1) Sugarcane
In 1994, state sugar factories under the Ministry of Industry (I) were transferred to the Ministry of
Agriculture and Irrigation. The state-owned institution Myanmar Sugarcane Enterprise (MSE)
became responsible for the management of these factories. Furthermore, in 1997, it was decided to
construct nine new sugar factories supported by foreign aid.33 Since 1998, some 17 factories have
come into operation, and total production capacity has doubled from 8,600 tons to 17,500 tons per
day.
One of the characteristics of sugarcane is that the sugar content decreases rapidly unless the
crop is processed soon after harvest. Furthermore, a modern sugar processing factory generally
requires very substantial capital investment, and it follows that its performance is heavily influenced
by the rate of capacity utilization. What this means in practice is that to ensure their supplies, the
state-owned sugar factories prescribe procurement zones surrounding the mills, and require farmers
in those zones to sell all their sugarcane output to the factory within whose zone they are located.
The problem lies not in the physical procurement of the crop but in the price prescribed by the
government, which for long was far lower than the market price. For example, the market price in
2000 was 5,270-6,100 kyats per ton while the government procurement price was 2,500 kyats (Kudo
2003, p.41). By contrast, since sugarcane farmers outside the procurement zones could sell freely in
1) SugarcaneIn 1994, state sugar factories under the Ministry of Industry (I) were transferred to the Ministry ofAgriculture and Irrigation. The state-owned institution Myanmar Sugarcane Enterprise (MSE)became responsible for the management of these factories. Furthermore, in 1997, it was decided toconstruct nine new sugar factories supported by foreign aid.33 Since 1998, some 17 factories havecome into operation, and total production capacity has doubled from 8,600 tons to 17,500 tons perday.One of the characteristics of sugarcane is that the sugar content decreases rapidly unless thecrop is processed soon after harvest. Furthermore, a modern sugar processing factory generallyrequires very substantial capital investment, and it follows that its performance is heavily influencedby the rate of capacity utilization. What this means in practice is that to ensure their supplies, thestate-owned sugar factories prescribe procurement zones surrounding the mills, and require farmersin those zones to sell all their sugarcane output to the factory within whose zone they are located.The problem lies not in the physical procurement of the crop but in the price prescribed by thegovernment, which for long was far lower than the market price. For example, the market price in2000 was 5,270-6,100 kyats per ton while the government procurement price was 2,500 kyats (Kudo2003, p.41). By contrast, since sugarcane farmers outside the procurement zones could sell freely in
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