FromAspirationtoTransformation:MyanmarAgricultureandtheRuralEconomy

DuncanBoughtonandBenBeltonMichiganStateUniversity

Yangon,June1,2018

Outline•MOALI’sAgriculturalDevelopmentStrategy• Summaryfindingsonthestatusofagandruraltransformation• Evidenceonagandruraltransformation•Migrationandwages•Mechanization• Agricultureandnon-farmeconomy

• Outcomes(ruralhouseholdincomes)• Discussion

MOALI’sAspiration:AgriculturalDevelopmentStrategy

P1

P2

P3

MOALIVisionStatement:“Aninclusive,competitive,foodandnutritionsecureandsustainableagriculturalsystemcontributingtothesocioeconomicwellbeingoffarmersandruralpeopleandfurtherdevelopmentofthenationaleconomy”

ADSgoalsrequiredecentralizedandmulti-sectoralapproach

1. Improvedproductionsystems• Diversifiedfarmingsystems(foodstaple,highvalue,livestock)• ImprovedVarieties(yield,quality,resilience,cycle)• Integratedsoilfertility/pestanddiseasemanagement• Mechanizationforcostsavingandprecisionagriculture

2.Accesstosustainable,efficientirrigationservices3.Flexibilityofenterprisechoiceforfarmers

• Landpolicy,tradepolicy• Efficientagribusinesslinkages(seed,chemicals,mechanizationservices,processorsandexporters)• Financialservicesandbusinessmanagementskills

Agandruraltransformationsummary(1)

1) Agricultureisthelargestsourceofruralemploymentand,withgrowingurbandemandforhighqualityanddiversifiedfood,akeypotentialdriverofsustainedgrowthintheruraleconomy.

2) Migrationoutofruralareasisaccelerating,drivingupruralwageratesandinjectingliquidityintomigranthouseholdsintheformofremittances.

3) Increasingwagerates,combinedwithbankfinanceformachineryrentalservices,isdrivingextremelyrapidmechanization.

4) Accesstoawiderangeofgoodsandservices,especiallytransportandcommunications,hasimprovedrapidlyinruralareas.

Agandruraltransformationsummary(2)

5) Agricultureisunder-performingrelativetopotentialdueto:• poorwatercontrol(irrigationanddrainage)• inefficientuseofmoderntechnology(improvedvarieties,fertilizer,pesticide)• lackofdiversificationintohighvaluefarmenterprises(aquaculture,livestock,fruitandvegetables)

6) Multi-sectoral(allhands)provisionofpublicgoods(research,extension,irrigationmanagement,foodsafety)isneededtoenablefarmerstorespondtoemergingmarketopportunities.

7) ThenewAgriculturalDevelopmentStrategyprovidestheframeworkforpublicsectorreformbutstrongstakeholderengagementwillbenecessarytoovercomeorganizationalandhumancapacityconstraints.

Evidenceofagriculturalandruraltransformation

SurveyLocations• 2015:MonStateSurvey

• 2016:DeltaRegionSurvey(withaquacultureVC)

• 2017:DryZoneSurvey(withpulsesandoilseedVCs)

• 2018:DryZoneVarietyAdoptionandSeedDemand

• 2018:SouthernShanState(withmaizeandpigeonpea VCs)

SurveyComponents

Mon Delta DryZone ShanScoping 1week 3months

(fishVC)1month(mostlygovernment)+1month(enterprises)

1month(farmers;government;enterprises)

HouseholdSurvey

1600HH 1100HH 1600HHSeed1400HH

1600 HH

CommunitySurvey

137villages 73villages 300villages 425 villages

Non-farmsurveys

0 Machine &sparepartssuppliers(49)

MachineryDealerships(60)Serviceproviders(123)OilMills(182)Traders(376)Total =742

50DealershipsTBDServiceproviders350Traders

Acceleratingmigration,risingwages

AcceleratingmigrationinDelta…

0

10

20

30

40

50

60

70

80

90

100

Urban Rural

Cumulativeshareofallmigrantsbyyearfirstmigrated(%),1995-2015

• 90%rural-urban• 92%domestic• 1in6HHhavemigrants• Averagemigrantage21• 55:45male/femalesplit• 70%employedinmanufacturing

…andDryZone

• 86%domestic• 1in5HHhavelongtermmigrants

• Averagemigrantage24• 56:44male/femalesplit• 26%employedinmanufacturing

• 55%low-skilledinformaljobs

Cumulativeshareofallmigrantsbyyearfirstmigrated(%),1995-2016

0

10

20

30

40

50

60

70

80

90

10019

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

1520

16

Domestic International

Migrationisdrivinglargeruralwageincreases

+20%+15%

0500

10001500200025003000350040004500

2012 2014 2016

+8%

+32%

0500

10001500200025003000350040004500

2011 2013 2016

Realdailywages(M

MK)

Delta DryZone

Changeinrealdailywagesformalecasualworkers

Agriculturemechanizingrapidly

Geographicalspreadofmachinesupplybusinesses2010 2013 2016

Improvingaccesstoformalfinancialservicesformachinepurchases

• Hirepurchaseagreementswithcommercialbanksbeganin2013

• Reducedcapitalconstraintsformachinesuppliers,costofcredittobuyers35

6877

17

5248

27 22

2WT 4WT CombineHarvester

Shareofsa

les(%)

Bank

Dealer

Customer

Sourceoffinanceformachinerypurchases,2016(MAAS)

Rentalservicesenablingaccesstomachines

+216%

+1839%

+1801%

+170%

0%

10%

20%

30%

40%

50%

60%

10yearsago

5yearsago

Today 10yearsago

5yearsago

Today 10yearsago

5yearsago

Today 10yearsago

5yearsago

Today

2WT 4WT CombineHarvester Thresher

Shareoffa

rmHHs

Own Rent

Shareoffarmersusingmachinery,bymachinetype,yearandownershipstatus(READZ)

Scale-neutraltechnology

78

8

50

83

7

60

75

13

61

0

10

20

30

40

50

60

70

80

90

100

2WT(LandPreparation) 4WT(LandPreparation) Combine(Harvesting)

%offarmhou

seho

ldsu

sing

<5acres >5&<10acres >10acres

Shareofhouseholdsusingagriculturalmachinery,bysizeoflandholding(MAAS)

Accesstoformalcreditisimproving

Shareofvillageswithcreditaccessbysource,2011&2016(MAAS)

0

10

20

30

40

50

60

70

80

%ofv

illageswith

access

2011 2016

Sourcesofcreditdiversifying

Creditbecomingmuchcheaperassourcesdiversify

-0.1% -0.4%

-1.3%

-1.3%

-1.7%

-3%

-5.2%

0

2

4

6

8

10

12

Mon

thlyinterestra

te(%

)

2012 2017

Monthlyinterestratesfrominformallendersandmicrocreditproviders,2012&2017(READZ)

Ruralnon-farmeconomygrowingrapidly

Numbersofnon-farmbusinessesgrowingquickly

+233

%

+50%

+44%

+67%

0

5

10

15

20

25

Motortransport

Retail Personalservices

Foodservices

MEA

NNo.ENTERP

RISES/VILLAG

E

Delta

2011 2016

+200

% +57%

+33%

+56%

0

5

10

15

20

25DryZone

2011 2017

Meannumbersofnon-farmenterprisepervillagebytype,2011&2016/17(MAAS&READZ)

Agricultureprovides>70%ofprimaryemployment,plusindirectnon-farmemploymentinvaluechains

Agriculturallaboris80%ofoff-farmemploymentinDryZone

BUT:Agriculturestillthemainsourceofprimaryemployment

Ownfarm42%

Agri-labor29%

Non-farmoccupations

29%

Shareofindividualprimaryemployment,bytype(MAAS)

Genderwagegapsmallerfornon-farmwork

0.98

0.79 0.69

0

1000

2000

3000

4000

5000

6000

7000

Salariedwork Non-farmcasuallabor Farmcasuallabor

Men Women

Averagedailyincomesformenandwomenworker,bytypeofwork,2017(READZ)

Agriculturalperformancelagging

Only(post-monsoon)riceyieldsareimproving

55.5

28.9

8.7 12

.2

58.4

28.0

8.2 9.6

62.2

27.3

7.7 8.4

Rice Groundnut Sesame Greengram

10yearsago 5yearsago 2016-2017

Reportedaverageyieldsforselectedcrops(baskets/acre)in2016,2011,2007(READZ)

UseofImprovedVarieties

Ageofvarietyandseedplantedin2018

Agriculturalproductivityandprofitabilityremainlow

MonsoonPaddy

Greengram

Median=$200/acre

Medianagriculturalland=5.5acres;Typicalannualagriculturalincome=$1650/HH,or$330/capita

-350

-250

-150

-50

50

150

250

350

1 7 13 19 25 31 37 43 49 55 61 67 73 79 85 91 97 103

109

115

121

127

133

139

145

151

157

163

169

175

181

187

193

199

205

211

217

223

229

235

241

GrossM

argin/acre(U

SD) Median=$100/acre

-400

-200

0

200

400

600

800

1 3 5 7 9 1113151719212325272931333537394143454749515355575961636567697173757779

Grossm

argin/acre(U

SD)

ReturnsintheDryZoneareevenlower,especiallyforuplandcrops

115

82

52

36

19

0

20

40

60

80

100

120

Dryseasonpaddy

Monsoonpaddy

Groundnut Sesame Greengram

Meangrossm

argin/acre(U

SD)

Meangrossmargins(USD/acre)forselectedcrops(READZ)

Yieldsverystronglyaffectedbyclimaticconditions

262

1440

1939

547

432

414

331

166

1088

1521

371

281

261

215

45

538

998

159

112

121

83

0

500

1000

1500

2000

2500

Averagecrop

yield(k

g/acre) Goodyear

Averageyear

Badyear

Averagecropyields(kg/acre)inyearswith“good”,“average”and“poor”climaticconditions(READZ)

Transformationoutcomes:ruralhouseholdincomes

HouseholdIncomeComponents(HHswithag land)

44%

2%2%

5%5%

3%1%

14%

23%

MonState

52%

1%

7%

11%

6%

2%4%

10%7%

Delta

Crops Livestock Fishing/aquacultureAgwages Non-agwages SalariedemploymentResourceextraction Non-farmbusiness Remittances

48%

7%

17%

3%5%

1%8%

12%

DryZone$1,020 / $617 $794 / $373 $387 / $287

HouseholdIncomeComponents(landlessHHs)

6% 2%

9%

13%

19%5%

2%

19%

25%

MonState

2% 2%

44%

17%5%

7%

16%

8%

Delta

Crops Livestock Fishing/aquacultureAgwages Non-agwages SalariedemploymentResourceextraction Non-farmbusiness Remittances 2% 3%

45%

13%5%

1%

18%

13%

DryZone$690 / $475 $331 / $259 $414 / $280

HouseholdIncomeComponents(landterciles)DryZone

32%

7%

29%

5%

5%

1%9%

12%

Tercile 1(low)

49%

8%

15%

2%5%

1%7%

13%

Tercile 2

Crops Livestock AquacultureAgwages Non-agwages SalariedemploymentResourceextraction Non-farmbusiness Remittances

66%5%

5%1%

5%

7%

11%

Tercile 3(high)$347 / $257 $366 / $290 $450 / $322

ThankstoourCESDresearchteam

ADScasestudy:DecentralizationofAgriculturalResearch

IsMyanmar’sAgriculturalResearchandExtensionSystemequippedtosupportADS?

1. Scientistsarewelltrainedandhighlydedicated–importantsuccessesachieveddespiteobstacles

2. Researchhumanresourcesextremelylimited• Onetenththesizeofneighboringcountries• Criticalcapacitygapsinalmostalldisciplines

3. Researchisorganizationallyfragmented• Limitedresearchcapacityspreadacrossmultipleunits(DOA,DAR,YAU)• Verylimitedcollaborationbetweenresearchandextension

4.Researchstaffgeographicallyover-centralized• 80%ofDARPhDandMSlevelstaffatYezin

5.Slowresearchcareerprogressiondiscouragestalent

ConsequencesforResearchEffectiveness?1. Discipline-focusedratherthanproductionsystem

focused2. Laboratoryandresearchstationfocusedratherthan

farmerfocused3. Limitedcapacitytotakeadvantageofglobalscience4.Limitedcapacitytotranslateresearchfindingsintoimprovedfarmerproductionandincomeincreases5.Limitedtalentacquisitionandretention

Potentialimpactofresearchonfarmerwelfareandeconomicgrowthnotfullyrealized

ADSOpportunityforResearchandExtensionSystemReform:“HarvestingtheFuture”

1. Large-scaleresearchhumanresourcerecruitmentandgraduatetrainingtoaddresscapacitygaps

2. Re-organizeexistingunitstoachievecriticalmassinshort-term(e.g.,Biotechnology)

3.Decentralizeresearchandextension:jointregional,multidisciplinaryteamstoaddressfarmingsystemproblems4. Expandlong-terminternationalpartnershipslinking

capacitybuildingandfarmerproblemsolving5.Increaseamountandflexibilityoffunding

Highimpactofresearchonfarmerwelfareandgrowth

Potentialareasforengagement

• LinkagesbetweenUSAIDfundedprojectsandregionalresearchcenters• Facilitatingfarmervisitsandparticipationinvarietyevaluationonresearchorseedmultiplicationfarms• Expansionofon-farmevaluationofvarietiesandmanagementpractices• Modelsoflocalcommercialseedmultiplicationbyfarmers• Trainingoffarmserviceproviders

• Regionalcommercialtissueculturelabs