Private sector profits as government struggles to stockpile rice for pandemic

The Myanmar Rice Federation will spend 100 million kyat per month on storage to stockpile rice during the pandemic because the state cannot afford to and its own facilities are damaged, in bad locations, or already in use.

The rice will go to warehouses in Yangon’s industrial zones that were state-owned before 2010, when the previous military government oversaw mass sell-offs of public property to military-owned companies and military cronies.

Leading rice exporters and traders, including the federation secretary Lu Maw, own the warehouses that will hold the stockpiles, which are intended to ensure food security amid the Covid-19 crisis.

The government will spend 21 billion kyat ($14.8m) on one million bags of rice over the next five months. It will build the 50,000-tonne stockpile by buying 10% of exports each month at slightly below market value.

There are two state-owned warehouses in Mandalay region, but they can only store 50,000 bags, said commerce minister Than Myint.

The Myanmar Rice Federation, a private industry body, will pay 100 kyat per rice bag per month as rental fee to the warehouses, said federation chairperson Ye Min Aung.

“It is a lot cheaper than the market rate. No one can rent out at this rate,” he added. The usual rate is about 500 kyat per bag.

The government has no budget for rice storage, and it is common practice in Myanmar for the state to ask the private sector for help.

Although there are hundreds of government-owned warehouses, they can’t be used as some have been leased to businesses, are damaged or are not easily accessible, Ye Min Aung added.

“All warehouses in good locations have been privatised since 2009. The remaining government-owned warehouses are not in the main industrial zones,” he said.

Storing the rice in private warehouses is cheaper than repairing the government’s own facilities, Than Myint, the commerce minister, told Myanmar Now.

“Our warehouses can only hold up to 3,000 tonnes as reserves for natural disasters. We do not have enough space,” he said.

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