rice production was adopted in respect of oilseed crops such as sesame and groundnuts.
As will be described later, imports of edible oil increased dramatically after 1988. As a result,
the domestic edible oil price was lowered to a level close to that of the international price. On the
other hand, there was a remarkable increase in exports of pulses and beans, and before long, they
became Myanmar’s largest export item. In due course the domestic price of pulses increased quite
rapidly. Pulses and beans underwent a process of rapid adjustment with the international market
price. In this sense, the largest change that Myanmar agriculture has experienced since 1988 has
been departure from a closed trade regime, which had been isolating the domestic market from the
international market.
By contrast, in the case of rice, since 1988 the domestic price has been continuously repressed
at about half of the international price, although the disparity narrowed somewhat over time. On the
other hand, the indispensable inputs needed for rice cultivation (chemical fertilizer and diesel oil)
have strengthened their linkages to the international market, insofar as recently, they have begun to
be imported on a purely commercial basis. This means that the rice sector in Myanmar has itself
strengthened its linkage with the international market, albeit in a rather asymmetric way, and with
the result that in this respect, the sufferings of the Myanmar government and of the farmers have
come to converge.
It is true that even after 1988 farmers in Myanmar continued to be controlled by the ‘three
internal major agricultural systems’ inherited from the socialist period, namely the procurement
system, the planned cropping system and the state ownership of farmland, a point stressed by
Takahashi (Takahashi 2001). It can even be argued that after 1988, the government tightened these
systems to control farmers. However, at the same time, Myanmar agriculture is being forced to come
to terms with the current wave of internationalization. Given that internationalization is inevitable,
how to make the best use of its merits while at the same time minimizing its demerits is the key to
successful reform of the domestic control systems. In analyzing trends in the agricultural sector after
1988, this paper attempts to emphasize the transition to an open economy, rather than the transition
to a market economy in general. For this very reason, the paper focuses on broader measures rather
than simply domestic factors and it is hoped that by doing so, it will fill a gap in previous research.
We group the major agricultural products of Myanmar into the following four categories: export
crops, crops for import competition, crops for the domestic market and crops for state–owned
5
enterprises. We believe that this is the most appropriate classification for analyzing the problems
encountered by crop production in Myanmar in the course of internationalization.
Specifically, the categories comprise the following: export crops (rice and pulses), crops for
import competition (oilseeds), crops for the domestic market (vegetables, fruits, meat and fishery
products), and crops for state-owned enterprises (sugarcane and cotton).2
The contents of the paper are as follows. Section 1 reviews the development of the agricultural
sector since 1988 in the context of trends in the national economy as a whole. Section 2 discusses
performance, and analyzes the factors that have determined performance for each of the major
agricultural products contained in the four main categories of crop production. By way of conclusion,
the nature of Myanmar’s agricultural policies and the agricultural developments that can be
attributed to these policies will be briefly summarized.
1. Performance of the Agricultural Sector in the National Economy
Let us first look briefly at the performance of the agricultural sector and its role in the overall
economic development of Myanmar.
Table 1 indicates the changes in the composition of GDP by sector and annual growth rates
since the early 1980s. The agricultural sector was surprisingly slow to lose its relative importance in
terms of its contribution to GDP, and accounted for more than 40 % of GDP even in recent years (at
1985/86 constant prices). This suggests that the agricultural sector has been growing at a pace equal
to those of the other sectors of the economy.
The table also shows that the GDP share of agriculture is significantly higher at current prices
than at 1985/86 constant prices. The discrepancy between the two widened very sharply between
1985/86-1990/91 and the divergence increased further until 1994/95. This means that agricultural
prices, which in the socialist period had been highly repressed compared to non-agricultural prices,
were ‘normalized’ by the mid 1990s.3
In general, the rate of increase of agricultural retail prices was
higher than that of the CPI.
Table 2 shows the differences in the rate of price increase among crops in this respect. First, for
2
There are of course exceptions to the categorization that we have employed. For example, sesame is an
export crop, and some of the crops that we have classified as crops for the domestic market are also
exported (e.g. prawns and fish, and garlic and onions).
3
A similar development also occurred in China between 1978 and the mid-1980s.
6
export crops, the rate of price increase was generally quite high. Domestic prices, repressed at a very
low level, have risen dramatically because of the stimulus provided by international prices, and this
has resulted in a sharp increase in production and in exports. Second, the price of import competition
crops increased by only a small amount, since the expansion of imports prevented a surge in
domestic prices. Third, crops destined for the domestic market underwent a fairly large increase in
price. This may well be the result of the high income elasticity of items such as vegetables, meat and
fishery products.
In sum, the role of the agricultural sector in Myanmar’s economic recovery and growth after
1988 was very important, and remained so until the mid-1990s. This was made possible largely
through the price incentives given to the farmers. The agricultural marketing reforms of 1987 were
in general quite effective in achieving an adjustment between hitherto highly repressed agricultural
prices and international prices. The rate of price increase was very high, not only for a few (but
important) export crops but also for a variety of crops intended for the domestic market. Farmers
responded quickly to the new economic opportunities.
Increases in agricultural production can be achieved either by an expansion of the sown area or
by a rise in crop yields per unit area of land. This being the case, how did Myanmar increase its farm
output?
Table 3 sets out the changes in the sown acreage of major crops. The total sown acreage, which
was 24 million acres in the late 1980s, has increased rapidly to 40 million acres in recent years.4
Since the land frontier disappeared long ago in Myanmar, this expansion of sown acreage can be
mostly attributed to the intensification of land use, or in other words to a rise in cropping intensity.
The sown acreage expanded in the case of almost every crop, except for oil seeds which are typical
crops for import competition. Rice, pulses, vegetables (chilli, onion and garlic), cotton, sugarcane
and rubber all merit particular attention in this regard.
Table 4, by contrast, shows the changes in yield for major crops. A notable feature revealed by
Table 4 is that except for rice and rubber, yields have not shown any upward trend since 1988. We
can conclude that the development of the agricultural sector during the period was achieved through
the expansion of the sown acreage and not through improvements in land productivity.