Lower Mekong Food Security Database

The Ministry of Commerce is suspending plans for a paddy purchase program due to a recovery in market prices, according to ministry spokesperson U Khin Maung Lwin.

U Khin Maung Lwin told The Myanmar Times in the first week of December that the ministry had approval for a K15 billion purchase program in the Yangon, Bago and Ayeyarwaddy regions.

Paddy purchasing groups were to be formed under the temporary Agricultural Product Management Committee (APMC), and buy paddy from farmers at the minimum price of K380,000 for 100 baskets.

U Khin Maung Lwin said that the program had been put on hold because the market price for paddy had risen sufficiently to allow farmers to cover the cost of production.

Farmers had criticised the minimum purchase price announced in December, which they argued was lower than the then market price of K400,000. The commerce ministry responded at the time that the floor price was designed to cover the cost of production, not ensure profits.

The cost of production varies with region, seed type and inputs, but is rarely more than K400,000 per 100 baskets, according to farmers.

When news of the program was announced in early December the price for average-grade paddy was around K400,000 for 100 baskets, which rose to K460,000 later that month, said U Thein Aung, president of Freedom of Farmers League.

Now that the program has been halted the price has dropped again, he said. Although the price for 100 baskets remains above K400,000 in Ayeyarwaddy region, he believes the government is wrong to postpone the program.

“When the program was canceled the market price decreased,” he said. “Traders don’t want to pay more because they know the program won’t happen. Traders say the reason [for the falling price] is low demand from China but I think it is the consequence of the suspended purchase program.”

Rice industry officials blame much of the slump in prices to a sharp decrease in import demand from China, which many believe is cracking down on what it classifies as illegal rice imports from Myanmar.

U Khin Maung Lwin said the purchase program could be reactivated if the ministry deemed market prices had fallen below the cost of production, but would not comment on what price would prompt intervention.