January 24, 2018 Koji Kubo Chulalongkorn Univ. and IDE-JETRO Social and Sustainability Science in ASEAN: Agri-Food Systems, Rural Sustainability and Socioeconomic Transformations Emerging export-oriented horticulture and intensification of cropping systems in Myanmar January 24, 2018 Koji Kubo Chulalongkorn Univ. and IDE-JETRO

Background In the late 1990s, Myanmar integrated to Yunnan Province of China by roads, which enabled fresh fruit trade. Watermelon and melon of Chinese varieties have been spreading in the Central Dry Zone. 10,000 households have shifted to intensive horticulture from expensive cultivation.

Research questions What supported the rapid growth of watermelon and melon cultivation? Is the emerging export-oriented horticulture sustainable in the following aspects? Market Environment

Rural transformation in the Central Dry Zone Traditional farming Export-oriented horticulture Sesame, beans, wheat Watermelon, melon Non-perishable Perishable Extensive cultivation Intensive cultivation Less use of chemical and labor Intensive in input and labor Not so profitable High revenue, high risk

High profitability and risk of watermelon cultivation Cost and revenue of various crops (000 kyat/acre) Watermelon is a risky but profitable crop. -$4,200 to $3,100 per hectare. Watermelon: 1-3 yuan/kg, melon: 1.5-4 yuan/kg

Spontaneous development of rural institutions Wholesale market in the border area where Chinese brokers visit It makes exports as simple as domestic sales. Emerging land rental market High profitability of fruits allows growers to pay high land rental fees. Compatible with intensive use of chemical

Why do watermelon producers use agro-chemical intensively? The Chinese market prefers fruits of larger size. Fear of crop failure For producers, overuse of fertilizers and pesticides is better than crop failure. (Minimize the risk of crop failure)

Concern about sustainability Sustainability of the market China may introduce stringent controls on chemical residue. Environmental sustainability As the land rental market saturates, repeated cultivation with heavy use of agro-chemical lower the yield.

Summary and remaining issue Integration with the Chinese market helped emergence of export-oriented horticulture, which is conducive to rural development. As long as the Chinese market is tolerant with chemical residue, controlled use of agro-chemical is not incentive-compatible for Myanmar producers.

Thank you for your attention.

“River of watermelon” (Reardon 2014) runs from the Central Dry Zone around Mandalay via Muse/Ruili to Kunming, China Central Dry Zone: not suitable for rain-fed paddy cultivation Muse/Ruili Central Dry Zone Source: Strait Times (http://www.straitstimes.com/asia/se-asia/chinas-deepening-imprint-on-myanmar-in-mandalay)

Discrepancies in Myanmar’s export and China’s import records suggest unofficial status of Myanmar fruits in China. Myanmar was the top exporter of watermelon to China in 2011 and 2012. Export value in 2016 approximately $180 million. Watermelon exports amounted to about one third of rice export value in 2016. Sources: China Customs; Myanmar Fruit, Flower and Vegetable Producer and Exporter Association

Answer to the guiding question Benefits: Transition from extensive cultivation to horticulture (fresh fruits and vegetables) is a favorable development, as it generates more income of farmers. Pitfall: Agricultural technology for exports to China might be biased to heavy use of agro-chemical. This may hamper quality upgrading of Myanmar agriculture.