Myanmar: Informal Flour Import Troubles Local Wheat Mills
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The USDA forecasts Myanmar’s Wheat production to be flat at 80,000 MT for MY 2023/24. Decreased domestic demand, lack of good quality seeds, low Government interest in supporting Wheat production, and high cost of production from rising fuel and fertilizer prices will keep Wheat production below average. Wheat is one of the most critical crops after rice and corn. Major Wheat-growing areas are Shan State, Sagaing, and Mandalay. The Sagaing region accounts for more than 76 percent of total production, followed by Shan State at 20 percent and Mandalay at 4 percent. Farmers typically plant Wheat between October and November and harvest it between January and March.
Post forecasts Wheat consumption down at 500 MT in MY 2023/24 due to high prices, reduced operation by Wheat mills, and supply chain challenges in conflict areas. Industry sources confirm that much Wheat flour is entering the market informally from India. Wheat mills are reducing operating hours due to unreliable electricity and challenges importing Wheat grain. Wheat millers have suspended distribution or reduced the volume they sell to conflict areas within the country due to safety concerns and transportation challenges. Imported Wheat flour from India is relatively cheaper than those produced by local mills.
Only FDI mills, such as Diamond Star and Wilmar, compete with Indian flour. There are four major Wheat mill businesses (i.e., U Kyu Family Group, Lluvia -under the umbrella of Capital Diamond Star, Htun Myittar companies, and Wilmar Myanmar) that operate large Wheat mills. Even these more prominent Wheat milling companies have reduced their operations by about 40-50 percent since 2021.
Wheat imports are forecast at 400,000 MT in MY 2023/24 due to slow domestic demand, higher world prices, import licensing challenges, and policy changes on importation. Burma mainly imports Wheat grain from Australia, Canada, India, Thailand, and the United States. In MY 2021/22, Australia supplied 63 percent of Burma’s Wheat grain imports. According to AgFlow data, Myanmar imported 60,000 tons of Wheat from Australia in Jan-March 2023, followed by the United States (26,392 tons). Wheat importers must obtain an import license that usually takes one to two months to get; however, it often takes longer for some Wheat importers to get their license.
Wheat Price in Myanmar
Domestic Wheat prices doubled in March 2023 compared to the same period last year due to low-milled Wheat production, high fuel and transportation costs, the depreciation of the Myanmar kyat against the U.S. dollar, and the conflict in Ukraine. Domestic wholesale prices for Wheat gradually increased between August and September 2022 and sharply increased in October due to reduced stocks. Prices for imported Wheat flour vary according to the Wheat flour type but are usually cheaper and of higher quality than locally produced Wheat.
Domestic Wheat prices mainly depend on demand from the mills in Mandalay, Sagaing, and Shan State since they primarily use local Wheat. However, current world prices for grain increased due to the conflict in Ukraine. The influx of Indian Wheat flour in the market reduced domestic prices for Wheat in March 2023.
The military regime seeks to reduce imports of “non-essential” products to save foreign currency and reduce the current trade deficit. Wheat importers are required to apply for an import license; however, there are no trade restrictions on the volume of Wheat imports. Foreign currency controls implemented by the government have limited the ability of importers to secure foreign currency to purchase goods. The CBM requires importers to buy U.S. dollars at the CBM; however, the CBM does not always have enough U.S. dollars to meet importers’ demand. CBM prioritizes U.S. dollars to import fuel, edible oil, and pharmaceuticals.
Other sources: USDA
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