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Shocks, Production, Exports and Market Prices: An Analysis of the Rice Sector in Myanmar

- Rice exports from Myanmar have exceeded 2 million tons per year since 2019-2020, except for 2020-2021 during the peak of the pandemic. Exports through seaports now account for around 80% of total exports. - Domestic rice prices in Myanmar have closely tracked Thai export prices, suggesting strong linkages between domestic and international markets. - Simulations of a 10% decrease in rice productivity and a 0.4 million ton increase in exports in 2022-2023 resulted in a 33% increase in domestic prices, a 5% fall in production, and a 10% drop in consumption, with poor households suffering the largest declines in rice consumption of 12-13%.

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September 29, 2023
4:30 PM – 5:30 PM MMT
Paul Dorosh,
Director, Development Strategy and Governance Unit,
International Food Policy Research Institute
Nilar Aung,
Research Specialist,
Michigan State University
Shocks, Production, Exports and Market Prices:
An Analysis of the Rice Sector in Myanmar
We thank the Myanmar Rice Federation for providing data and other information on Myanmar’s rice exports.
SUMMARY
• Rice exports exceeded 2 mn tons/year each year since 2019-20, except for 2020-21 (the
peak of the pandemic).
• Trade across land borders (mainly to China and Thailand) accounted for over half of
exports each year from 2012-13 through 2017-18, but this trade fell to an average of
only 470K tons/year (21% of total trade) from 2019-20 to 2022-23.
• Domestic rice prices (Emata, wholesale Yangon) tracked Thai export prices measured at
prevailing market (kyat/USD) exchange rates (official rates or parallel market) suggesting
strong linkages with the international market
• Simulations of the rice market developments in 2022-23 (a 10 percent decrease in rice
productivity and a 0.4 million ton increase in rice exports) result in a 33 percent increase
in the domestic price, a 5 percent fall in rice production and a 10 percent drop in
consumption.
• Poor households suffer the largest declines in rice consumption – by 12 to 13
percent; rice consumption of the non-poor falls by 8 to 10 percent.
PLAN OF PRESENTATION
• Rice exports by source and by quality of rice
• Domestic and International (Border) Prices
• Partial Equilibrium Model of Myanmar’s Rice Sector
• Model Simulation Results
• Summary and Conclusions
Myanmar Rice Exports, 2008-09 to 2021-22*
Notes: All exports to Thailand across land borders are milled rice (not brokens).
Exports across land borders to China include both broken and non-broken rice.
Data from 2008-09 to 2017-18 is for April to March; data for 2018-19 to 2021-22 is for
October to September. Data shown for 2018 is April-September 2018.
Source: MRF (2023) data.
• Trade across land borders
(mainly to China and
Thailand) accounted for
over half of exports each
year from 2012-13 through
2017-18.
• Rice trade with China has
declined sharply since then,
however.
• From 2018-19 through 2021-
22, exports through seaports
accounted for 79% of
exports (an average of 1.8
mn tons out of a total of 2.3
mn tons per year).
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
(thousnad
tons)
Official (via Sea) Land Borders (China, Thailand)
Myanmar Rice Exports by Type of Rice (Apr 2022 - Feb 2023)
Notes: - A Grade (also called A 1:2) and B Grade (also called B 1:2) are 100 percent
broken, sold mainly for export to China and Europe. Both are well-milled Sortex rice; A
grade is polished rice, B grade is not polished. Domestic rice is typically a lower quality
than either A Grade or B Grade.
Source: MRSF (2023) data.
• The average price of all
exports in February 2023 was
$469 USD/ton, equal to
85.1% of the f.o.b. Bangkok
price of A1 rice.
• In 2022-23, A and B grade
rice accounted for 11% and
28% of the quantity of
exports, mainly traded across
land borders with China and
Thailand.
• The quality and price of
rice exports over land
borders was 11% to 17%
lower than exports by
sea (5% brokens).
Myanmar and Thai Rice Export Prices, 2009-23
• Myanmar’s export price
was on average 15
percent below Thailand’s
export price between
2013-14 and 2017-18,
though the gap widened
in 2018-19 and 2019-20.
• Average export prices of
Myanmar rice in 2020-21
were only 19 percent
below the average export
price for Thailand (fob, A1
grade), however.
0
100
200
300
400
500
600
USD/MT
Exports-Sea Exports-PRC Exports-Ave FOB Bangkok (A1)
* Data from 2008-09 to 2017-18 is for April to March.
** Data for 2018 is April to September; all other years are October-September.
Source: IMF(2023), MRF(2023), World Bank (2023) and author's calculations.

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Shocks, Production, Exports and Market Prices: An Analysis of the Rice Sector in Myanmar

  • 1. Photo Credit Goes Here Photo Credit: michel arnault/Shutterstock September 29, 2023 4:30 PM – 5:30 PM MMT Paul Dorosh, Director, Development Strategy and Governance Unit, International Food Policy Research Institute Nilar Aung, Research Specialist, Michigan State University Shocks, Production, Exports and Market Prices: An Analysis of the Rice Sector in Myanmar We thank the Myanmar Rice Federation for providing data and other information on Myanmar’s rice exports.
  • 2. SUMMARY • Rice exports exceeded 2 mn tons/year each year since 2019-20, except for 2020-21 (the peak of the pandemic). • Trade across land borders (mainly to China and Thailand) accounted for over half of exports each year from 2012-13 through 2017-18, but this trade fell to an average of only 470K tons/year (21% of total trade) from 2019-20 to 2022-23. • Domestic rice prices (Emata, wholesale Yangon) tracked Thai export prices measured at prevailing market (kyat/USD) exchange rates (official rates or parallel market) suggesting strong linkages with the international market • Simulations of the rice market developments in 2022-23 (a 10 percent decrease in rice productivity and a 0.4 million ton increase in rice exports) result in a 33 percent increase in the domestic price, a 5 percent fall in rice production and a 10 percent drop in consumption. • Poor households suffer the largest declines in rice consumption – by 12 to 13 percent; rice consumption of the non-poor falls by 8 to 10 percent.
  • 3. PLAN OF PRESENTATION • Rice exports by source and by quality of rice • Domestic and International (Border) Prices • Partial Equilibrium Model of Myanmar’s Rice Sector • Model Simulation Results • Summary and Conclusions
  • 4. Myanmar Rice Exports, 2008-09 to 2021-22* Notes: All exports to Thailand across land borders are milled rice (not brokens). Exports across land borders to China include both broken and non-broken rice. Data from 2008-09 to 2017-18 is for April to March; data for 2018-19 to 2021-22 is for October to September. Data shown for 2018 is April-September 2018. Source: MRF (2023) data. • Trade across land borders (mainly to China and Thailand) accounted for over half of exports each year from 2012-13 through 2017-18. • Rice trade with China has declined sharply since then, however. • From 2018-19 through 2021- 22, exports through seaports accounted for 79% of exports (an average of 1.8 mn tons out of a total of 2.3 mn tons per year). 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 (thousnad tons) Official (via Sea) Land Borders (China, Thailand)
  • 5. Myanmar Rice Exports by Type of Rice (Apr 2022 - Feb 2023) Notes: - A Grade (also called A 1:2) and B Grade (also called B 1:2) are 100 percent broken, sold mainly for export to China and Europe. Both are well-milled Sortex rice; A grade is polished rice, B grade is not polished. Domestic rice is typically a lower quality than either A Grade or B Grade. Source: MRSF (2023) data. • The average price of all exports in February 2023 was $469 USD/ton, equal to 85.1% of the f.o.b. Bangkok price of A1 rice. • In 2022-23, A and B grade rice accounted for 11% and 28% of the quantity of exports, mainly traded across land borders with China and Thailand. • The quality and price of rice exports over land borders was 11% to 17% lower than exports by sea (5% brokens).
  • 6. Myanmar and Thai Rice Export Prices, 2009-23 • Myanmar’s export price was on average 15 percent below Thailand’s export price between 2013-14 and 2017-18, though the gap widened in 2018-19 and 2019-20. • Average export prices of Myanmar rice in 2020-21 were only 19 percent below the average export price for Thailand (fob, A1 grade), however. 0 100 200 300 400 500 600 USD/MT Exports-Sea Exports-PRC Exports-Ave FOB Bangkok (A1) * Data from 2008-09 to 2017-18 is for April to March. ** Data for 2018 is April to September; all other years are October-September. Source: IMF(2023), MRF(2023), World Bank (2023) and author's calculations.
  • 7. Rice Prices in Myanmar and Thailand, 2013-2023 • The wholesale price of rice in Yangon (Emata variety) closely tracked export prices of Thai A1 rice (converted to kyat at the official exchange rate) from 2014 through 2018, but the two series diverged from 2019 through mid-2021. • Exports of some grades of rice were still profitable, however, as evidenced by the large volume of trade (especially over land borders to China). 0 200 400 600 800 1000 1200 1400 (Kyat/kg) Emata wholesale Yangon Thai A1 Source: IMF(2023), MRF(2023), World Bank (2023) and author's calculations.
  • 8. Real Rice Prices (2023 Kyat/kg), 2013-2023 • The average real (inflation- adjusted) export price of A1 rice in Thailand from July 2014 to June 2021 was 821 (2023) Kyat/kg, 23 percent higher than the average real wholesale price of Emata rice in Yangon (670 Kyat/kg). • Between July 2021 and January 2023, the real price of rice (Emata wholesale, Yangon) rose by 61%, while Thailand’s price rose by 48%. 0 200 400 600 800 1000 1200 1400 (2023 Kyat/kg) Emata wholesale Yangon Thai A1
  • 9. Real Rice Prices (2023 Kyat/kg), 2019-2023 • Domestic rice prices (Emata, wholesale Yangon) tracked Thai export prices measured at official (kyat/USD) ex rates from June 2020 to Oct 2021. • From Nov 2021 to Jan 2023, domestic prices more closely tracked Thai prices measured using weighted average ex rates (65% official – 35% parallel market). This average reflects the share of forex (35%) that exporters were allowed to keep. 0 200 400 600 800 1000 1200 1400 1600 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 (2023 Kyat/kg) Emata wholesale Yangon Thai A1 Coup. February 1, 2021
  • 10. Real Rice Prices (2023 Kyat/kg), 2019-2023 • Domestic prices have been consistently below Thai export prices measured at parallel market exchange rates. • The large increase in domestic prices in Feb 2023 reflects lower domestic production, high macro-inflation, and a loss of competitiveness relative to Thai rice at official ex rates. • Nonetheless, rice exports appear to remain profitable at world prices converted to kyat at the parallel exchange rate. 0 200 400 600 800 1000 1200 1400 1600 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 (2023 Kyat/kg) Emata wholesale Yangon Thai A1 Thai A1 (par ExR) Thai A1 65:35 ExR Coup. February 1, 2021
  • 11. Myanmar Rice Model Equations Production (1) Xi = X0i * xshocki * (Pi/P0i) ES i Domestic Supply (2) Si = Xi * (1 – lossi) Household Income (3) Yh = Y0h * (1 + yshockh) + ( Pi * vai,h* Xi,h ) – ( P0i * va0i,h* X0i,h ) Demand (Consumption) (4) Dih = D0ih *(Pi/P0i) ED i,h * (Yh/Y0h) EY i,h Equilibrium (5) Si = ∑h Dih + Ei Variable names (0 denotes base level) Parameters Di = demand (consumption) of commodity i (rice) EDi,h own-price elasticity of demand Ei = exports EYi,h income elasticity of demand Pi = domestic price of rice ESi own-price elasticity of supply Si = total supply of rice xshocki exogenous production shock Xi = total national production of rice vai,h value-added share of production Yh = household income of household h
  • 12. Myanmar Household Rice Demand Parameters Source: Econometric estimates using data from the Myanmar Poverty and Living Conditions Survey, 2014/15. See Comstock and Ecker 2023. Own-Price Expenditure Elasticity Elasticity Urban poor -0.460 0.357 Urban nonpoor -0.348 0.246 Rural poor -0.674 0.504 Rural nonpoor -0.653 0.494 Myanmar average -0.599 0.449 • Own-price and expenditure elasticities for rice are higher for poor households than for non-poor households (i.e. demand by non-poor households is less responsive to changes in prices or incomes). • Likewise, own-price and expenditure elasticities of demand are rural than for urban households.
  • 13. Supply, Demand and Exports • Without external trade, supply equals demand when price is P0. • At a border price of P1, supply increases to QS1 and demand falls to QD1 resulting in exports of QS1- QD1. S0 D0 Quantity (tons) EXP0 Price (Kyat/kg) P0 P1 QD1 QS1 Q0
  • 14. Supply, Demand and Exports S0 D0 Quantity (tons) EXP0 Price (Kyat/kg) P0 P1 P2 EXP1 QD1 QS’1 QS0 • If domestic supply is reduced (due to poor weather, lower labor or fertilizer availability, etc.)… • the supply curve shifts to S1, • domestic supply falls from QS1 to QS1’ • and exports fall to EXP1. S1 QS1
  • 15. Supply, Demand and Exports S0 D0 Quantity (tons) EXP0 Price (Kyat/kg) P0 P1 P2 EXP2 QD1 QS’1 QS0 • If domestic demand also falls from D0 to D1, exports increase to EXP2, a total that is a little less than EXP0. S1 D1 QS1 QD2
  • 16. Supply, Demand and Exports S0 D0 Quantity (tons) EXP0 Price (Kyat/kg) P0 P1 P2 EXP2 QD1 QS1 Q0 • If, in addition to the shifts in the supply and demand curves, the world price rises to P2, then the new level of exports (EXP3) is equal to the original level of exports (EXP0). S1 D1 EXP3 QD3 QS3
  • 17. Source: Model simulations. • Sim 1: 20% and 10% reductions in urban and rural household incomes, respectively, along with a 10% decline in rice production, leads to a 65K ton reduction in rice exports. • Sim 2: A 20% increased in world rice prices leads to a 460K ton increase (3.7%) in rice production and a 1.1 mn ton (45.7%) increase in exports. • Combining Sim 1 and Sim 2, exports increase by 370K tons (15.4%) relative to the base. Impacts of Lower Incomes and Higher World Prices on Rice Production and Exports -1.50 -1.00 -0.50 0.00 0.50 1.00 1.50 Production Exports Consumption (mn tons) Lower HH Incomes World Rice Price +20% Sim1+Sim2
  • 18. Impacts of Lower Incomes and Higher World Rice Prices on Rice Consumption Source: Model simulations. • Sim 1: 20% lower household incomes result in a 7.7% reduction in rice consumption for the urban poor and a 5.3% reduction for urban nonpoor. • Sim 2: 20% higher rice prices reduce rice consumption of the urban poor by 8.1% and by 9.2% for the urban nonpoor. • Sim 3: Lower incomes with higher rice prices lead to a 15.1% reduction in rice consumption for the urban poor and a 10.9% reduction for the urban nonpoor. -16.0% -14.0% -12.0% -10.0% -8.0% -6.0% -4.0% -2.0% 0.0% Urban Poor Urban Nonpoor Rural Poor Rural Nonpoor Lower HH Incomes World Rice Price +20% Sim1+Sim2
  • 19. Impacts of Lower Productivity and Increased Export Demand on Production and Exports Source: Model simulations. • Sim 4: If rice exports to PR China (0.8 mn tons in the base) fall to zero, but 1.6 mn tons of exports of higher quality rice continue, domestic prices of rice fall by 14.6%. • Production falls by 3.1%, but consumption increases by 5.0%. • Sim 5: A 10% decrease in rice productivity leads to a 1.3 mn ton decrease in output and a 1.0 mn ton (41.8%) decrease in exports. -40% -30% -20% -10% 0% 10% 20% Production Exports Consumption Sim 4: Rice Exports to PRC = 0 Sim 5: Rice Productivity -10% Sim 6: 2023
  • 20. Impacts of Lower Productivity and Increased Export Demand on Production and Exports (cont.) Source: Model simulations. • Sim 6: If, in addition to a 10.0% decrease in rice productivity, rice exports increase by 0.41 mn tons (17.1%), then domestic prices rise by 27.9%, rice production decreases by 5.5% and consumption falls by 11.3%. • Note: the 10.0% decrease in production and the 0.41 mn ton increase in exports are equal to the actual changes between 2022 and 2023. -40% -30% -20% -10% 0% 10% 20% Production Exports Consumption Sim 4: Rice Exports to PRC = 0 Sim 5: Rice Productivity -10% Sim 6: 2023
  • 21. Impacts of Lower Productivity and Increased Export Demand on Rice Consumption Source: Model simulations. • Sim 4: Lower total demand for exports increases rice availability, reduces domestic rice prices and leads to a 7.3 to 7.5% increase in rice consumption for poor households, but only a 2.2% increase for rural nonpoor households whose incomes from rice production decline. • Sim 5: With domestic prices tied to world prices, simulated decreases in rice productivity do not directly affect urban incomes or consumption, but rural consumption falls by 1 to 2%. -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% Urban Poor Urban Nonpoor Rural Poor Rural Nonpoor Sim 4: Rice Exports to PRC = 0 Sim 5: Rice Productivity -10% S-2023
  • 22. Impacts of Lower Productivity and Increased Export Demand on Rice Consumption Source: Model simulations. • Sim 6: The combined effect of a 10 percent decrease in rice productivity, a 0.41 mn ton increase in rice exports (and a 33% increase in prices) is to reduce total rice consumption by 11.3 (10.7 and 13.4% for the urban and rural poor, respectively, and by 8.2 and 10.8%, respectively, for the urban and rural non-poor. -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% Urban Poor Urban Nonpoor Rural Poor Rural Nonpoor Sim 4: Rice Exports to PRC = 0 Sim 5: Rice Productivity -10% S-2023
  • 23. SUMMARY • Rice exports exceeded 2 mn tons/year each year since 2019-20, except for 2020-21 (the peak of the pandemic). • Trade across land borders (mainly to China and Thailand) accounted for over half of exports each year from 2012-13 through 2017-18, but this trade fell to an average of only 470K tons/year (21% of total trade) from 2019-20 to 2022-23. • Domestic rice prices (Emata, wholesale Yangon) tracked Thai export prices measured at prevailing market (kyat/USD) exchange rates (official rates or parallel market) suggesting strong linkages with the international market • Simulations of the rice market developments in 2023-24 (a 10 percent decrease in rice productivity and a 0.4 million ton increase in rice exports) result in a 33 percent increase in the domestic price, a 5 percent fall in rice production and a 10 percent drop in consumption. • Poor households suffer the largest declines in rice consumption – by 12 to 13 percent; rice consumption of the non-poor falls by 8 to 10 percent.
  • 24. REFERENCES Coady, David, Paul Dorosh and Bart Minten. 2009. “Evaluating Alternative Policy Responses to Higher World Food Prices: The Case of Increasing Rice Prices in Madagascar”, American Journal of Agricultural Economics 91(3) (August 2009): 711-722. Dorosh, Paul A. 2001. “Trade Liberalization and National Food Security: Rice Trade between Bangladesh and India”, World Development, 29(4): 673-689. Dorosh, Paul, Myat Thida Win Joanna van Asselt. 2019. “Production Shocks, Exports and Market Prices: An Analysis of the Rice Sector in Myanmar”, IFPRI Discussion Paper 01830. Washington, D.C.: IFPRI. Ecker, O., and A.R. Comstock. 2023. “Income and Price Elasticities of Food Demand (E-FooD) Dataset”, Version 1.0. Harvard Dataverse. https://doi.org/10.7910/DVN/OXZ0H6. Ecker, Olivier, and Andrew R. Comstock. 2021. Income and Price Elasticities of Food Demand (E-FooD) Dataset: Documentation of Estimation Methodology. Washington, DC: International Food Policy Research Institute. IFPRI Data Paper: https://doi.org/10.2499/p15738coll2.134675 Schmidt, Emily, Paul Dorosh and Rachel Gilbert. 2021. "Impacts of COVID-19 related income and rice price shocks on household welfare in Papua New Guinea", Agricultural Economics 52(3):391- 406. https://doi.org/10.1111/agec.12625 World Bank (2021). Myanmar Poverty and Living Conditions Survey, 2014/15. Washington, D.C.: World Bank. https://doi.org/10.48529/tyd0-f528