Ame Cho, (CESD, Myanmar), Ben Belton and Myat Thida Win (Michigan State University), Mateusz Filipski and Xiaobo Zhang (IFPRI) Presented at the ReSAKSS-Asia conference “Agriculture and Rural Transformation in Asia: Past Experiences and Future Opportunities”. An international conference jointly organized by ReSAKSS-Asia, IFPRI, TDRI, and TVSEP project of Leibniz Universit Hannover with support from USAID and Deutsche Forschungsgemeinschaft (DFG) at the Dusit Thani Hotel, Bangkok, Thailand December 12–14, 2017.

1. The rapid rise of agricultural
mechanization in Myanmar
Presented by
Ame Cho
Research Associate (CESD, Myanmar)
“Agriculture and Rural Transformation in Asia: Past Experiences and Future
Opportunities” Conference, Bangkok.
December 13rd, 2017
Authors: Ben Belton¹, Mateusz Filipski², Myat Thida Win¹, Xiaobo Zhang²
(¹Michigan State University, ²IFPRI)
Food Security Policy Project

2. Myanmar recent historical context
• Recently emerging from 50 years isolation - political &
economic reforms from 2010
• Least developed economy in SE Asia
• Agricultural GDP = 38%; Population 70% rural
• Conventional view of Myanmar’s rural economy is gloomy
one of stagnation:
“The level of agricultural mechanization in Myanmar
is still low… not a surprise given the low wages in
rural areas, the excess agricultural labor, and the still-
lacking infrastructure and regulatory environment
for machinery service providers… Farmers in general
do not have the access to long-term capital,
preventing investments in agricultural machinery”
(World Bank, 2016)
• BUT, situation changing very quickly

3. Data sources
• Two recent household surveys:
• Delta: Myanmar Aquaculture-Agriculture Survey 2016,
4 townships, 1100 HH
• Rural Economy and Agriculture Dry Zone Survey 2017,
4 townships, 1600 HH
• Both aim at generating ‘benchmark’ of current
status of rural economy (farm & non-farm) and
recent changes within it, including mechanization
• Survey of agricultural machinery supplier
businesses from main ‘cluster’ in Yangon (2016)
• Surveys of suppliers and rental service providers in
Dry Zone (ongoing)

4. Dry Zone
Delta

5. DELTA

6. Machines displacing draft animals;
Mechanized harvesting

7. Cumulative Purchases of Selected Machinery (1990-2015)
0
1000
2000
3000
4000
5000
6000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Cumulativenumberofmachines
Surface-water Pump 2WT Thresher 4WT Combine
Changes in Number of Machines
Purchased
7

8. DRY ZONE

10. Combined use of machines and draft animals
Cattle
only
22%
Machine
only
2%
Both
cattle and
machine
76%
Neither
0%
Share of farmers using draft animals and machinery for land
preparation

11. Increasing ownership of machines
0
5000
10000
15000
20000
25000
30000
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Cumulativenumberofmachines
Feed cutter Water pump
Thresher 2WT
4WT
Cumulative purchases of selected machinery (1997-2017)

12. Increasing value of machines owned
-
10.0
20.0
30.0
40.0
50.0
60.0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
MillionUSD
Feed cutter Water pump
Thresher 2WT
4WT
Real annual value of agricultural machinery purchases at 2016 prices, by
year and machine type (1997-2017)

13. Rental services enabling access to machines
27
52
10
39
0%
10%
20%
30%
40%
50%
60%
10
years
ago
5
years
ago
Today 10
years
ago
5
years
ago
Today 10
years
ago
5
years
ago
Today 10
years
ago
5
years
ago
Today
2WT 4WT Combine Harvester Thresher
ShareoffarmHHs
Own Rent
Share of farmers using machinery, by machine type, year and ownership status
(2017-2007)

15. 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Any machine 2WT 4WT Combine Thresher
T1 T2 T3
Rental services → scale-neutral technology
Share of HH using machinery by landholding tercile and type of machine

16. Drivers: rural-urban migration
Cumulative share of all long-term migrants by year first migrated (%), 1995-2016
0
10
20
30
40
50
60
70
80
90
100
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Domestic International

17. Migration → large rural wage increases
+20%
+15%
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2012 2014 2016
Realdailywages(MMK)
Change in real daily wages for male casual workers (2012-2016)

18. Price of machines falling
-5.8%/year
-7.1%/year
0
500
1000
1500
2000
2500
3000
3500
2007 2009 2011 2013 2015 2017
USD
Water Pump 2WT
Trend in real price of small machines (2007-2017)

19. Simultaneous improvement in
access to formal financial services
• Hire purchase
agreements with
commercial banks
began in 2013
• Agricultural land titles
can be used as
collateral since 2012
• Reduced capital
constraints for
machine suppliers,
cost of credit to buyers
35
68
77
17
5
248
27 22
2WT 4WT Combine
Harvester
Shareofsales(%)
Bank
Dealer
Customer
Source of finance for machinery purchases (2016)

21. Geographical spread of machine supply businesses
2010 2013 2016

22. 22

23. Conclusions
• Demand side drivers: Migration; rising wages rates, labor
shortages
• Supply side drivers 1: Hire purchase finance from banks;
transferrable land use rights (collateral)
• Supply side drivers 2: Falling cost of machines; no restrictions
or tariffs on imports
• Supply side drivers 3: Dynamic informal private rental markets
(very limited reach of government rental services)
• Result 1: Extremely rapid mechanization in main agricultural
zones, following crop specific patterns (power tillers and
combines in main paddy growing areas, 4 wheel tractors
drylands)
• Result 2: Machine access scale neutral at point of use; saves
time/reduces risk; helps farms remain viable in face of rising
production costs