The potential of pulses

July 19, 2016

Published by Myanmar Times

potential of pulses
Myanmar is one of the world’s largest exporters of beans and pluses, typically exporting more than 1 million tonnes a year – worth about US$1 billion, according to the chair of Myanmar Pulses, Beans and Sesame Seeds Merchants Association, U Tun Lwin.

Mr Seth, who is also Myanmar country head of the Indian firm Tata Group, thinks Myanmar could be exporting $1.5 billion to $2 billion worth of beans and pulses in the next three to four years if changes are made.

He is hoping OATAM will be able to sit down with the new administration in the next few months to discuss what reforms need to be implemented.

One issue is that production has been largely stagnant for the last four or five years, Mr Seth said, speaking on the sidelines of an Economist Myanmar Summit last week. Better-quality seeds, improved nutrients and more protection from disease and insects would all help, he added.

In 2015-2016 Myanmar exported 1.1 million tonnes of beans and pulses, but the country is hoping to hit 1.4 million tonnes this year, after two years of falling supply.

Another issue is that Myanmar needs to start exporting higher-value-added bean and pulse products, and to make use of the some of the lower grades of pulse produced during milling, Mr Seth said.

“We [OATAM] are planning to go and meet the new [agriculture] ministry and bring up those issues to see how we can improve [the industry] overall,” he said, adding that this would probably take place in July or August.

Moving to higher-value-added products would involve making finished pulses, not simply exporting them raw, which would raise the margin for farmers. That in turn requires a milling facility, and Mr Seth said his company had looked at the logistics of setting up its own plant.

“That’s something we want to take a good look at,” he said, adding that such a venture faced several challenges. The lack of a stable electricity supply is one, and the availability of land is another.

A third issue is that during the process of milling prime-grade pulses, other grades are produced. If those lower grades cannot also be exported to viable markets, then the cost of producing the prime grade becomes “exorbitantly high”, said Mr Seth.

“It’s a product mix issue,” he said. “Myanmar [at present] can’t fully utilise the other grades that are produced when you’re milling prime.”

Operating a milling plant as a foreign company would likely require a joint-venture agreement with a local firm, said Mr Seth. But he has not looked around for potential partners because preliminary studies have shown that a plant would not be economically viable, mainly because of the lower-grade export issue, he said.

The good news is that if Myanmar can start exporting higher volumes and higher-value-added products there is a ready market – India.

“The markets are there,” he said. “India has the demand and Myanmar has an inherent advantage due to its proximity.”

About 80 percent of Myanmar’s bean and pulse exports head to India, although Myanmar is also hoping to break into the United States and Middle East markets.

Some pulses, like black beans, are also very specific to Myanmar, Mr Seth added. Competitors in bean and pulse exports like Canada or Australia are too far away, but Myanmar needs to be on the lookout for competition from African countries, he said.

“That’s where the threat to Myanmar for trade with India will come from,” he said.

Mr Seth would also like some restrictions on foreign firms engaging in agro-trading to be lifted. At present, he is unable to buy agricultural produce directly from farmers in local currency, and instead has to buy from separate suppliers in dollars.

Foreign trading firms also have to make advance payments to the supplier. “While most of the suppliers are good, there have been cases where people have taken the money and not delivered,” Mr Seth said.

At the end of last year, the Ministry of Commerce relaxed long-standing trading restrictions on fertilisers, insemination seeds, pesticides and hospital equipment. Mr Seth suggests pulses could be added to this list.

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