Rice grain price falling but …..

Rice prices in Myanmar are falling. However, fall in price is mainly in the price paid to the rice farmers for rice grain. The price of polished rice sold in the domestic market remains high. Current grain price for low grade rice is 250,000 kyat (about US$ 250) per 100 tin (Burmese system for measuring rice and grain, equivalent to 66 sacks), while the price for high grade rice is currently at 450,000 kyat (US$ 450) per 66 sacks. (Rice in Burma is usually sold in sack). This is the price paid to rice farmers by the millers.

Polished rice at the wholesale market is currently at 14,000 to 16,000 kyat (US$ 130 – 150) per sac for low grade rice, while high grade rice is sold at more than 24,000 kyat per sac. Usually, 66 sacks of grain will yield 32 sacks of polished rice after milling. At this rate, 66 sacks of grain (bought at 250,000 kyat would yield more than 500,000 kyat (double the buying price).

Even after the addition of other overhead costs, such as milling, transportation and labor costs, the price difference is still very high. “For 66 sacks of grain, they pay us 250,000 kyat only. The milling cost is 10,000 kyat for 66 sacks of grain. Transport cost is another 10,000 kyat. Therefore, after milling and polishing, the total cost is still 270,000 kyat, producing 32 sacks of polished rice. Cost for transportation to Yangon is 400 kyat per sack for the shipping, with a total shipping cost of 12,800 kyat. From Yangon port to Bayintnaung wholesale market, the truck fee is 6,400 only. Add a few more for the labor cost, and the total cost for 32 sacks of rice is only 300,000 kyat. This is the total cost from the point of purchase of unpolished grain to the whole sale market. However, the selling price of one sack of polished rice for low grade rice in wholesale market of Yangon is currently 16,000 kyat. Multiply that with 32 sacks and you get around 500,000 kyat. The investment is 300,000 kyat; the selling price is 500,000 kyat. Thus they make 200,000 kyat as profit! You can see there is a lot of profit making in this process. They should have paid us at least 300,000 kyat for 66 sacks of rice grain,” said one of the rice farmers from Ngapudaw (Ngaputaw) Township, Irrawaddy (Ayeyarwaddy or Ayarwaddy) Division.

So who is suffering from this large discrepancy in the buying and selling price of rice? Those who really suffer are rice farmers and the consumers. “The price rice farmers get is low, but the price the consumers pay is still high. Thus both the farmers and consumers are the culprit of this profit making process. If the consumers can pay at this price, the farmers should get more. Or, the consumer price should be lower. Now, they don’t give enough to the farmers, while at the same time, they don’t lower the price at the other end. The difference is 200,000 kyat. In realty, if they sell the end product at this price, they could pay us more than 300,000 kyat,” explained another sad farmer from Irrawaddy Division.

One of the Yangon residents who live in Hlaing Township said, “Although they say prices are falling, the retail price of rice is still high. Very low grade rice falls a little bit, but other grades are selling at the same price. Lowest quality rice is selling at 550 kyat per pyi (Burmese measure, about 8 cups of rice) while the highest quality rice at 1,600 kyat. That is what they are selling in our street.”

The fall in the price of rice is only for that paid to rice farmers but not to that sold to general public. At current situation, even if the millers buy from the farmers at 300,000 kyat per 100 tin (66 sacs), they could still make a large profit. This is why rice farmers want reasonable price for their grain, while at the same time lowering the consumer price of rice at the other end.

According to some experts, the reason the end consumer price is so high may be due to other hidden costs during the transportation and selling of rice grain and polished rice (such as tax collected at various check points, permit fees, bribe money to get permission, etc). In such case, these hidden costs should be lowered or abolished in order to reduce the consumer prices.

Source: Weekly Eleven News Journal

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