This post was written by Joey Goeb, Policy, Research, Capacity and Influence Innovation Lab.

More than three-quarters of the world’s extreme poor and nearly one-quarter of the global population live in fragile states. Yet, despite the enormous importance of these areas for global poverty, there is relatively little research examining how agricultural value chains, crucial for assuring food security, respond and adapt to such contexts. A recent study by researchers from the International Food Policy Research Institute (IFPRI) and Michigan State University (MSU) begins to fill this gap for the rice value chain in Myanmar in a period of instability during COVID-19 and after a military coup.

Data and Methods

When Myanmar’s military seized power in a coup on February 1, 2021, it immediately caused severe economic disruptions, including to the agrifood system. To document and quantify these disruptions, IFPRI and MSU have continued a suite of panel phone surveys, which were introduced in 2020 in response to COVID-19 impacts.

Rice — far and away Myanmar’s most important food with an average per capita consumption of 170 kg per year, as well as an important export crop — has been a point of emphasis with phone surveys tracking prices at multiple nodes in the value chain. A panel of about 400 rice millers in the delta region captures prices paid to farmers for paddy, as well as milled rice prices at the mill, while a panel of about 200 food vendors throughout the country tracks retail-level rice prices.

The authors leverage the rice price data before and after the coup and at multiple nodes in the value chain, together with a number of secondary data sources, including violence data from the Armed Conflict Location and Event Data Project (ACLED) and estimated distances and travel times along the road network, to estimate a market-pair regression. The approach compares prices between each mill and each vendor over time and estimates how rice price formation has changed since the coup. Importantly, the method removes any confounding effects caused by (1) rice varieties, (2) seasonality and (3) miller or vendor characteristics that do not change over time.

Key Results

The survey data and estimations reveal several important findings for Myanmar’s rice value chain during the coup and COVID-19:

• Despite widespread challenges in the rice value chain after the coup — including in banking, transportation and credit — the value chain as a whole has shown resilience. Rice is still widely available in markets throughout the country — just 6% of food vendors reported a lower availability of rice.
• Paddy prices and rice milling margins have been remarkably stable following the coup (Figure 2) and during COVID-19.

However, distribution margins have increased markedly, driving up consumer prices. Regression results show that prices have increased more after the coup in places farther from the rice mills (and the main rice production zones).

• The increased distribution margins are explained by two primary factors following the coup: (1) transportation is less secure and generally more difficult and (2) fuel prices in Myanmar increased sharply.
• Violent events in the townships near mills and food vendors further increase rice prices.
• Lastly, vendors closer to export markets show smaller price increases, but only when the border crossings were open. In periods when border crossings were closed, this relationship weakened.

Implications

• The widening distribution margins in Myanmar’s rice sector following the military coup have important implications for consumers and producers alike. Other things equal, consumers pay higher prices for rice, and a smaller share of the retail rice price is passed through the value chain to producers who receive lower prices than they would have had with a more fluid supply chain midstream. In aggregate, the authors estimate welfare losses of $0.5 billion in the rice value chain.
• Maintaining open borders in food markets may have stabilizing effects on prices, perhaps especially so during times of crisis and disruption to domestic demand.
• The most severe effects of the coup on retail rice prices were found in the most isolated areas further away from export opportunities and major production zones in the country and areas that were affected by violence.