This post was written by Duncan Boughton and Melissa Hill, Michigan State University - Food Security Group.

The poverty and food insecurity situation in Myanmar is dire. In addition to almost a million internally displaced people dependent on assistance for daily survival, the compounded effects of the COVID-19 pandemic and political disruption in the country are predicted to leave 50% of the population in poverty. Most of Myanmar’s poor are in rural areas. While the increase in poverty rates following the February 2021 coup has been proportionately higher in urban areas, the rural areas experienced higher poverty rates and account for a much larger share of the population. It is estimated that 57% and 31% of the rural and urban population, respectively, are now poor.

Effects of COVID-19 and the coup in Myanmar

Myanmar experienced four waves of COVID-19: in April 2020, September 2020, July 2021 (Delta variant) and December 2021 (Omicron variant). In 2020, despite the waves of COVID-19, shocks to the agrifood system were generally short-lived. By December 2020, the economy was on a recovery track.

Following the February 1, 2021, coup, however, the financial system was severely disrupted by the closure of bank branches and the internet shut down, which together prevented financial transfers. A rapid depreciation of the Myanmar kyat (MMK) resulted in higher fuel prices, transport costs and mechanization services, compounding international cost increases for imported fertilizer and higher international shipping costs due to global shipping container shortages. The combination of military coup, a deadly wave of COVID-19 and soaring agricultural input costs created prolonged shocks for the agrifood system.

Questions for policymakers during the crises

Analysis of agrifood system and livelihood responses to temporary versus prolonged shocks can provide insights on how to manage complex emergencies in the short run and strengthen the resilience of future agricultural and rural growth trajectories for the long term. Two key questions faced policymakers and humanitarian assistance agencies:

1. How would COVID-19 affect farmers and other agrifood system participants, and to what extent would they be able to adapt before and following the military coup in 2021?
2. How would coup-induced state failure affect poverty and food insecurity?

To answer these questions, the USAID Burma funded the Myanmar Agricultural Policy Support Activity (MAPSA) project, implemented by the International Food Policy Research Institute (IFPRI) with Michigan State University, which conducted multiple phone surveys with different actors in the agrifood systems and combined that with household-level simulations using nationally representative Living Standards Measurement Study (LSMS)-type data.

Initially, the majority of households were resilient to short-term shocks associated with temporary lockdowns and border closures. The government contributed positively to resilience, expanding credit lines for farmers and businesses and social safety nets for vulnerable households. In contrast, the prolonged financial and economic shocks following the coup, combined with a third wave of COVID-19 (Delta variant), pushed the agrifood system and vulnerable households beyond their capacity to adjust.

Expected impact on gross domestic product (GDP) of COVID-19 combined with the coup

Using household simulation models, MAPSA predicted that the economic consequences following the military intervention are predicted to result in poverty rates between 40% and 50% compared to 32% in 2015, the survey baseline year. Although urban poverty rates are predicted to increase proportionately more than rural poverty rates, doubling relative to 2015, rural poverty rates are still much higher than urban poverty rates. Between 849,000 and 1.87 million additional households were predicted to be in poverty by late 2021 compared to 2015, with three out of every four newly poor households located in rural areas.

Figure 1. Predicted poverty rates for different household groups, by percentage share.

It is important to note that it is not only the total number of households in poverty that has increased, but also the depth of poverty for households that were already poor. The poverty line expenditure shortfall is predicted to have increased from 26% in 2015 to 40%, on average, for individuals living in poor households by the end of the current financial year.

Response of the agrifood system to post-coup shocks

Shocks to the agrifood system since the February 2021 coup were larger and longer lasting than those posed by the first two waves of COVID‑19. Curfews, safety concerns and rising fuel costs due to currency depreciation following the coup led to even larger transportation disruptions than COVID‑19 lockdowns. More than 60% of crop traders, agricultural input retailers and rice millers reported increased transportation costs in March and April 2021. While the challenges to transportation and internet communications affected every level of the agrifood system from farmers to consumers, banking sector disruptions were the most impactful for agribusinesses: 86% of rice millers, 57% of crop traders, and 41% of input retailers cited the banking sector as their largest disruption since February 1, 2021.

One of the most significant impacts for farmers has been the run up in global fertilizer prices, magnified by the rapid depreciation of the MMK. Smallholder crop profitability, low even before COVID-19, has now evaporated. While fertilizer subsidies would be extremely costly and complex to implement, subsidies for mechanization services that enable farmers to plant and harvest on time could be a very cost-effective option. Cash-for-(farm)work would also enable smallholders to provide employment for landless laborers and improve crop productivity through timely weeding.