land for the cultivation of soybeans, paddy, onions, maize, tea and sugar cane. 12,13

Local small to moderate scale contract farming arrangements has been happening in Myanmar. Currently, Myanmar government, several global firms, development and finance agencies and local private agribusinesses estates are showing their interest and commitment to it.7

Charoen Pokphand Group of Thailand (CP Group) implemented a contract farming scheme for poppy farmers in upland rural Shan State, northern Myanmar in early 1990s, targeting China's domestic chicken-feed market. 7 Myanmar Agribusiness Public Corporation (MAPCO) has introduced an innovative contract farming model at Naypyitaw Council Area, Central Myanmar and has expanded to other parts of Myanmar for paddy farmers.11

So far, there is no specific policy or laws for contract farming in Myanmar. However, one of the strategies of the Ministry of Agriculture and Irrigation (MOAI) is to promote contract farming.14 Myanmar's ongoing reform of the investment, land and tax laws provide opportunities for successful adoption of contract farming.10 As such, there is a good possibility that contract farming in Myanmar could be implemented successfully and help farmers out of poverty especially small land holders.13

3.2 LESSONS LEARNT FROM SIMILAR COUNTRIES

Positive lessons13

According to the lessons taken from two successful contract farming establishments in Laos and Cambodia, the following important factors are emerged for intensive consideration for CF for Myanmar's small land holding population.

Clear intent between the companies and the farmers: Income generation and technical training of the farmers are the key part of the companies' goals and used contracts to the mutual benefit of both parties.

Agricultural inputs, technical assistance and credit were provided to support small landholders in developing the crops to the specifications in the contract.


12

Farmers' participation was based on the participant's choice and recommendations of the participating farmers' trustworthiness and work ethic was obtained from fellow farmers.

Use of niche crops for a pre-determined market proved a mean of increasing the income of farmers who would have made less per acre on local or traditional commercial crops. Consideration for possible niche crops to be grown with small land farmers could be particularly beneficial given Myanmar's size and climatic range.

As small land farmers often have less access to information available to farmers with more wealth, a contracting company makes information about local and international markets, or the demand for certain crops, available.

As contracting companies introduced new crops to the area, farmers received a wide range of inputs and technical support. In areas where credit, technical training, or other extension service might not be readily available, such as in Myanmar, small land farmers will particularly benefit.

In Myanmar, as a target for developing technical skills as well as reducing poverty, a small farming contract that includes the provision of technical training, credit, and other extension services, could augment possible shortcomings in the existing extension services available in Myanmar.

Farmers association can offer a good model for more independent bodies to negotiate and organize small land farmers. In Myanmar’s context, the inclusion of an independent association in a contract relationship could assist a company in a broad range of support measures; could coordinate farmer, private company, and state concerns; as well as ensure that farmers’ input is included in the contract operation.

Laws protecting the rights of parties in a contract and an efficient reliable legal system are necessary.

3.3 CHALLENGES AND POTENTIAL CHALLENGES OF CF IN MYANMAR13

no legal framework and credible enforcement mechanism for CF in Myanmar since the land holdings are mostly small, the contractor need to contract with a large

number of farmers which can increase cost and complicated in process lack of proper crop insurance scheme over influence or control of a company in a contract, without clear liability or repercussions

for the company in breaching the contract. If a contracting company abuses its power in a contracting relationship, it risks loosing the

crop and credibility with farmers, but farmers risk greater losses to their income, long term ability to farm, and trust of contracting relationships or an interest in taking risk on new crops.

A weak legal system that cannot reliably resolve contract disputes, or ensure some action be taken in a broken contract, could undermine confidence of companies and farmers in participating in contract farming.

The absence or unreliable infrastructure (i.e. out dated or fault irrigation, roads susceptible to seasonal weather) can negatively impact contracted farmers as well as companies.

In Myanmar years of economic isolation and socialist economic policies have led to degradation in the transportation, irrigation, and export infrastructure. Particularly in terms of shipment from the country’s seaports, and the impacts seasonal weather can have on roads, contracting companies could risk losses if harvested crops were not delivered or shipped on time.

What are the basic needs for success of CF in developing countries?6


13

Success of CF is highly dependent on positive support of government and policy makers. Generally the following conditions are important for successful implementation of CF.

Geographical conditions: road infrastructure, access to water, soil types, climate, etc. Political-economic conditions: land-rights policies, market regulation, trade policies and the

risk to socio-economic shocks, Enabling business environment: financial services, conflict resolution systems, investments

subsidies, business development services, brokering services and farmers organizations.

4. THE ROADMAP, A CONTRIBUTION TO FARMERS O F MYANMAR

4.1 MCFA ORGANIZATIONAL INFORMATION

Currently, there are 8 state and division sub-committees with 12980 farmer members. Five more states and divisions also requested for establishment of sub-committees in their regions and we will proceed with that once we are ready.

Vision: All Myanmar's farmers earn enough regular income which is sufficient for their living.

Mission:

1. To build capacity and promote empowerment of Myanmar farmers 2. To advocate for favorable policy change and create enabling environment for

farmers 3. To establish a contract farming system in Myanmar agriculture and livestock

sector 4. To contribute to development of a market-based and quota-based crop

cultivation.

Organizational information

Registration number: inland/ 0279

Address: No. 19 (B), Fifth Floor, Thadipantan Street, Kyotmoung, Termwe Township, Yangon, Myanmar.

PH: +31612281919. +95 9767014356, +959794364009, +959260901001

email: [email protected], [email protected],

mailto:[email protected]



14

4.2 PROPOSED CONTRACT FARMING SYSTEM IN MYANMAR

Considering Myanmar's current political, economic, legislation situation and farmers' capacity, power and their working environment situations, as well as lessons and best practices from the developing countries of similar context, MCFA proposes the use of intermediary model for contract farming in Myanmar. As MCFA is an actual farmers' organization, organized without any influence from contractors, government or any other entity, it can properly represent all member farmers for their own benefit.

Intermediary model is a model where a collector (or other intermediary such as a NGO) is used for dealing between the producer and contractor. Sponsors agreed with intermediaries such as collectors, farmer groups, NGOs with a formal subcontract of production and the intermediaries have their own informal arrangements with farmers.8,16

Government administration, relevant ministries and institutes, input/service companies, in-country and international contracting farms, United Nations and international non-governmental organizations, community-based organizations and civil society organizations and banks will involve in this process. Through this model, MCFA will represent member corn farmers as an intermediary independent farmers' association in dealing with the stakeholders. In this way the power imbalance between the contractors and farmers can be reduced the rights of farmers can be achieved.

4.3 ROLE OF MYANMAR CORN FARMERS ASSOCIATION IN CONTRACT FARMING IN MYANMAR

MCFA will take the leading role as an association representing all member farmers to get their voices heard, to work towards achieving their rights and to promote their quality of life. We also realized the positive implications of contract farming in developing countries like Myanmar, such as inclusion of farmers in the market, food security and poverty reduction. Lessons learnt from previous CF establishments pointed out the critical issue of power imbalance, capacity and empowerment of farmers and farmer associations, importance of farmers' voices to be heard by the policy makers and crucial need of government's support.

Since its establishment in August 2016, MCFA has conducted awareness raising mass meetings with the farmers from various geographic areas such as Kayah, Sagaing, Mandalay and Shan States. Many farmers showed their enthusiasm to participate as members. The number of members increased quickly and many other states and divisions sent their requests for establishment in their regions. They realized the collective power of the farmers’ association in dealing with government and agriculture businesses. Most farmers appreciated the contract farming system approach since they have been struggling for their living under market instability and manipulation by brokers and


15

businesses for such a long time. MOAI is mandated to promote contract farming and current Myanmar government is putting its efforts on positive reform of the investment, land and tax laws supportive for CF. As such, we have confidence that CF in Myanmar could be implemented successfully with the cooperative efforts of government, private businesses, MCFA and other stakeholders.

Figure 3. Role of MCFA in contract farming

MCFA’s Short and long-term plan

Project list: Short term programs (1 to 2 years)

1. Data collection and analysis (supply & demand) 2. Capacity Building for farmers ( understanding banking system, contract, agreement and farm

management) 3. Advocacy (public awareness, organization and legislation)

Government

MCFA representing farmers

Buyer Contractor

s

Input & Service

Companies

Banks

UN, INGO, CBOs

Insurance companie

s

Capacity building

Advocacy & capacity

Insurance

Contra

Contr

Contract management

Finance management

Finance Management


16

4. Contract farming system establishment

Project list: Long term Programs (2 to 5 years)

1. Improvement of Export Mechanism ( Shipping logistics, Port capacity and Warehousing) 2. Developing the agro-based Industry (Bio-Energy, Edible Oils and Fertilizers production

projects) 3. Livestock farming systematized in contract farming and quota-based production.

For contract farming, MCFA will take the representative intermediary role on behalf of member corn farmers in most of the dealings with stakeholders of higher power, as mentioned in the figure 3, on the followings:

1. Advocacy and lobbying with the government

for development of policies/laws regarding contract farming and tax and incentive laws

push for enforcement of existing agricultural laws and farmers' rights

also advocate for other support from the government such as o machinery and infrastructures, seeds, fertilizers o research for quality seeds, o participate as one of the contractors for domestic food security, o protect the farmers and contractors in case of unexpected losses, o development of agricultural insurance system and o more intensive and updated capacity building and knowledge/skill sharing

2. Capacity building of farmers

To be an information source

To write proposals for practical capacity development projects and mobilize funding

To negotiate and advocate the government, institutions, UN, INGOs, CBOs and input/service companies as well as contractors to provide capacity building activities for farmers

3. Exploring, networking and getting collaboration agreements with the buyer contractors and input/service companies and other associations

4. Contract Management

Development, negotiation and agreement of terms and conditions for contracts with various buyer contractors on behalf of farmers

Development, negotiation and agreement of terms and conditions for contracts with input and service companies on behalf of farmers

To provide sufficient information to the farmers

Ensuring presence in contracting between individual farmers and contractors by performing contract signing at its field offices.

Getting support and agreement terms with relevant banks for financial management of contracts between farmers and buyer/input/service contractors.

Making sure of smooth implementation of contract farming system. 5. Insurance:

To educate and encourage farmers and businesses to ensure to be insured.

To advocate and negotiate with the insurance companies on behalf of farmers. 6. Monitoring and Evaluation

To monitor both parties follow the terms and conditions of the agreed contracts

To evaluate the situation of contract farming system in its project areas and revise as necessary


17

4.4 CONTRACT FARMING ROADMAP

FIGURE 4: ROADM AP F OR C ONTR A C T F ARMIN G IN M YA NMAR

This is the roadmap to protect Myanmar farmers from long-standing unstable market and to support them get their rights to involve in decision making of production and the market via their associations and federations.

Figure 4 explained how the contract farming will be operated in Myanmar.

Technically speaking, it is the downstream process of crop cultivation and production. The contract farming system has been never exercised in Myanmar.

First of all, farmers need to sign contracts with manufactures (contract farming cooperatives) , agriculture related technological and other service companies and farm Input suppliers (seed, fertilizer, pesticides..etc). Contract farming cooperatives will take responsibilities for farmers' agricultural production expenses and will deposit their investment money into the bank in advance.

Contracts

Contracts

Contract farming Cooperatives

Cro

p S

ale

Inco

me

Farmers & MCFA

Bank

Government Tax

Farm Service Companies

Farm Input suppliers

Pay

me

nt

for

cult

ivat

ion

& In

pu

t


18

These cooperatives and farmers will also ensure the fair price of the agricultural products. Farmers are free to choose the agricultural-related service companies that they would like to enter contract agreements. However, the advance money provided by the contract farming cooperatives are not eligible for farmers to use for matters un-related to the crop cultivation.

In addition, farmers can use these advance money only to buy agricultural materials and input necessary for crop cultivation such as seeds, fertilizers, to pay fees for agricultural-related services and other agreed activities according to the contract.

When the products are received from the farmers, Contract farming cooperatives will transfer the excess money to the farmers into their bank account.

It is the responsibilities of geographic-wide farmers associations, crop-specific farmers associations and government Economic Affairs Ministries to provide utmost support and action to achieve these objectives. Furthermore, in order to fill the country's food need, the government and the military will also need to help and provide support by means of direct purchase from the farmers.

Potential impact of agricultural marketing through contract farming

Direct contracts before the start of crop cultivation between farmers and agricultural-based national and international companies will ensure the stronger agricultural market.

All the farmers will get strong and regular income.

5. NATIONAL QUOTA-BASED CROP CULTIVATION AND PRODUCTION

In Myanmar, farming without proper market research has been causing deficit and imbalance for national consumptions leading to unstable market as well as unstable food consumer prices in the country. It is necessary to make sure National agricultural consumption needs and demand are met before consideration for the international agricultural export.

In addition, government should purchase the crops from farmers by direct contracting with them to reserve for the needs for military and state emergency situations. Now is the time for each state and divisions to calculate and produce crops in quota system, based on the country's needs and demand.

In this way, agricultural production will be enough for the country consumption and the food prices will become stable. On excess, crops can be systematically exported internationally. MCFA will advocate and contribute to quota-based system development and establishment in Myanmar.


19

6. SECOND PART OF THE ROADMAP

After its start-up phase, MCFA will continue implementation with its second part of the roadmap:

1. Improvement of Export Mechanism ( Shipping logistics, Port capacity, Warehousing and Storage Silo)

2. Developing the agro-based Industry (Bio-Energy, Edible Oils and Fertilizers production projects)

3. Livestock farming systematized in contract farming and quota-based production.

VALUE ADDED- AGRICULTURE AND AGRICULTURAL VALUE CHAIN

Value added-agriculture and agricultural value chain are the important parts of the Roadmap too. For example, food processing is viewed as the value added-agriculture.

The key-players of the food processing are the agriproduct-based manufacturers and entrepreneurs with modern technology, research and development. Education and Technology will add the value of the crop higher than before too.

The livestock farming is a best way to maintain the stability of the farmer’s income. One kilo of maize can be fed to chicken or one ton of corn silage is enough for a year to feed two or three cows for milk . Farmer can earn more money from selling the chicken and milk value of which are clearly higher than maize and corn silage. Eventually, his income is stable that leads his life in stability.

National planning and commercial thoughts and activities will complete the mission.

The driving force is money: money drives the farmers to do the livestock farming for getting money more and more.

All output and input of the farms in Myanmar should be systematized in contract farming and national quota-based crop cultivation and production.


20

FIGURE 5. AGRO-ECOLOGICAL ZONES_MYANMAR


21

7. MCFA’S ACTIVITIES GALLERY

MCFA field committees organization meetings

Community farmers awareness raising on association and contract farming


22

Networking and discussion with stakeholders


23

Field visit to Europe


24

Supply chain of corn/ maize

Corn Farmers

drying screening

Brokers and Dealers

Animal feeds

(20%)

Liquor & snack (10%)

Profit-oriented

wholesalors

Export

(5%)

Border Trade

(65%)


25

Empowered and active

advocates & CSOs

Increased QOL of farmers

More powerful & louder

voice

Effective, influential & wider scope

impact of advocacy

Positive change - policies,

accountability

Advocacy & Lobbying Activities -

increased, more focused, higher

quality

Advocacy Strategy

Development

Advocacy Department

Establishment

Project-Strengthened

capacities

Existing Capacities

Capacity building of other SHGs

& local CSOs

Experience sharing & motivation

More Coalition

More Linkages Capacity

development

Recognition & Sympathy

Raised awareness- gov. &

non-gov. actors

Supportive and enabling environment

Empowered & engaged


26

Conclusion

Myanmar, where China and India meet, given the diverse agro climatic zones, can be a competitive producer of a large number of crops, and a potential supplier for two of the most populated countries in the world.

There is a Need to convert our factor price advantage into sustainable competitive advantage.

Contract farming offers one possible solution.

Welcome to your cooperation

Thank you

Edited by Dr. Shwe Shwe Aye and Mr. Tun Aung

EU Office of Myanmar Corn Farmers’ Association

Friezenstraat 17, 3604AE, Maarssen, The Netherlands

Tel: +31 61228 1919

E-mail: [email protected]

Website: www.eumya.com


http://www.eumya.com/


27

References_MCRA roadmap

1. Union of Myanmar Federation of Chamber of Commerce and Industry (UMFCCI), Myanmar.

November 2013. Country Presentation Myanmar. Progetto Integrato di Mercato - PIM

ASEAN. Presentation.

2. World Bank (WB). 2016. Economic and Sector Work Report No. 100066 - MM. Myanmar:

Analysis of Farm Production Economics. February 2016.

3. Zorya. S. May 2016. The World Bank (WB) blog post. East Asia and Pacific on the Rise:

Unleashing Myanmar's Agricultural Potential. Accessed from:

http://blogs.worldbank.org/eastasiapacific/unleashing-myanmar-agricultural-potential, on

03.12.2016.

4. Aeres groep. 2015. Reform of the Agricultural Knowledge system in Myanmar:

Opportunities for Myanmar-Netherlands cooperation. Report of a quick scan commissioned

by Directorate General for Agro, Ministry of Economic Affairs, The Netherlands.

5. Arie de Jong, Teus Korevaar. June 2015. Repot Agricultural Vocational Education Myanmar.

Opportunities aiming at strengthening Agricultural Vocational Education and the

Agricultural Knowledge and information system. A quick scan commissioned by Directorate

General for Agro, Ministry of Economic Affairs, The Netherlands.

6. Ton. G, Vellema. W. D' Haese. M, Desiere. S, Weitruschat. S. December 2015. Systematic

Review of the Effectiveness of Contract Farming for Income and Food Security of

Smallholder Farmers in Low- and Middle-Income Countries.

7. Kevin Woods, May 2015. CP maize contract farming in Shan State, Myanmar: A regional case

of a place-based corporate agro-feed system. Conference Paper No. 35. Land grabbing,

conflict and agrarian-environmental transformations: perspectives from East and Southeast

Asia. An International Academic Conference 5-6 June 2015, Chiang Mai University.

8. Food and Agriculture Organization of the United Nations (FAO), International Institute for

the Unification of Private Law (UNIDROIT), International Fund for Agricultural Development

(IFAD), Rome. 2015. Legal Guide on Contract Farming.

9. Japan International Cooperation Agency (JICA) website. Topics and events. Myanmar:

Making Agriculture a Profitable Business in Myanmar. Accessed from:

https://www.jica.go.jp/myanmar/english/office/topics/140515.html, on 5 December 2016.

10. Shim, Jeff, Contract Farming in Myanmar: Perspectives from the Pre- and Post-Establishment

Framework in Foreign Investment Literature (April 7, 2016). Contract Farming in Myanmar:

Perspectives from the Pre- and Post-Establishment Framework in Foreign Investment

Literature (Forthcoming). Available at SSRN: https://ssrn.com/abstract=2760690

11. Myanmar Agribusiness Public Corporation (MAPCO) website. Contract Farming - An

innovative business model. 2016. Accessed from: http://www.mapco.com.mm/business-

highlights/contract-farming, on 5 December 2016.

https://ssrn.com/abstract=2760690


28

12. Wikileaks: Contract farming in Burma, 12 January 2009. US embassy, Rangoon. Accessed

from: http://www.burmalibrary.org/docs13/Contract_farming-Wikileaks.pdf, on 5

December 2016.

13. Thomas A. Baker, Vahu Development Institute, Research Associate. October 2011. Lessons

for the potential use of contract farming with small land holding farmers in Myanmar.

14. Ministry of Agriculture and Irrigation, Myanmar. November 2014. Country Statement of

Myanmar. Accessed from:

http://www.fao.org/fileadmin/user_upload/faoweb/docs/MM3/Statements/Myanmar.pdf.

on 07.12.2016.

15. Food and Agriculture Organization of the United Nations (FAO). 2016. Website. Myanmar:

Myanmar at a glance. Accessed from: http://www.fao.org/myanmar/fao-in-

myanmar/myanmar/en/. on 07.12.2016.

16. A.K. Chakrabarty. Department of Commerce, Chakdaha College, Kalyani University, India.

2015. Contract Farming: Conceptual Framework and Indian Panorama. Journal of Economics

and Business Research, ISSN: 2068 - 3537, E – ISSN (online) 2069 – 9476, ISSN – L = 2068 –

3537 Year XXI, No. 1, 2015, pp. 25-42

17. Swe Mon Aung. 2016. USDA Foreign Agricultural Service: Gain Report Number: BM 6002.

Global Agricultural Information Network. 2016 Annual Report.

18. Department of Agriculture (DOA).MOAI, Myanmar.2016. Data information received through

email.

19. Discussion with farmers, farmer associations. July to October 2016.

20. FAO, 2016. Website. World Food Situation. FAO Cereal Supply and Demand Brief. Accessed

from: http://www.fao.org/worldfoodsituation/csdb/en/, on 10.12.2016.

21. USDA (United States Department of Agriculture). International Grains Council. 2016. Grain

Market Report. GMR 472- 24 November 2016. Accessed from:

http://www.igc.int/downloads/gmrsummary/gmrsumme.pdf, on 10.12.2016.

22. International Service for the Acquisition of Agri-Biotech Applications (ISAAA). 2003. Global Demand for Maize in 2020 to increase by 45% potential role of BT maize. CropBiotech Net.K Sheet. Accessed from: http://www.isaaa.org/kc/Publications/pdfs/ksheets/K%20Sheet%20(Global%20Demand%20for%20Maize).pdf, on 10.12.2016.

23. Peeters,, F., J. van Meggelen and H. Schepers, 2015. Crop protection and pesticide risk assessmentMyanmar; Towards sustainable agricultural production and export of high value crops. Wageningen,Alterra Wageningen UR (University & Research centre), Alterra report 2621. 82 pp.; 12 fig.; 27 ref.

24. International Monetary Fund (IMF), Washington, D.C. September 2015. IMF Country Report No. 15/268. Myanmar: Selected Issues.

25. Netherlands Embassy, Myanmar. 2015 May. Progress in Myanmar_Netherlands Agriculture

Cooperation Report. Accessed from:

http://myanmar.nlembassy.org/binaries/content/assets/postenweb/m/myanmar/netherl

ands-embassy-in-myanmar/general-overview-of-agricultural-relations-myanmar-

netherlands.pdf on 03.12.2016.

26. Kevin Woods. May 2015. Land grabbing, conflict and agrarian-environmental

transformations: perspectives from East and Southeast Asia. CP maize contract farming in


29

Shan State, Myanmar: A regional case of a place-based corporate agro-feed system.

Conference Paper No. 35. An international academic conference, Chiang Mai University.

27. GIZ. 2015. Myanmar's Financial Sector: A challenging environment for Banks.

28. JICA Japan International Cooperation Agency. 2013. Data collection survey on agriculture

sector in the Republic of the Union of Myanmar. Final Report, Sanyu Consultants INC.

29. Chakrabarty.A.K. Department of Commerce, Chakdaha College, Kalyani University, India.

2015. Contract Farming: Conceptual Framework and Indian Panorama. Journal of

Economics and Business Research, ISSN: 2068 - 3537, E – ISSN (online) 2069 – 9476, ISSN –

L = 2068 – 3537 Year XXI, No. 1, 2015, pp. 25-42.

30. Department for International Development (DFID). 2015. DFID's Conceptual Framework on

Agriculture. November 2015.