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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
30
40
50
60
70
80
90
100
1995
1996
1997
1998
1999
2000
2001
2004
2005
2006
2008
2009
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