It’s been a rough year for rice producing countries, especially in Southeast Asia, due to the severe El Niño which is among the strongest in two decades. Production levels have dropped enough to affect rice imports and global food prices.

As difficult as it may be for the producers, it’s even harder for the countries that rely on rice but are unable to produce it.

The world’s third largest importer of rice, the Philippines, is facing a dilemma as it experiences a change in leadership, a drop in its domestic rice production, and a recent ban on rice imports by private traders all at the same time. In the face of all these challenges, the government and the private sector have searched for alternatives to meet the Philippines’ rice demand as the country aims for self-sufficiency within two years. One such method they have found is to form a joint venture with Myanmar.


Philippines’ Food Supply Threatened: Must Resort to Rice Imports

As previously mentioned in another article, rice production levels have gone down significantly for the first time in 6 years – even though they’re nowhere near 2008 crisis levels. But even the slight increase in the price of this commodity has the Filipino government on edge, considering the events of the last food crisis.

In 2008, when the world realized that there was going to be a rice shortage, a widespread panic took place. The world’s top rice exporter, India, banned all rice exports which was the first domino to fall. This led to food riots taking place all over the world, but most notably, in the Philippines where the military had to crack down on rice hoarders and placed restrictions on fast-food chains.

While theoretically sound, the current ban on importing rice by private traders could work against the government’s ambitions for rice self-sufficiency. Created in an attempt to end abuse of a rice import auction system where importers with permits from government auctions offer other importers and brokers the use of their permits for a fee, the ban also means that all rice imports into the country will go through the government.

Thus, the burden of finding all that extra rice to bring into the country will now fall onto the shoulders of the government, which is now going through unprecedented changes.


Myanmar, Philippines Both Seek to Benefit

There are many reasons why a strategic alliance between the Philippines and Myanmar makes sense for both sides.

For the Philippines, it would obviously mean another source of rice to import from. Having limited land for agriculture, the country could use all the extra land it can get, especially with its willingness to share its technology for the betterment of both sides.

For Myanmar, it would mean more income for the country’s local farmers in addition to economic development and higher use for the fertile land still yet to be farmed on. The assistance provided by the Philippines in terms of technology and farming methods would also be another huge plus.

Myanmar has also expressed its interest long ago to rely less on its towering neighbor, China, to increase its political leverage. As China is also the #1 country Myanmar exports its rice to, it should be happy to find another nation to export crops to.

Some progress has already been made between the two countries. A pilot joint venture program featuring private companies from both nations has produced satisfactory results. Agriculture experts have already concluded that Myanmar would be a viable production site for the Philippines’ rice export.

According to a World Bank report, Myanmar has the potential to double its rice exports by diversifying and increasing rice production, opening its rice sector to foreign investment, and reducing export costs.

With an unprecedented and unexpected climate situation, rice production levels are looking to decline in 2016. This should lead the Philippines to seek a strategic alliance with Myanmar.

About Reid Kirchenbauer

Reid Kirchenbauer is the Founder of InvestAsian. He's experienced with trading stocks and buying property in Thailand, Cambodia, and elsewhere. He's been featured in publications such as Forbes, Nomad Capitalist, Property Report, and Seeking Alpha. Download his free investment guide by clicking here.

You Might Also Like