In lieu of an abstract, here is a brief excerpt of the content:

77 4 david dapice Recapitalizing the Rural Economy In January 2009 I met with groups of farmers from areas just north of Mandalay down to areas in the Ayeyarwady Delta that were still recovering from the devastation caused by Cyclone Nargis in May 2008. I was part of an assessment team facilitated by International Development Enterprises Myanmar, a nongovernmental organization focused on social entrepreneurship . We were able to meet with many farmers, usually without any officials present, so they were able to speak freely about the challenges they faced. This chapter does not recount in detail the findings of our team, which were delivered to International Development Enterprises and the Myanmar government.1 Suffice it to say that we found many farmers, even those with considerable land holdings, wanting to borrow at 10 percent a month interest and unable to do so. Virtually all families we talked to were deeply in debt. They had great trouble financing inputs for rice and other crops. To save labor they were broadcasting rice seed instead of transplanting, even though broadcasting results in lower yields than transplanting. Farmers were also using much less fertilizer than they would have if credit had been available. Even pulses, legumes, and crops other than rice, one of the great recent successes of agriculture in Myanmar, had been hit by collapsing prices.2 It was reported that a group of well-connected traders in Yangon had promised high prices to local buyers and farmers but asked them to provide credit by deferring payment. Their attempt to corner the market evidently failed, and they were unable to pay after they had taken the product, leaving many of the local buyers without capital. Reports conflict over how well the situation with these major cash crops is evolving, but the main food product of Myanmar has always been rice, and this chapter focuses on rice, even though pulses are often an important cash crop for rice farmers. 04-0505-5 ch4.indd 77 8/30/10 6:10 PM 78 David Dapice To begin with, there are two major data series estimating rice output. One is produced by the UN’s Food and Agriculture Organization, which largely relies on government data. Its estimate puts current annual output of milled rice at about 18 million tons.3 Given domestic consumption of about 10 million tons, this would imply 8 million tons of rice exports annually, making Myanmar the largest rice exporter in the world. Since recorded exports are typically considerably less than 1 million tons and unrecorded border trade is unlikely to be more than a few hundred thousand tons, it is doubtful that these production estimates are close to reality. The second data series is produced by the U.S. Department of Agriculture. It has local people making estimates based on area and yield samples. The department estimates rice production to be in the range of 10 million to 11 million tons a year, a much more plausible figure. In 2009 rice exports were about 1 million tons and domestic rice prices were stable. This is not surprising. The world rice price has dropped by half from its high in 2008, and the kyat-dollar exchange rate has been stable or even appreciating slightly. Based on these facts, some observers have concluded —probably incorrectly—that there is no real food security problem in Myanmar. The lack of credit has led to a lack of work for landless laborers .4 They are eating taro and types of rice normally used for animals. Their demand has collapsed owing to a lack of wage income, and they are hungry. The lack of entitlements to food means that even when food is available in the markets, it may not reach the stomachs of the landless or their families. Even the normal safety net of Buddhist monasteries’ feeding of children and even adults is frayed and strained. Things are quite close to the edge, if recent informal but plausible reports are correct. The situation in 2009, a reflection in part of the damage to capital, labor, and land (salt intrusion, filling of irrigation ditches, and the like) wrought by Cyclone Nargis, is only the latest chapter in a long book. Farmers always and everywhere are used to annual crop variation and natural disasters. They save in the good years and use these savings (food, livestock, gold, or financial savings) to tide them through the lean years. What has happened in recent years in Myanmar is that surpluses...

Share