Myanmar Wheat: Australia Leads Under the AANZFTA
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The Sagaing region, the Mandalay region (central plain of country), and Shan State (the eastern part of country) are the main Wheat-producing regions in Burma. The Sagaing region accounts for more than 73 percent of total production, followed by Shan State at 11 percent, and Mandalay at 4 percent. Farmers typically plant Wheat in October and harvest it between January and March. MY2022/23 Myanmar Wheat production is at 75,000 MT, according to the USDA. 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.
The USDA forecasts Wheat consumption down to 530,000 MT in MY 2022/23 due to lower domestic demand. Wheat noodle manufacturers consume 45 percent of total Wheat flour in noodle production, bakeries consume another 35 percent, and other food manufacturers use the remaining 20 percent to produce Wheat products, such as Wheat-derived breakfast foods. Lower- and middle-income consumers will switch to eating rice at home if they can no longer afford these Wheat snacks. Similarly, demand for bakery goods and fast food is also weak due to high prices and low incomes.
There are more than 70 Wheat flour mills in the Mandalay, Monywa, Sagaing area (central part of the country) with a capacity of approximately 30-60 MT/day. Wheat millers operate these mills independently and primarily use local Wheat grains from Shan State. They rely on imported Wheat when the local supply is not sufficient. These mills produce flour according to the demand in their areas and often do not operate daily or at full capacity.
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 larger Wheat mills. Even these bigger Wheat mill companies have reduced their operations by about 40-50 percent since 2021 due to the unstable situation following the coup, COVID-19 restrictions, and power outages.
Myanmar Wheat Import and Price
Wheat imports are at 430,000 MT in MY2022/23 and MY2021/22 due to poor domestic demand, higher world prices, the depreciation of the Myanmar Kyat against the U.S. dollar, and increasingly stringent controls on foreign currency. Burma mainly imports Wheat grain from Australia, Canada, and the United States. In 2021, Australia supplied 75 percent of Burma’s total Wheat grain imports. Australia Wheat benefits from zero duties under the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA). As per AgFlow data, Australia shipped 200,000 MT of Wheat to Myanmar in 2021 – 2022, followed by the United States (60,000 MT).
Major Wheat mills in Yangon usually source about 20-30 percent of their Wheat grain from Ukraine, as it is generally cheaper than Wheat grain from Australia and the United States. Wheat imports from Ukraine had already decreased during 2021 due to higher prices and logistic challenges. Burma imported 19,251 MT of Wheat grain from Ukraine in MY 2020/21 and has only imported 31,206 MT in MY 2021/2022 as of April 2022.
Domestic Wheat prices doubled in March 2022 compared to the same period last year due to anticipated low domestic production, high fuel, and transportation costs, and the depreciation of the Myanmar Kyat against the U.S. dollar. Domestic wholesale prices for Wheat gradually increased during August and September 2021 and rose sharply in October due to reduced stocks. Prices for imported Wheat flour vary according to the type of Wheat flour and are usually cheaper and of higher quality than local Wheat. Domestic Wheat prices mainly depend on demand from the mills in Mandalay, Sagaing, and Shan State since they primarily use local Wheat.
Other sources: https://www.usda.gov
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