Thadoe Hein, Group CEO, Awba: Interview

Interview: Thadoe Hein

What action is required from the government to address the shortfalls related to irrigation, fertiliser, seeds and machinery?

THADOE HEIN: A number of shortfalls contribute to low productivity rates relative to neighbouring countries such as Vietnam and Thailand. We have very comparable land utilisation and acreage, but we are producing approximately a quarter of their output. The reason behind this is the limited number of crops that farmers can grow due to inadequate irrigation infrastructure. Enabling Myanmar farmers to grow a third crop, as is done in other ASEAN countries, could trigger as much as a 50% increase in revenue and annual net income for farmers. The two reasons behind the current lack of good-quality irrigation infrastructure are limited government funds and worries about corruption.

Other issues will naturally be resolved when the third crop is enabled, as the usage of tractors and fertilisers will increase automatically. To give an example, in certain areas of the country, farmers now use credit to buy tractors or harvesters, but because they cannot grow a third crop, the return on investment is not as good as in Thailand. Indeed, thanks to relatively high interest rates and a long payback period, they are making losses. There is a major opportunity for foreign investors to bring drip irrigation and sprinkler systems into Myanmar. These systems cost around $2000 per acre and will represent a significant change for farmers across the country. With regard to seeds, companies in this segment are introducing new seeds, in particular vegetables and corn, in Myanmar.

What infrastructure projects should be prioritised to address productivity and logistical challenges that limit output and export capacity?

HEIN: In my opinion, the top project should be the ports. During the peak seasons our ports are congested, and importing or exporting crops, fruits or other related goods like fertilisers and seeds takes a long time, which increases logistical costs substantially. On top of that, because of high demand during those periods, ship owners charge far more than they should, making it unreasonably hard for local producers. This also affects our competitiveness, because our shipping costs are much higher than in any other country in the region. In addition, the capacity of ports in Thilawa and Yangon is 20,000–30,000 tonnes. If you compare this to other ports and deepwater ports in the region, such as those in Thailand where they can handle up to 60,000 tonnes, it is clear more investment is needed.

The price and size of land continue to pose problems. Myanmar is a smallholder farming economy and each farmer has approximately five to 10 acres of land, so land acquisition is problematic. For instance, a big investor wanting to set up a 10,000-acre, fully-mechanised farming site would face severe challenges and high costs, making the project almost unrealisable. I think transforming our smallholder agricultural system into a large cooperative system would be the best solution. Cooperative systems allow farmers to be organised with good governance and transparency, while at the same time increasing productivity and revenue.

How is technological innovation shaping the future of farming in the country?

HEIN: Technology has come a very long way in recent years and so-called precision farming has arrived. Our farmers now have access to 4G and smartphones, and many have started to use agriculture-related services. Previously, the lunar calendar was the most efficient tool to predict weather conditions and plan growing and harvesting seasons. Climate change has, however, rendered this centuries-old calendar invalid. One of the services that our sector can thus benefit from is applications for predicting the weather. Using satellite data, farmers now have precise climatological information at their fingertips, helping them decide whether they should grow, harvest, water or wait for the rains.