FEED THE FUTURE BURMA AGRICULTURE AND

FEED THE FUTURE BURMA AGRICULTURE AND

FOOD SYSTEMS DEVELOPMENT (AFDA) ACTIVITY

SECTOR PRIORITIZATION REPORT

Phase 1: Initial Research and Prioritization of Sectors for Analysis

i

TABLE OF CONTENTS

TABLE OF CONTENTS ........................................................................................................................................ I

ACRONYMS AND ABBREVIATIONS .................................................................................................................. II

EXECUTIVE SUMMARY ...................................................................................................................................... 1

BACKGROUND & OBJECTIVES..................................................................................................................................... 1 PURPOSE ........................................................................................................................................................................... 1 RESEARCH AND PRIORITIZATION METHOD ........................................................................................................... 1 FINDINGS ......................................................................................................................................................................... 1

INTRODUCTION ................................................................................................................................................. 5

SECTOR PRIORITIZATION BACKGROUND AND OBJECTIVES ................................................................................................. 5

RESEARCH AND PRIORITIZATION METHODOLOGY .................................................................................. 5

SECTORS SCREENED ............................................................................................................................................................. 5 SECTOR PRIORITIZATION PROCESS ...................................................................................................................................... 6 RESEARCH METHODS .........................................................................................................................................................11

FINDINGS ........................................................................................................................................................... 12

OVERALL PRIORITIZATION ................................................................................................................................................12 CURRENT END MARKETS ...................................................................................................................................................14 END MARKET OPPORTUNITIES AND SECTOR PERFORMANCE ............................................................................................16 PRODUCTION AND RELATED SUPPORT MARKET SYSTEMS .................................................................................................18 OUTPUT AND RELATED SUPPORT MARKET SYSTEMS .........................................................................................................12

NEXT STEPS ....................................................................................................................................................... 14

ANNEX 1. COMMODITY SECTOR PRIORITIZATION ...................................................................................... I

ANNEX II. SYSTEMIC CHANGE IMPACT OF SUPPORT SECTORS ............................................................... III

ANNEX III. SUPPORT SECTOR PRIORITIZATION SCORING ......................................................................IV

ANNEX IV: REFERENCES & CITATIONS ........................................................................................................ V

ii

ACRONYMS AND ABBREVIATIONS

AFDA Agriculture and Food-Systems Development Activity

BDS Business Development Services

FTF Feed the Future

GAP Good Agricultural Practices

GMP Good Manufacturing Practices

HACCP Hazard Analysis and Critical Control Points

ICT Information and Communications Technologies

USAID United States Agency for International Development

ZOI Zone of Influence

1

EXECUTIVE SUMMARY

BACKGROUND & OBJECTIVES

The United States Agency for International Development (USAID) Feed the Future (FTF) Burma Agriculture

and Food-Systems Development Activity (AFDA) is designed to advance peace and reduce interethnic

tensions by creating bonds of mutual self-interest and urban-rural linkages across market systems, inclusive of

marginalized ethnic groups in conflict areas. AFDA uses a market system approach to facilitate the

transformation of agriculture and food systems by increasing the productivity, inclusiveness, and

competitiveness of key agricultural commodity sectors and cross-market functions. AFDA’s Zone of

Influence (ZOI) comprises Shan State, Kachin state, Mandalay, Sagaing, and Magway. This sector prioritization

served to help AFDA identify a portfolio of target agricultural commodities for intervention focus.

PURPOSE

The purpose of the sector prioritization report is to provide a summary of the process and findings AFDA

undertook in analyzing and prioritizing agricultural commodities and support market sectors with the

greatest potential to meet AFDA’s activity objectives and targets. The sector analysis and prioritization will

inform both the evaluation of applications to the Market Systems Development Fund as well as AFDA’s

overall market systems change strategy. Individual sector reports were compiled from secondary research

and key informant interviews provide a snapshot of the current trends and opportunities across selected

market systems criteria (not included in the summary report).

RESEARCH AND PRIORITIZATION METHOD

AFDA used a multi-phase process to prioritize the following agricultural sectors: Coffee, Cotton,

Horticulture, Livestock, Maize, Oilseeds, Pulses, Spices and Tea. The team first completed in-depth secondary

research to score sectors against project-aligned criteria. The team then undertook targeted primary

research to validate and fill information gaps left by secondary research. The AFDA Chief of Party and core

technical team then convened to finalize scoring, drawing on AFDA’s research and the team’s extensive

experience working on agricultural development in the ZOI. Concurrent with sector prioritization, the team

evaluated and characterized critical cross-market functions relevant to target sectors: inputs/services,

extension, mechanization/irrigation, finance, ICT, and logistics.

FINDINGS

Prioritized Commodity Sectors

The team eliminated cotton and livestock after secondary research due to lack of compliance with relevant

U.S. policies, and very low potential for impact and systemic change relative to other sectors. This left seven

potential target commodities, listed in priority order with total scores as follows:

Table 1: Commodity Sector Scoring.

SECTOR SCORE

Horticulture 411

Oilseeds 407

Maize 397

Pulses & Beans 350

Coffee 333

2

SECTOR SCORE

Spices 295

Tea 283

Production and End Markets

Production -ZOI producers typically cultivate multiple target crops, though some crops have much larger

planted area than others. The crops with the largest planted area in the ZOI are oilseeds (especially early

sesame and rainy season groundnut), pulses (especially green gram and pigeon pea), and maize. Horticulture

(especially vegetables), tea, spices (chili & onions) are next, with coffee having the smallest planted area.

Coffee, garlic, maize and tea are centralized in Shan State, horticulture is highest in Sagaing and Shan

State, rainy season groundnut and early sesame area is highest in Magway and Mandalay, winter

groundnut, late sesame and many pulses area is highest in Magway and Sagaing, and chilies and onion are

centered in Mandalay. Based on the percentage of total national planted area in the ZOI for each crop, the

ZOI is highly competitive relative to other areas for tea, oilseeds, several pulses, onion, garlic, maize and

coffee, moderately competitive for vegetables and chilies, and less competitive in fruit and plantain.

End Markets - Regarding current end markets, ITC Trade Map (2019) data indicate that, for exports, pulses

dominate in value, followed by horticulture, maize and oilseeds (largely seeds, not oil), spices, and tea and

coffee. From 2014-18, exports increased for all sectors except maize, oilseeds and pulses, with edible oil,

horticulture (excluding potatoes), and tea showing the highest growth. Exports primarily comprise items that

are unprocessed or processed only at the primary level, with very few value-added goods. For imports,

oilseeds have the highest value—mostly edible oil, followed by moderate values of horticulture and maize,

and smaller values of spices, pulses, coffee and tea. From 2014-18, imports increased for all sectors except

tea and pulses, with spices, maize, and potatoes having the highest growth.

Trade data indicate that most commodities have highly concentrated end markets that are centralized in the

region, with China being a dominant buyer (ITC 2019).

• Pulses & Beans have two dominant buyers: India (37.9% of export value) and China (26%).

• Fruit and nuts: China buys 65.72 percent of value and India 28.49 percent.

• Maize: China buys 96.41 percent of seed for sowing and 99.92 of seed not for sowing.

• Oilseeds: China is the majority buyer of sesame and groundnut seed, India is the largest buyer of

sunflower and cotton seed, China is the only buyer of sunflower, maize and crude cottonseed oils and

the largest buyer of sesame oil; Singapore is the majority buyer of cottonseed oil and Malaysia is the

majority buyer of groundnut oil.

• Spices: China is the majority buyer for chilies, turmeric and cardamom, India is the dominant buyer for

pepper and Bangladesh dominates as a ginger buyer. Regional countries dominate exports

• Vegetables, every product group has a dominant buyer, with the largest buyer ranging from 57.3

percent (China) for “other chilled vegetables” to more than 98 percent for vegetables cooked/uncooked

(Japan 98.3%), tomatoes (99.4% Korea) and potatoes (Thailand 100%).

• Tea: Three buyers in lower-cost markets represent over 72 percent of Burma 2018 exports by value:

China, Thailand and Taipei (China)

• Coffee: The top three buyers represent a bit more than 50% of value: U.S (27%), Thailand (14.6%),

Malaysia (10.8%).

3

Synthesizing end market findings, the team identified two high-level end market growth opportunities: a)

diversifying end markets to offset risk and b) producing and selling value added products.

Production and Output Market System Performance and Constraints

There are several areas of poor performance in production and output market systems that prevent ZOI

actors from accessing end market opportunities. Performance issues are highly similar across production and

output marketing, as the performance of production systems and the nature of relationships among farmers

and buyers are significant determinants of marketing outcomes.

The main production system performance issues and related high-level constraints are:

• limited output due to low quality planting material, low input use and lack of sufficient irrigation

• producers do not produce output that meets market standards

• lack of market access and low prices as farmers are unorganized and lack long-term buyer linkages

• producers cannot afford to improve production as they cannot access sufficient affordable finance

• producers lack incentives to improve productivity due to unreliable markets and procurement channels

• ethnic minorities have differentially lower outcomes due to conflict and insecurity, lack of land tenure

protections, and lack of trusting, long-term relationships with buyers from majority ethnic groups

• women have differentially lower outcomes due to lack control over productive decisions and resources,

and higher barriers to accessing finance

The main output market system performance issues and high-level constraints are:

• limited volumes due to production and processing constraints, and post-harvest losses

• poor supply chain management due to weak links across value chain levels and poor road infrastructure

• inability to invest in improved processing and logistics due to lack of access to affordable credit

• inability to meet higher-value market standards due to lack of aligned standards and regulatory processes

and supporting infrastructure

• low inclusion of women and ethnic minorities due to gender norms and ethnic marginalization

Prioritized Supporting Market Sectors

The AFDA team analyzed and prioritized 14 supporting market sectors based on desk research reports and

key informant interviews. The supporting sectors were ranked using a weighted scoring process to arrive at

the below prioritization. Detailed calculations of the final supporting sector prioritization can be found in Annex

3. Specific findings for supporting market sectors that are common across multiple commodity sectors are

included in the findings section of the report covering systems-level production and market systems results.

Table 2: Support sector ranking based on scores.

SUPPORT SECTORS WEIGHTED SCORE

1 Value-added Processing 295

2 Finance 285

3 Marketing Services 265

4 Agriculture Extension 252

5 BDS (ICT, Market Information, Training, Research, OP) 252

4

SUPPORT SECTORS WEIGHTED SCORE

6 Standards & Certification 226

7 PHH (primary processing) 211

8 Plant Protection & Fertilizer 210

9 Machinery & Equipment (Farm, PHH, Processing) 208

10 Mechanization Services 206

11 Seeds 204

12 Irrigation Services 198

13 Storage 191

14 Transport and logistics 127

Next Steps

The sector prioritization provides the AFDA team a platform for which to conduct the following deeper dive

analyses to better understand why the current agricultural market system is performing the way it is and to

develop a project’s systems-level change strategy. It also provides an analytical base for which to evaluate

applications to the Market Systems Development Fund through prioritization of sectors. The following

additional analyses will be conducted as part of phase 2 market systems analyses during the second half of

year 1.

Table 3: Planned Phase 2 Analyses.

PHASE 2: INCLUSIVE MARKET SYSTEMS ANALYSES OF TARGET SECTORS

Market Systems Diagnostic

An enterprise-based survey to understand behavioral and structural characteristics within

priority AFDA sectors and systems change objectives. The survey will include questions

around the determinants of market systems resilience (per recent USAID guidance): i)

diversity, ii) connectivity, iii) governance, iv) business norms, and v) competition.

Gender and Social Inclusion

Analyses

To better understand gender gaps and opportunities within the Zone of Influence (ZOI) and

within specific sectors. The GSI analyses will help refine AFDAs overall strategy and deliver

on outcomes around women’s empowerment in agriculture and food systems, gender equity,

and broader social inclusion.

Agricultural Inventory Research To carry out an inventory study of the existing Market Systems infrastructure and actors in

AFDA’s ZOI.

End Market Analyses

To characterize AFDA’s end markets across prioritized sectors and identify opportunities

where ZOI producers and related firms can competitively expand, upgrade and diversify end

markets.

Supporting Market Sector Studies

Conduct analyses of the top two tiers of supporting market sectors. The analysis will focus

on why these services/inputs are not available or accessible as well as benchmark

performance and development of comparative countries in the region.

5


Research on Production, Inputs

and Financial Services

AFDA will commission studies on extension, certification, financial, and machinery and

equipment services using comparative analysis of regional countries

Political Economic Analysis AFDA will conduct a deeper dive political economy assessment using primary research on

prioritized sectors across the ZOI.

Systems Mapping and Strategy

Development

AFDA staff will prioritize key results across the production and output market systems

before conducting a root cause analysis and eventual systems map that will be the basis for

AFDA’s systems change strategy.

INTRODUCTION

Sector Prioritization Background and Objectives

The United States Agency for International Development (USAID) Feed the Future (FTF) Burma Agriculture

and Food-Systems Development (AFD) Activity is designed to advance peace and reduce interethnic tensions

by creating linkages of mutual self-interest across urban and rural actors, with particular attention to

inclusion of marginalized ethnic groups in conflict areas. AFDA uses a market systems approach to facilitate

the transformation of agriculture and food systems by the increasing productivity, inclusion and

competitiveness of high-potential agricultural sectors and related cross-market functions. AFDA’s Zone of

Influence (ZOI) comprises Shan State, Kachin state, Mandalay, Sagaing, and Magway.

AFDA seeks to drive improvement across a portfolio of agricultural sectors that collectively deliver benefits

across ZOI regions and populations while providing diversified market opportunities and advancing markets

at different levels of maturity (e.g., market entry, upgrading channels, value addition). It also will emphasize

strengthening interrelated value chains and cross-market functions to improve performance and increase

inclusive economic opportunities across multiple sectors. The sector screening and prioritization served to

help AFDA identify a portfolio of target sectors for interventions, including agricultural commodities and

cross-market functions that are critical to drive growth across commodity sectors.

Purpose

The purpose of the sector prioritization report is to analyze and prioritize agricultural commodities and

cross-market sectors with the greatest potential to meet AFDA’s activity objectives and targets. The sector

analysis and prioritization is intended to inform both the evaluation of applications to the Market Systems

Development Fund as well as AFDA’s overall market systems change strategy. Individual sector reports

compiled from secondary research and key informant interviews provide a snapshot of the current trends

and opportunities across selected market systems criteria.

RESEARCH AND PRIORITIZATION METHODOLOGY

Sectors Screened

AFDA evaluated the following agricultural commodity and supporting sectors, listed alphabetically here:

6

Commodity Sectors Supporting Market Sectors

1. Coffee

2. Cotton

3. Horticulture: Fruits, vegetables (excluding

pulses) and nuts

4. Livestock: Cattle, poultry and other fowl,

small ruminants, bison

5. Maize

6. Oil Seeds

7. Pulses

8. Spices

9. Tea

1. Value Added Processing

2. Finance

3. Marketing Services

4. Agricultural Extension

5. BDS (ICT, Market Information, Training)

6. Standards and Certification

7. Post-Harvest Handling

8. Plant Protection & Fertilizer

9. Machinery and Equipment

10. Mechanization Services

11. Seeds

12. Irrigation Services

13. Storage

14. Transport and Logistics

Sector Prioritization Process

Commodity Sector Prioritization Process

The AFDA team used a multi-phase process to select and prioritize sectors. The team first undertook in-

depth secondary research and a preliminary scoring for each sector against scoring criteria. The team then

undertook targeted primary research to validate and fill information gaps left by secondary research. Finally,

the AFDA Chief of Party and core technical team convened to discuss and score target commodities,

drawing on secondary and primary research, and the team’s extensive experience working on agricultural

market development in the ZOI.

Table 4 lists the criteria used to prioritize commodity sectors, comprising 14 scoring criteria and two

exclusion criteria. Scoring criteria are numbered and exclusion criteria are starred. AFDA identified criteria

based on Activity objectives and the nature of the market systems approach.

Table 4: Commodity Sector Prioritization Criteria.

CRITERIA CATEGORY

CRITERIA SCORED ON SCALE OF A 0-5

(5=HIGHEST/BEST)

CRITERION WEIGHT

EXPLANATION OF WEIGHT

Ability to

Affect

Systemic

Change

1. Degree to which sector’s value chains are inter-related and

its potential for spillover to other sectors.

7

Beneficial if VCs are inter-related as the demand for one

VC can be driven by the changes in demand of another

related VC; it contributes to one another's resilience (eg.

Maize and Livestocks) if the sector's value chains are inter-

related, lowers the risk and enhances opportunity for

diversification. Thus, the Team decided on a score of 7.

Competitiveness 2. Relative level of unmet international

end market demand (new or upgraded 10 Considered as one of the two biggest determinants of

potential for expansion thus is given the highest weight.

9

CRITERIA CATEGORY


(5=HIGHEST/BEST)

CRITERION WEIGHT


market channels) to incentivize

collaboration and investment

This is the main issue that market actors are faced with

based.

3. Relative level of unmet domestic end

market demand (new or upgraded

market channels) to incentivize

collaboration and investment

8

Market is the main issue that actors are faced with, thus,

given a high score, but lower than international market

because absorptive capacity of the market is a lot lower

compared to international market

4. Relative contribution to Myanmar’s

economy 8

The relative importance of a sector to the economy

provides a bigger voice in policy reforms and facilitates

access to financing thus this parameter is given a high

score.

5. Level of current or potential

production in ZOI from which the

sector can grow quickly. 10

Considered as one of the two biggest determinant of

potential for expansion; even if there is a market if not

suitable for cultivation in ZOI, then the market potential

doesn't mean anything

6. Degree to which there are market

actors with the incentives and ability to

drive necessary upgrades to compete 7

This parameter is important but can be influenced by the

project through market information and capacity building

interventions. It can accelerate change if there are already

market actors with incentives and ability, thus given a

relatively high score of 7

Inclusive Growth

Potential

7. Potential for women’s participation

(production, off-farm employment,

entrepreneurship)

7

Important consideration to support inclusiveness objective

of the project thus given a high score of 7

8. Potential for youth participation

(production, off-farm employment,

entrepreneurship)

7

9. Potential for ethnic minority

participation (production, off-farm

employment, entrepreneurship)

7

10. Degree to which market actors have

the incentives and ability to drive

inclusive growth (e.g., engage and serve

women, youth, and minorities).

7

If there are already market actors with the

incentives and ability to drive inclusive growth, this

can accelerate accomplishment of the objective of

inclusion, thus given a high score of 7.

** Exclusion criterion: Pervasive

sector control by political or

military elites (Exclude if YES)

N/A

Alignment with

USAID and

other Donor

Investments

11. Government priority or focus of

government initiative 5

There's some benefit but not very significant; it will

depend on the ability of the market actors to push for

government support thus we decided on a middle weight

of 5

12. Relative synergies with other USAID

projects or donor investments 5

If we can build synergy with other projects it will facilitate

efforts to achieve change in the sector, but the

importance is not that big so we give it a middle weight of

5.

10

CRITERIA CATEGORY


(5=HIGHEST/BEST)

CRITERION WEIGHT


13. Relative opportunities for US firms

to benefit from sector development 7

We think that it is important to the USG that AFDA

contributes to growth of US businesses so we give it a

weight of 7

14. Degree of positive environmental

impact/lack of unavoidable negative

impact 7

In line with the sustainability objective of the project,

consideration of impact to the environment is important.

There are crops that are inherently good for the

environment such as nitrogen fixing crops like ground nuts

and beans and good for soil health. Thus, we give it a

weight of 7

** Exclusion Criterion: Compliance

with U.S. Government Bumpers

Amendment (Exclude if NO)

N/A

Supporting Market Sector Prioritization Process

Concurrent with the commodity prioritization research, AFDA evaluated and prioritized the following

supporting market sectors relevant to target commodities: inputs/services, extension,

mechanization/irrigation, finance, ICT, and logistics. The process involved two phases. The first phase was to

determine the magnitude of impact for systemic change, as this was one of the ten criteria used to prioritize

the supporting sectors.

To evaluate the systemic change impact, support sectors were given scores of 1-3, based on how large a

constraint the supporting sector was for each of the AFDA commodities, with 3 being the highest magnitude.

The scores were then multiplied by the weighted total commodity scores (from the commodity prioritization

process). For example, marketing services was allocated a constraint magnitude score of 3 across all seven of

the commodity sectors. Each of the commodity scores were then multiplied by 3 to arrive at the total score

of 7,428 for market services. Systemic change scores for support sectors were then assigned. A score of 5

signifies the highest systemic change impact anticipated if access to this sector is increased. The team

prioritized three tiers of supporting market sectors based on their systemic change scores (5, 4, and 3 or

below) te details of which are presented in the findings section and Annex II.

The second phase used the scoring based on the following criteria and weights to determine the final

prioritization of supporting market scores. Details are shown in Annex III.

Table 5: Supporting Market Sector Prioritization Criteria.

# CRITERIA WEIGHT EXPLANATION OF WEIGHTS

1 Magnitude of impact for Systemic Change 10 This is given the highest score since this is the core

objective of the market systems approach

2 Degree to which there are market actors with the incentives and ability to drive upgrades

to compete

8 We work with market actors to drive change. Champions are important in driving systemic change; thus,

this parameter is given a high score of 8

3 Potential for participation among women 7 Important consideration to achieve the inclusiveness

objective of AFDA. They are treated individually to give

due importance to inclusion of all these sectors (women, 4 Potential for participation among youth 7

11

# CRITERIA WEIGHT EXPLANATION OF WEIGHTS

5 Potential for participation among ethnic

minority populations 7

youth and ethnic groups) and not just any of them. Since they are treated individually, we decided to give each a

score of 7

6

Degree to which market actors have the

incentives and ability to drive inclusive growth focused on women, youth, and ethnic minorities

5

We feel this parameter is more important in the

prioritization of commodity sectors and has already been given due importance there with a weight of 7

7 Relative synergies with other USAID projects

or donor investments 5

This could facilitate/accelerate transformation for example

we can build on the work of LIFT on oil processing in

Kachin, or work of CSP on community mobilization in N and E

8 Relative opportunities for US firms to benefit

from sector development 5

Important but we feel it is not significant thus the weight

of 5

9 Degree of positive impact to the Environment 5 Important to consider, but we are not very clear on how big of a consideration so we give this a weight of 5

10 Included as a government priority sector or

other government initiative 2

The team thinks there is not much benefit since the

government doesn’t seem to have much resources to

contribute to this. Their attention to support sectors is dependent on the commodity sector.

Research Methods

As noted, the team combined secondary and primary research. Secondary research focused on both

commodity sectors and supporting market sectors. AFDA enlisted several Headquarters and field technical

and program staff and two consultants to research target commodities and cross-market functions, develop

initial sector summaries for both types of sectors, and develop initial scoring for commodities. The

commodity sector summaries are in the Appendix. Secondary research drew on trade databases, government

data (production, trade, cross-market function supply), reports from relevant recent and current donor-

funded projects, third-party research, prior in-country research the AFDA team conducted in the proposal

development phase, and other sources. Citations and references are listed in each sector summary report.

The team also drew on a conflict analysis and cross-market function research carried out concurrently by

AFDA team members and consultants.

For primary research, the AFDA technical leadership team identified relevant key informants, which the

AFDA field team interviewed. The team used an open-ended interview instrument, with separate forms for

public sector and private sector actors. Interview forms are in the appendix. The AFDA design team also

engaged in an earlier round of key informant interviews in the pre-design phase. Primary research focused on

high-level key informants with knowledge of multiple sectors, or individual sectors across the ZOI and more

broadly. Interviewees are listed in Table 2.

Table 6: Key Informant Interviews.

ENTITY SECTOR(S)/ISSUE/S

INTERVIEWED AFTER SECONDARY RESEARCH PHASE

Multinational input provider Inputs: Seed and crop protection products

DaNa Facility Activity (UKAID funded) Horticulture, oilseeds, pulses, spices, coffee

Proximity Designs Ag technology (incl. irrigation) and advisory services

ProFound (Netherlands NGO) Pulses, spices, tea, organic production and trade

Impact Terra Farm-level technical assistance (incl. ICT) in maize & pulses (may expand to sesame & coffee)

12

ENTITY SECTOR(S)/ISSUE/S

Myanmar Fruit and Vegetable Processors

Association (umbrella group of several associations)

Horticulture processing and trade fruit, vegetables, nuts, tea

One to Watch (Netherlands) Entrepreneurship: Admin/finance and tech support

Nathan and Associates Enabling Environment

INTERVIEWED DURING PRIOR PRE-DESIGN RESEARCH

Government: MoALI Cooperative Division, General Administration Dept.

Multi-sector: producer organizations, registration

Helvetas, MEDA, PATH, Winrock Multi-sector: Development implementers

Three seed/agroinput providers (domestic and international), agroinput company foundation,

custom tillage provider

Inputs and Services: Seed, agrochemicals, fertilizer, agri-services, ag insurance, tilling services

Various domestic traders and processors Horticulture, spices

Myanmar Agrifoods Processing trade association

GIZ Food quality

A Bank, Myanmar Agricultural Development

Bank, Infracapital Myanmar

Finance (credit and investment)

Trucking provider On-demand trucking

Cold storage provider Cold storage

ICT provider ICT

Landesa Land tenure

Nyaung Shwe Women’s Self-Help Group Gender issues

FINDINGS

Overall Prioritization

Table 7 summarizes the final scoring for each sector, followed by an explanation of the scoring by sector.

Commodities are listed in order of priority (total score) from left to right. The team eliminated cotton and

livestock from further consideration and scoring after the initial desk review. Cotton involves compliance

issues with the U.S. Bumpers Amendment (exclusion criterion) in addition to having very low impact

potential (production, economic) and synergy with other commodities. Livestock has little synergy with crop

sectors, which have many synergies among themselves, making it a relatively low-ROI sector for Activity

investment versus a crop sector.

Table 7: Commodity Scoring.

CRITERIA HORTI-

CULTURE

OIL

SEEDS MAIZE

PULSES

BEANS COFFEE SPICES TEA

1

Degree to which sector’s value

chains are inter-related (synergy)

35 35 28 35 7 14 7

2 Relative level of unmet end market demand (Int'l)

50 50 30 30 40 40 50

3 Relative level of unmet end market

demand (Domestic)

40 32 40 8 32 40 8

4 Contribution to Myanmar’s

economy

32 32 32 40 8 24 8

13

CRITERIA HORTI-

CULTURE OIL

SEEDS MAIZE

PULSES BEANS

COFFEE SPICES TEA

5

Current or potential

production base in

ZOI

30 50 50 50 10 10 10

6

Degree to which

market actors have incentives & ability to upgrade

35 35 35 21 35 21 35

7

Potential for

women’s participation

35 28 35 21 35 35 35

8 Potential for youth participation

28 14 28 14 28 21 28

9 Potential for ethnic minority participation

35 28 35 28 35 35 35

10

Degree to which market actors have

incentives and ability to drive inclusive growth

(women, youth, and ethnic minorities)

21 7 14 7 28 14 21

11

Government

priority sector or other government

initiative

15 20 15 20 20 5 10

12

Synergies with other USAID

projects or donor

investments

20 20 20 20 20 15 15

13

Opportunities for US firms to benefit from sector

development.

21 21 28 21 28 14 7

14

Positive

environmental

impact/lack of unavoidable

negative

14 35 7 35 7 7 14

Total Score 411 407 397 350 333 295 283

As mentioned in the Research and Prioritization section, the prioritization of support sectors followed a two-

step process. First, the team evaluated the systemic potential of the supporting market sectors, which is one

of the weighted criteria used for the final prioritization. The below table summarizes the final systemic change

scores. Detailed calculations of the final systemic change scores can be found in Annex 2.

Table 8: Support Sector Systemic Change Scores.

SUPPORT SECTORS SCORE VIS A VIS

COMMODITY

SCORES

SYSTEMIC CHANGE

SCORE

Agriculture Extension 7428 5

14

Business Development Support (ICT, Market Information, Training, Research, organization capacity development)

7428 5

Standards & Certification 7428 5

Marketing Services 7428 5

Finance 7428 5

Value-added Processing 7031 5

Seeds(input) 6748 4

Irrigation Services 6517 4

Storage 6517 4

PHH (primary processing) 6395 4

Machinery & Equipment (inputs) 4924 3

Plant Protection & Fertilizer (input) 4849 3

Mechanization Services 4055 3

Transport and logistics 3593 2

Detailed calculations of the final supporting sector prioritization can be found in Annex 3. Specific findings for

supporting market sectors that are common across multiple commodity sectors are included in the below

sections covering systems-level production and market systems results.

Table 9: Support Sector Final Prioritization Scores.

SUPPORT SECTORS WEIGHTED

SCORE

1 Value-added Processing 295

2 Finance 285

3 Marketing Services 265

4 Agriculture Extension 252

5 BDS (ICT, Market Information, Training, Research, OP) 252

6 Standards & Certification 226

7 PHH (primary processing) 211

8 Plant Protection & Fertilizer 210

9 Machinery & Equipment (Farm, PHH, Processing) 208

10 Mechanization Services 206

11 Seeds 204

12 Irrigation Services 198

13 Storage 191

14 Transport and logistics 127

Current End Markets

15

Trade data provide a snapshot of Myanmar’s export levels and end markets. Table 4 summarizes ITC Trade

Map (2019) data for imports and exports from 2014-18. For exports, pulses dominate in value, followed by

horticultural products (almost all unprocessed), maize and oilseeds (predominantly seeds, not oil), relatively

moderate amounts of spices, and small amounts of tea and coffee. Export values from 2014-18 increased for

all sectors except maize, oilseeds and pulses, with edible oil, horticulture other than potatoes, and tea

showing the highest relative growth. Trade data at the product group level, detailed in the sector summaries

in the Appendix, indicate that exports primarily comprise commodities that are unprocessed or processed

only at the primary level, with very few value-added goods. For imports, oilseeds have the highest value by

far—mostly edible oil, followed by more moderate levels of horticultural products and maize, and smaller

amounts of spices, pulses, coffee and tea. Import values across 2014-18 have grown for all sectors except tea

and pulses, with spices, maize, and potatoes showing the highest relative increases. Import data indicate

opportunities for domestic substitution of edible oil if domestic producers can compete with imports.

Table 10: Myanmar Exports and Imports 2014-18.

COMMODITY/SECTOR

EXPORT

VALUE 2018 (USD

THOUSAND)

CHANGE IN

EXPORT VALUE 2014-

18

IMPORT VALUE

2018 (USD THOUSAND)

CHANGE IN

IMPORT VALUE 2014-18

Coffee $2,740 26% $2,314 68%

Horticulture: Fruit & Nuts

(Edible fruit and nuts; peel of citrus fruit or melons)

$414,778 120% $46,837 29%

Horticulture: Vegetables and Potato

$24,754 11% $3,613 102%

Horticulture, Processed Fruit & Vegetable Products

$7,982 7502% $9,221 18%

Maize $238,485 -33% $42,289 194%

Oilseeds: Seed $233,863 -17% $11,906 59%

Oilseeds: Plant-based

Edible oil $3,143 283% $581,302 0.30%

Pulses (Dried, fresh and

chilled leguminous

vegetables, milled dried pulses)

$736,800 -19% $2,609 -33%

Tea $2,896 145% $1,307 -41%

Spices $50,854 16% $13,662 196%

Trade data from 2018 indicate that many commodities have highly concentrated end markets and that

regional neighbors—especially China— represent the majority of export value (ITC 2019).

• Pulses have two dominant buyers: India (37.9% of export value) and China (26%).

• Fruit and nuts: China represents 65.72 percent of value and India 28.49 percent.

• Maize: China buys 96.41 percent of seed for sowing and 99.92 of seed not for sowing.

• Oilseeds: China is the majority buyer of sesame and groundnut seed, India is the largest buyer of

sunflower and cotton seed, China is the only reported buyer of sunflower, maize and crude cottonseed

oils and the largest buyer of sesame oil; Singapore is the majority buyer of cottonseed oil and Malaysia is

16

the majority buyer of groundnut oil. Myanmar does export to higher-value markets such as the EU and

UK.

• Spices: China is the majority buyer for chilies (Capsicum), turmeric and cardamom, India is the dominant

buyer for pepper and Bangladesh dominates as a ginger buyer. Regional countries dominate exports, with

very little going to the EU or USA, or higher-value Asian markets such as Japan and Korea.

• Vegetables: Every product group has a dominant buyer, with the largest buyer’s share ranging from

57.3 percent (China) for “other chilled vegetables” to more than 98 percent for vegetables

cooked/uncooked (Japan 98.3%), tomatoes (99.4% Korea) and potatoes (Thailand 100%). China is the

dominant buyer for onions/other alliums, roots/tubers and other vegetables fresh/chilled and Korea is the

largest buyer of dried vegetables and tomatoes.

• Tea: Three buyers in lower-cost markets represent over 72 percent of Burma 2018 exports by value:

China, Thailand and Taipei (China).

• Coffee: Export markets are fairly diversified with numerous higher-value end markets. The top three

importers represent just over 50% of export value: U.S (27%), Thailand (14.6%) and Malaysia (10.8%).

End Market Opportunities and Sector Performance

The commodity sector desk research identified several domestic and international end market opportunities.

Table 5 summarizes these opportunities along with key performance issues that constrain Myanmar from

realizing these opportunities. The following section summarizes the market systems dynamics that contribute

to performance constraints. Across commodity sectors, we see commonalities in both end market

opportunities and constraints. End market opportunities largely relate to a) diversifying end markets to offset

risk, b) entering and expanding higher-value markets in SE Asia, the EU and North America, and c) producing

and selling value added products. Performance limitations across many or all sectors include:

• limited output volume due to low quality planting material, low input use and lack of sufficient irrigation

• limited market access and low efficiency due to weak links within and across value chain levels, and lack

of trust across levels

• inability to invest in improved production and processing due to lack of access to affordable credit

• inability to access higher-value markets due to lack of quality standards and regulatory systems aligned

with higher-value end market demands,

• inefficiency and lack of market access due to poor road infrastructure, especially in more remote areas

• differentially lower outcomes among ethnic minorities due to lack of land tenure protections

• differentially lower outcomes women due to lack control over productive decisions and resources, and

higher barriers to accessing finance

Table 11: End Market Opportunities and Performance Constraints.

MARKET OPPORTUNITIES PERFORMANCE CONSTRAINTS

COFFEE

Domestic: Growing demand for coffee including higher value, growing specialty coffee

sector. Export: Growing demand for Burmese

specialty coffee in EU, Oceana and North America, with bulk of demand in SE Asia and E

Asia.

• Low-quality planting material due to lack of

sufficient, standard production.

• Weak vertical and horizontal relationships limit efficiency and information access.

• Insufficient capital for farm upgrades and

sufficient PHH equipment.

• Weak land tenure protections.

• Poor roads and limited irrigation.

17


HORTICULTURE

Domestic: Increased processing, drive increased consumption.

Export: Expand exports of processed fruits

and vegetables (frozen, dried), upgrade to higher markets such as EU, diversify products

and export markets as a few products dominate exports and end markets are highly

concentrated.

• Don't meet export standards due to lack internationally aligned standards and lack of

information for farmers.

• Limited breeding/R&D expertise.

• Insufficient vertical linkages and lack of trust

• Lack of sufficient capital to upgrade production and processing and develop cold

chain.

• Inequitable land tenure/reassignment, poor

transit routes and limited irrigation.

MAIZE

Domestic: Increase production to fill excess demand among domestic feed mills, which rely

on high volume of imports. Increase domestic production of hybrid seed (used by up to 90% of farmers per WB 2016) to replace high

volume of imported hybrid seed.

Export: Diversify markets beyond dominant

buyer, China, and diversify products to expand processed/value-added products (e.g., increase current maize oil processing). Upgrade to

higher-value end markets through improved practices to address quality issues (high

aflatoxin levels and high amount of broken

grains)

• Limited working capital and access to credit (can't use land as collateral)

• labor shortages and high labor costs.

• Limited irrigation constrains yield.

• Women are well represented as producers but have limited decision-making ability,

constraining production outcomes.

OILSEEDS

Domestic: Replace edible oil imports if

domestic sector can improve efficiency to compete. Export: upgrade to higher markets such as EU

countries with no current imports, expand current high-value markets such as Japan and

existing EU countries/UK, diversify export markets as end markets are highly concentrated (China and India dominate,

ASEAN well represented), upgrade processing to produce export-quality edible oil

• Most edible oil doesn't meet export

standards for higher-value markets due to lack of food safety/purity regulation.

• Sub-optimal productivity and varietal separation due to limited training, incentives, capital.

• Limited capital to upgrade processing machinery for quality and efficiency.

• Domestic oil processors have poor quality equipment and limited credit to upgrade to meet higher-value market standards.

PULSES

Domestic: Increase processing, improve efficiency to improve margins in current

channels. Export: Upgrade to higher markets such as EU. Diversify export markets as end markets

are highly concentrated (esp. India), Burma can competitively expand across ASEAN, produce and export processed products such as flour

• Product unsuitable for higher-value export markets due to lack of grading system and

poor PH facilities.

• Sub-optimal productivity due to limited training and capital. Lack of contractual

relationships (due to conflict/power).

• Limited capital for production and traders.

Inequitable land tenure/reassignment and

Insufficient irrigation

SPICES

Domestic: Replace imports where domestic

production is or can be competitive, imports valued at $13.1 mil in 2017-18.

Export: upgrade to higher-value markets such as EU. Diversify export markets as end markets are highly concentrated in ASEAN and region

(esp. China). Diversify products exported, as a few products dominate exports.

• Not all output meets export standards due

to lack of training, regulatory standards & accredited lab facilities for food safety.

• Limited aggregation results in inefficiencies, making Burma less competitive.

• Numerous spices have small production

volumes compared to other spice exporting countries, making Burma less attractive to

some higher-value buyers.

• Limited capital and investment to improve production and processing.

18


TEA Domestic: Potential to replace black tea imports if domestic firms can compete.

Potential to upgrade domestic consumers to

organic and higher quality, need to identify segments willing to pay associated higher prices.

Export: Diversify end markets beyond dominant buyers China and Thailand. Expand

exports to current and new higher-value markets, e.g., U.S., Europe. Expand organic exports per identification of profitable markets.

Tea Association wants to promote fermented tea-how much of a market is there internationally?

• Not all output meets export standards due to lack of training, regulatory standards &

accredited lab facilities for food safety.

• Lack of sufficient capital to improve production and processing quality and

standards alignment.

• Inequitable land tenure/reassignment.

• Production centered in some high-conflict areas of Shan State.

• Women well-represented as laborers in

production & processing but do not receive equitable wages compared to men.

• Limited government support for sector.

Production and Related Support Market Systems

The following two sections summarize the dynamics underlying performance constraints in target sector

production and output marketing systems using USAID’s 5Rs Framework for Local Systems (CITE). In this

framework, performance constraints represent the first R, Results. The system dynamics that explain Results

are 1. Roles (actors’ functions and relative power), 2. Relationships (direction and nature), 3. Rules (formal

and informal), and 4. Resources. Cross-market functions such as inputs, services, finance, extension/training,

BDS, ICT, logistics and R&D represent core resources, and are thus discussed here as they modulate results.

Production Overview

Myanmar’s Central Statistical Organization (2019) provides production data for individual commodities

across the target sectors. Table 6 summarizes planted area for each ZOI region and state. For ZOI as a

whole, oilseeds (especially early sesame and rainy season groundnut), pulses (especially green gram and

pigeon pea), and maize predominate in planted area. Horticulture, (especially vegetables), tea, spices (chili &

onions) are next, with coffee having the smallest planted area. The ZOI has more than 90 percent of national

planted area for tea, several pulses (chick pea, pigeon pea), certain spices (onion, garlic), and early sesame,

over 70 percent for some oilseeds (rainy season groundnut and late sesame), maize, and coffee, and more

than half for other pulses (soy, green gram), winter groundnut vegetables/potato and chilies. Therefore, ZOI

producers are highly competitive relative to other areas for tea, oilseeds, several pulses, onion, garlic, maize

and coffee, moderately competitive for vegetables and chilies, and less competitive in fruit and plantain.

Within the ZOI, coffee, garlic, maize and tea planted area is centralized in Shan State, fruit and vegetable area

is highest Sagaing and Shan State, rainy season groundnut and early sesame area is highest in Magway and

Mandalay, winter groundnut, late sesame and many pulses area is highest in Magway and Sagaing, and chilies

and onion and centered in Mandalay. Regarding dominant crops in each region, Kachin State is dominated by

horticulture and maize, Magway, Mandalay and Sagaing are dominated by oilseeds, pulses and vegetables, and

Shan State is dominated by maize, vegetables and tea.

8

Table 12: ZOI Planted Area for Target Sectors, 2016-17.

PLANTED

ACREAGE BY ZOI STATE/REGION,

2016-17

KACHI

N STATE

MAGWAY

MANDALAY

SAGAING

SHAN STATE

TOTAL

ZOI ACREAG

E

ZOI

ACREAGE

AS % OF NATIONA

L

Coffee

1,680

987 5,832

586

27,452

36,537 73.91%

Horticulture: Fruit

64,141

34,718 70,546

100,012

93,559

362,976 24.24%

Horticulture:

Plantain

21,308

2,687 10,608

22,153

20,417

77,173 34.23%

Horticulture:

Vegetables and Potato (excludes onion

and garlic, reported as

spices/condiments)

62,923

129,630

122,508

286,973

255,00

5

857,039

57.04%

Oilseeds: Groundnut (Rain)

1,892

388,880

329,702

285,539

106,22

5

1,112,238

89.65%

Oilseeds: Groundnut

(Winter)

28,080

157,208 112,579

498,431

22,737

819,035 68.01%

Oilseeds: Sesame (Early)

3,437

1,205,203

915,301

478,213

33,662

2,635,816 92.60%

Oilseeds: Sesame (Late)

15,313

108,748

78,731

523,708

5,287

731,787 83.88%

Pulses: Green gram (pedisein) (mung)

2,061

778,645

328,713

591,234

4,673

1,705,326 56.52%

Pulses: Matpe

(black gram)

78

48,222 11,274

221,271

148

280,993 9.65%

Pulses: Pigeon Pea (Pesingon)

403

444,626

444,626

606,763

71,628

1,568,046 94.94%

Pulses: Chick Pea

(gram)

-

213,712 213,712

426,914

1,547

855,885 95.18%

Pulses: Soybean

(peboke)

11,677

12,099 27,667

38,641

189,32

6

263,842 74.57%

Pulses: Cowpea

-

9,567 725 - -

10,292 3.16%

Spices/Condiments: Chilies

-

26,392

112,796

5,449

7,755

152,392 55.54%

Onion (Spice/condiment)

1,292

42,109

66,265

41,085

11,419

162,170 93.80%

Garlic (Spice/condiment)

2,996

3,570

2,357

11,243

45,558

65,724 92.73%

Maize

56,535

88,874 34,966

198,424

632,414

1,011,213

83.49%

Tea

3,525

1,187 17,426

11,191

200,54

0

233,869 98.11%

Overall Results (System Performance)

9

As noted in 3c., research identified several performance issues at the production level that constrain

Myanmar’s ability to access larger and better end-market opportunities. The following sections summarize

how production system roles, relationships, resources and rules contribute to these poor results.

• limited output volumes due to low quality planting material, low input use and lack of sufficient irrigation

• producers do not produce output that meets higher-value market standards

• lack of market access and lower prices as producers are unorganized and lack long-term linkages and

trust with buyers

• producers cannot afford to improve production as they are cash constrained and cannot access sufficient

affordable finance

• ethnic minorities have differentially lower outcomes due to lack of land tenure protections in addition to

lack of trusting, long-term relationships with buyers from majority ethnic groups

• women have differentially lower outcomes due to lack control over productive decisions and resources,

and higher barriers to accessing finance

Roles

• Producers generally have small plots and cultivate a few crops. For example, production systems may

combine maize, pulses, oilseeds, vegetables and some spices (e.g., chilies), or coffee, tea, vegetables, fruit

trees and maize.

• Farmers allocate production area based on market demand, margins and price stability, and reallocate

land based on changes in these measures. Farmers have switched from pulses to maize in recent years,

for example, as maize has higher margins and more stable prices. Paddy has high margins relative to

target sectors such as pulses and oilseeds, and thus competes for production area.

• Farmers have multiple cropping seasons for annual crops such as maize, pulses and oilseeds.

• Many farmers do not use improved crop management, harvesting or post-harvest processing practices

such as tree crop pruning, harvesting at the optimal time and ensuring hygienic post-harvest processing

due to lack of sufficient training and advisory services.

• Fertilizer and crop protection use varies across sectors and geography. For example, farmers generally

use very little fertilizer on oilseed, pulses and vegetables and relatively high amounts of fertilizer on

maize. Producers are more likely to use crop protection products on pulses than maize or vegetables.

• Farmers tend to use low-quality planting material such as saved and poor-quality seed, due to high costs

and low availability of quality seed and nursery material (coffee & tea). However, use of improved hybrid

maize seed is high due to government breeding programs and seed distribution by contract buyers.

• Use of mechanization is generally limited though producers tend to use mechanization for ploughing and

land preparation for maize.

• Due to lack of irrigation and use of improved planting material, farmers' margins are low.

• Men generally handle heavier labor tasks such as ploughing and clearing and marketing. Women tend to

have more responsibility for seeding, weeding, and post-harvest handling (e.g., winnowing and cleaning).

Both men and women harvest and apply fertilizer and crop protection products.

• Men generally have more decision-making power than women in deciding what to cultivate and the

nature of investment in production. This varies across ethnic groups due to differing social norms.

• Hired labor meets a significant portion of farmers’ labor needs Women are well represented as

production labor but often receive lower wages than men because men are assigned to more dangerous

and difficult tasks seen as worthy of higher pay (ILO 2019).

10

• Few farmers produce for higher-value or specialty markets due to lack of market linkages and the

relatively high costs of certification (e.g., organic and fair trade). However, organic green tea and specialty

coffee production have increased due to development program support and Burma is known as a niche

organic green tea producer. ZOI coffee producers also tend to cultivate higher-value arabica species

rather than lower-value robustas.

• Extension networks are limited in size relative to the number of producers.

• Input suppliers may be agrodealers or commodity traders who also sell seed, fertilizer and agrochemicals.

Last-mile agrodealers remain limited in number relative to demand but have increased over time.

• A few large agroinput companies control seed development and distribution outside of government

research and development and distribution programs.

• Input suppliers and buyers may also serve as sources of credit for producers.

• There are several small companies focused on small-scale machinery for the target sectors.

Relationships

• Farmer organizations are limited in number and capacity due to previous military government’s

crackdown on associations and civil society, reducing producers’ bargaining power and margins.

• Producers have few linkages to end buyers, especially those in higher-value markets and processors.

Rather, their buying relationships are with local or other intermediary traders.

• Traders often have informal agreements to pre-finance farmers to purchase inputsContract production is

more prevalent in maize, in part driven by supply deficits that motivate buyers to contract to assure

sufficient supply.

• Buying/selling and input/service provision relationships are asymmetric, with buyers and input/service

providers setting prices and controlling information flows (i.e., one-way flows).

• There are cross-sector trade associations that include farmers, such as the Myanmar Tea Association,

but actors who are larger and higher in the value chain tend to control these associations.

• Ethnic minority farmers have little power relative to ethnic majority buyers due to social norms that

concentrate power among majority groups.

• Lack of trust across ethnic majority buyers and ethnic minority farmers results in limited market linkages

and long-term relationships.

• There are organized input dealer networks though they are small in number and scale relative to the size

and level of production (potential demand for inputs) in the ZOI.

• There are weak linkages across research and extension systems and actors.

Resources

• Producers generally use saved seed due to the high cost of improved seed and the lack of sufficient end

markets offering prices that would ensure farmers realize profitable returns improved seed costs. There

also is insufficient supply of quality coffee and tea nursery material. However, use of improved maize seed

is relatively high (90% of farmers in a Shan State survey) due to government-supported seed production

and distribution, and the existence of some contract buyers (including foreign firms with vertical

integration) who provide seed to contract producers.

• Farmers have very limited access to irrigation, which constrains yield and production seasons. Only 6% of

upland acreage in the CDZ irrigated (Mather et al. 2018). Lack of irrigation is becoming an increased

problem as climate change exacerbates.

• Producers historically use a high amount of manual labor versus mechanization due to having a large

labor supply available but generally use mechanized tilling and land preparation for maize. Farmers have a

11

low use of own/family labor, making labor costs high. Outmigration is reducing labor supply, increasing

the need for mechanization.

• Producer have limited access to proper post-harvest handling equipment, such as dryers, reduces

product quality (e.g., coffee) and prices, and leaves farmers unable to dry and store product for later sale

(e.g., maize). Likewise, lack of access to sufficient threshing equipment leaves farmers using manual

methods that degrade quality and reduce efficiency (e.g., broken grains, high foreign matter).

• Limited local storage results in quality degradation and leaves farmers unable to sell product to sell at

better prices outside the peak season.

• Agricultural research and extension human resource capacity (staff numbers relative to scale of

production/number of producers) and resources are limited.

• Producers face constraints accessing affordable financing to buy improved planting material, fertilizer and

other agroinputs, and post-harvest handling equipment. Bank loans have interest rates averaging 13

percent, though many producers cannot meet loan criteria and must instead use informal financing with

interest rates up to 30 percent. (Farmers are unable to use land as collateral for credit due to issues

with land tenure/law (Wijnands et al. 2014).) Therefore, farmers rely on input providers and buyers for

credit. Women face higher constraints as they are much less likely than men to have assets to use as

collateral.

• Producers have limited access to market information such as buyers, prices and standards, limiting their

ability to negotiate, and produce for and target better markets.

• Agrodealers face credit constraints and rely largely on own financing along with any value chain financing

they can obtain from suppliers.

• Over 60 percent of Burmese own a mobile phone, with over 80 percent of mobile phone being

smartphones (Digital in Asia 2018). However, data is relatively expensive, limiting internet and data-

based information access (James 2019). ICT4AG services/products have limited reach.

• In CDZ lowlands, men generally hold land titles and thus control land, and their plots tend to be larger

than women’s.

• Men tend to have greater access to agricultural information, knowledge, training, extension, and market

information, than women.

Rules

• Social norms limit women’s abilities to make decisions about productive resources, production

management and the use of agricultural income, constraining their production outcomes. Gender norms

differ across ethnic groups, so women are differentially constrained or empowered across the ZOI.

• Myanmar’s government does not have food safety/phytosanitary and quality standards aligned with export

market requirements outside ASEAN or higher-value markets. As a result, buyers such as feed mills,

traders and importers are responsible for setting and enforcing standards in their supply. For example,

MyanmarGAP does not align with the GlobalGAP standard required by higher-value markets such as the

EU and U.S. Additionally, importers do not recognize the country’s Food and Drug Authority (FDA) food

safety testing process as FDA’s facilities did not meet ISO 17025, the international standard for such

laboratories. (The country was said to be seeking accreditation in 2019.).

• Women often receive lower wages than men because men are assigned to more dangerous and difficult

tasks seen as worthy of higher pay (ILO 2019).

• Social norms foster deep and sustained power imbalances across ethnic majority and minority groups.

This disadvantages ethnic minority producers, who are most prevalent in the highlands and highland

crops such as coffee.

12

• Groups in power (e.g., ethnic majority) use land tenure reform for “arbitrary” large scale land

acquisitions, disproportionately affecting ethnic minorities in highlands along with the ability to cultivate

highland-suitable crops such as pulses (von der Mühlen 2018).

• Government regulation over seed R&D varies, differentially impacting the introduction of new varieties.

For example, new varieties of maize, some oilseeds (groundnut, sunflower and sesame), some pulses

(green gram, black gram, chickpea, pigeon pea), four vegetables (pepper, tomato, cauliflower, cabbage)

and two fruits (watermelon, melon) must undergo research trials before being registered (Aung 2019).

• Government support varies across sectors. The government has prioritized coffee, oilseeds, pulses and

vegetables in its Agricultural Development Strategy and oilseeds and pulses in its National Export

Strategy. Prioritizes sectors have relatively higher government investment and support than other

sectors, though the government does not support prioritized sectors equally. According to key

informants, the government focuses its support on rice, a priority crop for the government not targeted

by AFDA.

Output and Related Support Market Systems

The output market system comprises actors and functions above the production level: traders (domestic,

export and import), processors (food and feed), and retailers.

Overall Results (System Performance)

As noted in 3c., research identified several performance issues across the output market system that

constrain Myanmar’s ability to access larger and better end-market opportunities. The following sections

summarize how output market system roles, relationships, resources and rules contribute to these poor

results.

• Limited volumes due to production and processing constraints, and post-harvest losses

• Low efficiency due to weak links across value chain levels and poor road infrastructure

• Inability to invest in improved processing and logistics due to lack of access to affordable credit, impacted

by factors such as lack of collateral and the high cost of rural financial service delivery

• Inability to meet higher-value market standards due to lack of alignment with market demands (e.g.,

varieties) and standards

• Low inclusion of women and ethnic minorities due to gender norms and ethnic marginalization

Roles

• There are larger trader networks for pulses, oilseeds and maize. Many traders deal in multiple

commodities, with synergies across maize, pulses and oilseeds in particular

• The relative level of competition among traders varies, being relatively high for pulses and oilseeds.

• Women are well represented as traders in several commodities, including pulses, oilseeds and maize.

• Domestic processing is generally limited in scale and quality capacity though it varies. There is a strong

feed production sector that consumes much of domestic maize production. There also are numerous

edible oil processors. Processing is especially limited in horticulture (even for basic processing like dried

fruit), pulses, and coffee (roasted and ground).

• Domestic processors have inefficient processes and older, less efficient equipment and this have difficulty

competing with larger and more technically advanced suppliers of imports such as China.

13

• Few processors have food safety certifications, such as Good Manufacturing Practices (GMP) and Hazard

Analysis and Critical Control Points (HACCP). Certification costs and technical capacity (equipment and

human resources) are barriers to certification. Among certified processors, GMP is more common than

HACCP, as the former is reportedly more feasible for them to attain.

• Domestic oilseed processors have poor equipment that reduces efficiency. They are therefore challenged

to compete with edible oil imports from larger and more modern suppliers.

• There are few domestic coffee processors, such as washing and milling stations, due to limited capital.

• Many entrepreneurs lack sufficient business management and marketing capacity, and many small firms

lack sufficient technical capacity.

• Women are well represented as processors in pulses and oilseed and as processing employees.

• There are few food safety testing labs. Burma’s FDA, which oversees food safety testing, has limited

facilities, equipment and technical capacity and did not have international accreditation as of 2019. There

are some accredited private labs. Foreign labs also may conduct tests for some buyers.

• Some interviewees reported limited trucking services relative to transportation demand but this varies

across sectors

• There are few qualified business development service (BDS) providers focused on small to medium

enterprises (SMES), associations, and entrepreneurs and the agriculture sector.

Relationships

• Most buying relationships are on the spot market without contracts or long-term strategic relationships

(i.e., opportunistic). Maize buyers, both foreign importers and domestic feed mills, are relatively more

likely to use contract production than buyers of other crops. This is driven, in part, by supply deficits that

motivate buyers to contract to secure supply.

• Market organization varies across sectors. Maize, pulses and oilseeds tend to have more organized

markets, such as association-based commodity trading centers. Horticultural markets are much less

organized and efficient.

• There are sector associations to leverage for improved efficiency and marketing such as the Fruit and

Vegetable Producers and Exporters Association (MFVP), the Myanmar Tea Association, the Sesame

Farmers Development Association (SFDA), and associations that run commodity trading centers.

Resources

• Traders face constraints accessing working capital, which limits the amount of product they can buy and

trade at one time. Some buyers advance credit to traders they buy from, as seen in the maize sector.

• Post-harvest storage and processing facilities are not sufficiently available, resulting in product loss, quality

degradation, and quality deficits such as aflatoxin. Cold chain limitations result horticultural product loss

and degradation.

• There are several regional collection centers focused on pulses, oilseeds and grains, run by associations.

• Processors cannot access sufficient affordable financing to upgrade, constraining efficiency and quality.

• Trucking services are a constraint to trade. However, Kargo is scaling an on-demand trucking model

including refrigerated vehicles.

• Internationally accredited food safety testing capacity is limited, as noted above.

• BDS resources for agribusinesses are limited relative to more industrial and technical sectors, especially

for rural enterprises.

• RFA mentions driver of value-addition in Mandalay: Special Economic Zones to attract investment. Need

to research to see how AFDA can engage/position processors to take advantage.

14

Rules

• Myanmar’s government does not have food safety/phytosanitary and quality standards and certification

processes aligned with export market demands outside ASEAN or higher-value markets. It also has

weaker standards for domestic products than exports. As a result, buyers are responsible for setting and

enforcing standards in their supply. As noted in Section 3d above, MyanmarGAP, does not align with the

GlobalGAP standard required by higher-value markets such as the EU and U.S and the country’s Food

and Drug Authority (FDA) food safety labs are not internationally accredited. Additionally, the

government requires FDA approval only for exports, enabling low-quality processed products such as

adulterated edible oil enter domestic market channels.

• While social norms limit women’s decision-making authority, women traders have been found to have

relatively higher household decision making ability that women producers.

• Women often receive lower wages than men because men are assigned to more dangerous and difficult

tasks seen as worthy of higher pay (ILO 2019).

• Social norms foster deep and sustained power imbalances across ethnic majority and minority groups.

This disadvantages ethnic minority output market actors such as traders.

• Government support varies across sectors. The government has prioritized coffee, oilseeds, pulses and

vegetables in its Agricultural Development Strategy and oilseeds and pulses in its National Export

Strategy. Prioritizes sectors have relatively higher government investment and support than other

sectors, though the government does not support prioritized sectors equally. According to key

informants, the government focuses most of its support on rice, which is a priority crop for the

government not targeted by AFDA.

NEXT STEPS

The sector prioritization and analyses of systems-level findings provides the AFDA team a platform for which

to conduct the following deeper dive analyses to further inform the project’s understanding of how the

current agricultural market system is performing. It also provides an analytical base for which to evaluate

applications to the Market Systems Development Fund. The following additional analyses will be conducted

as part of phase 2 of its market systems analyses during the second half of year one.

Table 13: Planned Analyses for Phase 2.


Market Systems Diagnostic

An enterprise-based survey to understand behavioral and structural

characteristics within priority AFDA sectors and systems change objectives.

The survey will include questions around the determinants of market

systems resilience (per recent USAID guidance): i) diversity, ii) connectivity,

iii) governance, iv) business norms, and v) competition.

Gender and Social Inclusion

Analyses

To better understand gender gaps and opportunities within the Zone of

Influence (ZOI) and within specific sectors. The GSI analyses will help refine

AFDAs overall strategy and deliver on outcomes around women’s

empowerment in agriculture and food systems, gender equity, and broader

social inclusion.

15


Agricultural Inventory

Research

To carry out an inventory study of the existing Market Systems

infrastructure and actors in AFDA’s ZOI.

End Market Analyses

To characterize AFDA’s end markets across prioritized sectors and identify

opportunities where ZOI producers and related firms can competitively

expand, upgrade and diversify end markets.

Supporting Market Sector

Studies

Conduct analyses of the top two tiers of supporting market sectors. The

analysis will focus on why these services/inputs are not available or

accessible as well as benchmark performance and development of

comparative countries in the region.

Research on Production,

Inputs and Financial Services

AFDA will commission studies on extension, certification, financial, and

machinery and equipment services using comparative analysis of regional

countries

Political Economic Analysis AFDA will conduct a deeper dive political economy assessment using

primary research on prioritized sectors across the ZOI.

Systems Mapping and

Strategy Development

AFDA staff will prioritize key results across the production and output

market systems before conducting a root cause analysis and eventual

systems map that will be the basis for AFDA’s systems change strategy.

i

ANNEX 1. COMMODITY SECTOR PRIORITIZATION.

Commodity Sectors Scoring Horticulture Oil Seeds Grains Pulses & Beans Coffee Spices Tea

Indicator

Weight

(1 = low,

10 =

highest)

Score

(1 - 5,

5 = most

favorable)

weig

hted

score

Score

(1 - 5,

5 = most

favorabl

e)

weight

ed

score

Score

(1 - 5,

5 = most

favorabl

e)

weight

ed

score

Score

(1 - 5,

5 = most

favorable)

weight

ed

score

Score

(1 - 5,

5 = most

favorable)

weight

ed

score

Score

(1 - 5,

5 =

most

favora

ble)

weighted

score

Score

(1 - 5,

5 = most

favorabl

e)

weighte

d score

1 Degree to which sector’s value chains are inter-related

and its potential for spillover to other sectors. 7 5 35 5 35 4 28 5 35 1 7 2 14 1 7

2 Relative level of unmet end market demand (Int'l)

incentivize collaboration and investment within the sector 10 5 50 5 50 3 30 3 30 4 40 4 40 5 50

3

Relative level of unmet end market demand

(Domestic)incentivize collaboration and investment within

the sector

8 5 40 4 32 5 40 1 8 4 32 5 40 1 8

4 Contribution to the Myanmar economy 8 4 32 4 32 4 32 5 40 1 8 3 24 1 8

5 Level of current or potential production base in the ZOI

from which the sector can grow quickly 10 3 30 5 50 5 50 5 50 1 10 1 10 1 10

6 Degree to which there are market actors with the

incentives and ability to drive upgrades to compete 7 5 35 5 35 5 35 3 21 5 35 3 21 5 35

7 Potential for participation among women 7 5 35 4 28 5 35 3 21 5 35 5 35 5 35

8 Potential for participation among youth 7 4 28 2 14 4 28 2 14 4 28 3 21 4 28

9 Potential for participation among ethnic minority

populations 7 5 35 4 28 5 35 4 28 5 35 5 35 5 35

10 Degree to which market actors have the incentives and

ability to drive inclusive growth focused on women, youth,

and ethnic minorities

7 3 21 1 7 2 14 1 7 4 28 2 14 3 21

11 Included as a government priority sector or other

government initiative 5 3 15 4 20 3 15 4 20 4 20 1 5 2 10

12 Relative synergies with other USAID projects or donor

investments 5 4 20 4 20 4 20 4 20 4 20 3 15 3 15

13 Relative opportunities for US firms to benefit from sector

development. 7 3 21 3 21 4 28 3 21 4 28 2 14 1 7

14 Degree of impact to the Environmental 7 2 14 5 35 1 7 5 35 1 7 1 7 2 14

ii

Commodity Sectors Scoring Horticulture Oil Seeds Grains Pulses & Beans Coffee Spices Tea

Indicator

Weight

(1 = low,

10 =

highest)

Score

(1 - 5,

5 = most

favorable)

weig

hted

score

Score

(1 - 5,

5 = most

favorabl

e)

weight

ed

score

Score

(1 - 5,

5 = most

favorabl

e)

weight

ed

score

Score

(1 - 5,

5 = most

favorable)

weight

ed

score

Score

(1 - 5,

5 = most

favorable)

weight

ed

score

Score

(1 - 5,

5 =

most

favora

ble)

weighted

score

Score

(1 - 5,

5 = most

favorabl

e)

weighte

d score

Total Score 411 407 397 350 333 295 283

Commodity Sectors weighted

score total

1 Horti 411

2 Oilseeds 407

3 Maize 397

4 Pulses 350

5 Coffee 333

6 Spices 295

7 Tea 283

iii

ANNEX II. SYSTEMIC CHANGE IMPACT OF SUPPORT SECTORS.

iv

ANNEX III. SUPPORT SECTOR PRIORITIZATION SCORING.

v

ANNEX IV: REFERENCES & CITATIONS.

Aung, S. M. 2019. Burma - Union of Grain and Feed Annual 2019 - USDA GAIN.

Central Statistical Organization of Myanmar (CSO). 2019. Myanmar Statistical Yearbook 2017. Government

of the Union of Myanmar, Ministry of Planning and Finance.

Digital in Asia. 2017. Myanmar 33 Million Mobile Users, Smartphone Usage 80 Percent. Retrieved 3/31/20 at

digitalinasia.com.

International Labor Organization (ILO). 2019. Brewing Opportunity: A Market Systems Analysis of the Tea

Sector in Southern Shan State, Myanmar.

International Trade Centre (ITC). 2019. ITC Trade Map Trade Statistics. Retrieved from www.trademap.org

on 10/11/2019 and 12/13/19.

James, K. 2019. Plunging Prices Bring Connectivity to the Masses in Myanmar. Accessed 3/31/20 at dw.com.

Ministry of Agriculture, Livestock and Irrigation (MOALI). 2018a. Myanmar Agricultural Development

Strategy and Investment Plan 2018-23. Government of the Republic of the Union of Myanmar.

MOALI 2018b. Detailed Gender Analysis. Myanmar: Climate-Friendly Agribusiness Value

Chains Sector Project. 2018.

MoALI 2018c. Ethnic Group Development Framework. Myanmar: Climate-Friendly Agribusiness Value

Chains Sector Project. 2018.

Myanmar Ministry of Commerce. 2015. National Export Strategy of the Republic of the Union of Myanmar

2015-19. Government of the Republic of the Union of Myanmar.

von der Mühlen, M. 2018. The Fate of Customary Tenure Systems of Ethnic Minority Groups in Upland

Myanmar: An Analysis of the Legal Framework of Land Governance. ETH.

Wijnands, J., J. Biersteker, L. Hagedoorn and J. Louisse. 2014. Business opportunities and food safety of the

Myanmar edible oil sector. LEI.

https://digitalinasia.com/2017/01/09/myanmar-33-million-mobile-users-smartphone-usage-80/

http://www.trademap.org/

https://www.dw.com/en/plunging-prices-bring-connectivity-to-the-masses-in-myanmar/a-48200452

FEED THE FUTURE BURMA AGRICULTURE AND

Documents

Transcript of FEED THE FUTURE BURMA AGRICULTURE AND