Myanmar

Myanmar: The outlook for Myanmar’s inorganic fertilizer use and 2021 crop harvest | An ex-ante assessment, Strategy Support Program | Working Paper 10 April 2021

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1. INTRODUCTION

Agro-chemicals are important inputs for crop production and increasingly so in many low and middle- income countries. Inorganic fertilizers, in particular, are often the most important purchased input for farmers. Thus, farmer access to affordable fertilizer is an important concern for governments, development partners, and farmers. Current international and local disruptions to fertilizer supply chains threaten farmer’s access to fertilizer in Myanmar. Moreover, effective farmer demand for fertilizer in Myanmar has taken a crucial hit as well due to the COVID-19 pandemic and the political crisis. This will likely lead to significantly lower fertilizer use in the country in 2021.

International fertilizer markets have undergone several recent changes. First, international fertilizer prices are rapidly increasing. In March 2021, US prices of urea and diammonium phosphate (DAP) were estimated to be 27 and 48 percent higher, respectively, than a year earlier (Quinn 2021). Higher prices are expected globally through 2021 due to high prices of feedstock (Ibendahl 2021) Second, international shipping costs in 2021 are substantially higher due to a global shortage of containers, which is especially problematic in Asia due to COVID-19 related trade reductions. International freight costs in the Southeast Asian region in the beginning of 2021 were estimated to be two to four times higher than during normal times (USDA 2021b, Fitch Ratings 2021).

Locally, COVID-19 and political crises have created unprecedented challenges to the functioning of agricultural value chains and the agri-food system. The COVID-19 crisis has led to large income declines in the country overall and to substantial disruptions in Myanmar’s agri-food system (Boughton et al. 2021; Headey et al. 2020). The political crisis has caused large problems in the banking and finance sector, in international trade, and in the local transport sector, among others (USDA 2021a). Moreover, the currency of Myanmar, the kyat (MMK), is rapidly depreciating. This is important as most inorganic fertilizer used in the country is imported. By early April 2021, the MMK had depreciated by almost 20 percent in USD terms compared to early February 2021, according to a licensed moneychanger in Yangon (USAID 2021). At the farm level, the political crisis is leading to lower credit availability for farmers, a decrease in farm prices for some crops, and more uncertain agricultural profitability (MAPSA 2021).

The purpose of this research note is to assess how both international developments and domestic crises might affect fertilizer use in Myanmar in the upcoming agricultural year. We discuss in turn the data and methods used for our assessment, the functioning of inorganic fertilizer value chains in normal years in Myanmar, recent increases in fertilizer prices and decreases in use, and the expected implications of reduced fertilizer use on crop output in 2021.

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