myanmar’s mechanization revolution: symptoms of structural...

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Myanmar’s Mechanization Revolution: Symptoms of Structural Transformation Myanmar Update Conference, Australian National University, Canberra Myat Thida Win 1 , Ben Belton 2 , and Xiaobo Zhang 3 1 Center for Economic and Social Development 2 Michigan State University 3 International Food Policy Research Institute

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Page 1: Myanmar’s Mechanization Revolution: Symptoms of Structural ...foodsecuritypolicy.msu.edu/uploads/resources/(17.2.17)_MTDW_ANU... · Revolution: Symptoms of Structural Transformation

Myanmar’sMechanizationRevolution:SymptomsofStructuralTransformation

MyanmarUpdateConference,AustralianNationalUniversity,Canberra

MyatThidaWin1,BenBelton2,andXiaoboZhang31CenterforEconomicandSocialDevelopment

2MichiganStateUniversity3InternationalFoodPolicyResearchInstitute

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Outline• Overview• DataandMethods• EvidenceofMechanization

o FromDemandsideo FromSupplyside

• Driversofmechanization• Conclusions

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Overview

• RuralEconomy,traditionallyviewedasstagnant,lowwage,lowproductivity,agricultural-based

• Unprecedentedgrowthsince2011• Myanmarastheworld’sfastest-growingeconomy(WEF2016)

• Servicesandconstructionarethemaindriverforthisgrowth

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DataandMethods

• A rapidassessmentinAyeyarwaddy,Yangon,Mandalay,andMagway

• Householdsurveyof1100householdsinfourtownshipsinDelta

• Enterprisesurveyof49agriculturalmachinerybusinessesinYangon

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WidespreadAdoptionofMachinery

94

38

50

40

12

2 04

0

10

20

30

40

50

60

70

80

90

100

LandPreparation Threshing CombineHarvesting HaulingInputsorCrops

%ofh

ouseho

ldsu

sing

Machineryanddraftanimaluseinpaddycultivation,2015-2016

Machinery Draft

PercentageofhouseholdswhichadoptedmachineriesfordifferentagriculturalactivitiesinfourtownshipsinDelta

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CumulativePurchasesofSelectedMachinery(1990-2015)

0

1000

2000

3000

4000

5000

6000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Cumulativenu

mbe

rofm

achine

s

Surface-waterPump 2WT Thresher 4WT Combine

ChangesinNumberofMachinesPurchased

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IncreasingMachinerySales

SalesofselectedmachinerybydealershipsinMingalar Thanmyintcompound(2012-2016)

2012 2013 2014 2015 2016 Change2WT&Accessories 9598 11715 14912 14872 20684 116%

4WT 275 420 870 1662 3200 1064%Combine 0 40 237 955 2372 5830%Reaper 305 335 860 1351 1244 308%Thesher 0 30 220 167 46 53%

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DriversofMechanization

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Migration• Migrationleadingto

laborshortage• 16%ofHHhave

migrants

• Averageageofmigrantis21

• 8%international

• 70%employedinmanufacturing

0

10

20

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100

1995

1996

1997

1998

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2001

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2005

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2008

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2010

2011

2012

2013

2014

2015

UrbanRural

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IncreasingWages

+8%

+32%

0

500

1000

1500

2000

2500

3000

3500

4000

2011 2013 2016

Realdailywages(M

MK)

Averagerealdailywageformaleagriculturallabour(2011-2016)

Mainimpactofmigrationisonrurallaboursupplyandwagerates

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ImprovingAccesstoFinance

35

6877

17

5248

27 22

2WT 4WT Combine…

Shareofsa

les(%)

BankDealerCustomer

SourceoffinanceformachinerypurchasesinMingalar Thanmyintcompound(2016)

• Hirepurchasesystemwithcommercialbanksbymachinerysuppliersbeganafter2011

• Reducedcapitalconstraintsformachinesuppliersandimprovetheaccessibilityofmachinerybyfarmers

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RentalMarket

0102030405060708090

100

2006 2011 2016

%ofh

ouseho

ldsu

singmachine

ry

Own Rentedin Other

2006 2011 2016

Own Rentedin Other

MachineUseforLandPreparation

MachineUseforHarvesting

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Scale-neutralTechnology

78

8

50

83

7

60

75

13

61

0

10

20

30

40

50

60

70

80

90

100

2WT(LandPreparation)

4WT(LandPreparation)

Combine(Harvesting)

%offarmhou

seho

ldsu

sing

<5acres>5&<10acres>10acres

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Geographicalspreadofmachinesupplybusinesses2010 2013 2016

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Conclusions

• Mechanizationsupportedby“Enablingpolicyenvironment”o market-ledmodelo nopolicydistortiono partialliberalizationofbankingsectorsandtransferrablelanduserights

o Form7usedascollateralforhire-purchase

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Conclusions(Cont’d)

• Implicationsforruralpopulationo Farmers:scale-neutraltechnology,andcontinuetobeeconomicallyviableinthefaceofrisinglaborcost

o Labor:uncertaineffectsonagriculturallabor;theeffectscanbeeitherpositiveornegativedependingontherateofmechanizationvs therateofmigration

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Thankyou!!