Government has not been able to substitute for absent commercial banks. In an effort to improve farm input credit, the government instituted a system of Rice Specialization Companies (RSC) in 2008 under which registered firms were encouraged to provide paddy inputs on credit under contract farming schemes in return for rice export permits. Although 57 RSC’s have been registered, many face difficulties in running viable contract farming schemes for paddy. Heavy cost of input financing coupled with poor repayment due to crop losses, flooding and low paddy prices, only a handful of RSCs continued contract farming in Monsoon crop of 2012 (Wong and Wai 2013).
High transport and communication costs. Transportation and logistics costs are high in
Myanmar as a result of many decades of underinvestment, heavy regulation and limited
structures linking the water, road and rail transportation (Wong and Wai 2013). Currently,Myanmar ranks lowest in the ASEAN region in quality of logistics and transport-relatedinfrastructure (ADB 2012). The country’s main rivers offer potentially cheap internal transport.
Yet the management of intermodal connections, linking water transport, rail, road and air are not well developed. As a result, road and sea container freight rates quickly rise during the peak marketing season in response to cargo congestion. Unpredictable policies. Many of the stakeholders we interviewed offered examples of how arbitrary and unpredictable implementation of evolving government policies had adversely affected agricultural trade, production and investment. Despite recent relaxation of production and land allocation controls at the farm level, many farmers spoke of continued government “encouragement” to plant certain crops, while a few complained explicitly about non-paddy crops being ripped out and plowed under by disapproving local authorities. Clarity about land use choices is particularly critical for farmers wishing to diversify into high-value horticulture, fruit, poultry and fish farming. Many of the agribusiness people we interviewed likewise complained about unpredictable export restrictions, and in some cases continued land controls, that prevented them from exporting specific crops over the past decade, even when business conditions looked attractive. The removal of trade restrictions, or at least clarity on the