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Impacts of COVID-19 on Myanmar's agri-food system: Evidence base and policy implications (October 2020)

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Between April and October 2020, the International Food Policy Research Institute (IFPRI) and Michigan State University (MSU), with support from the United States Agency of International Development (USAID) and the Livelihoods and Food Security Fund (LIFT), have undertaken analyses of secondary data combined with regular telephone surveys of actors at all stages of Myanmar’s agri-food system in order to better understand the impacts of COVID-19 on the system. 2 These analyses show that the volume of agribusiness has slowed considerably in Myanmar since COVID-19 restrictions were put in place. There is lower demand from farmers for agricultural inputs and mechanization services and lower volumes of produce traded, especially exports to neighboring countries whose borders are closed. All actors in the agri-food system are facing liquidity constraints and experiencing increased difficulties in both borrowing and recovering loans.

The hardest hit segments of the agri-food system are 1) smallholder farmers and 2) low-income households in both rural and urban areas who depend on selling their labor. Low income families with newborn children are especially at risk for food and nutrition insecurity. Among a sample of 2,000 households, equally split between rural (Dry Zone) and urban (Yangon) areas:

• 75 percent of rural and 84 percent of urban households reported loss of employment and income in the past six months;

• The median decline in rural incomes was 38 percent, and half of rural households were income poor in June. The corresponding decline in urban incomes was 31 percent, with 28 percent of urban households being income poor in June.

• The highest increase in rural income poverty rates occurred among farming households, from 20 percent being poor in January to 55 percent in June. Those most at risk of falling into poverty are smallholders farming five acres or less. Such households directly support more than 5 million individuals nationally.

• The most common coping strategies used by households to manage the economic shocks associated with COVID-19 involve borrowing (48 percent of households) or using savings (31 percent). Smaller shares of households reported cutting both food and non-food expenditures or selling assets.
The increase in poverty among farmers inevitably impacts agribusinesses. Farmers are less able to purchase inputs, including hired labor. This results in their farms being less productive, reducing the volumes of produce for agribusinesses to handle.

The scale of the COVID-19 Comprehensive Economic Recovery Program (CERP) of the Government of Myanmar and the share of CERP expenditure on agriculture have been too small to offset serious economic harm to labor-dependent households in Myanmar’s agri-food system or to prevent food and nutrition insecurity from increasing. By comparison, as a share of its GDP, Thailand has spent on COVID-19 relief activities four times as much as Myanmar has, equivalent to more than twenty times as much in USD terms.

To avoid transient economic shocks causing long-term economic harm and human suffering, it is essential that the scale of CERP be increased greatly in coming months. In addition to continuing programs that provide loans for agribusinesses, priorities for an expanded CERP should include:

• Scale-out maternal and child cash transfer programs to achieve nationwide coverage;

• Expand employment subsidies for both rural and urban workers (employer subsidies, cash for work);

• Rehabilitate the financial condition of smallholder farmers in order to avoid a cycle of chronic indebtedness – this can be done through a combination of short-term input subsidies, flexible loan repayment conditions, freezing of interest payments on overdue loans, and repayment incentives; and

• Expand access to mobile money platforms for financial transactions, including for social protection grants and employment subsidies – doing so will increase the timeliness of payments and reduce exposure to infection among those involved.

In the short term, despite increasing numbers of COVID-19 infections, it will be important to allow movement of agricultural inputs and produce throughout the country; to ensure that consumers and suppliers have continuing access to markets using safe practices, such as through reducing congestion or remaining open for longer hours; and to negotiate with neighboring countries to re-open border trade. This is especially important in view of the extension of the recent lockdown of Yangon to include Ayeyarwady, Bago, and Mandalay regions and Mon state.

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