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Taking out a contract on Burma’s farmers

Tine Gyaw
Feb 10, 2009 (DVB), When the British ruled Burma, the living standard of farmers was very low due to the monopolisation of the rice trade by the colonial power and the impact of Chettiar money lenders brought in from India by the British.

Now, history has come full circle and Burmese farmers are facing the same fate under the ruling State Peace and Development Council.

But this time, the 'blood-suckers' are no longer Chettiars, who monopolised the money lending market with high interest rates, but companies owned by the children of army officers and their cronies.

The main problem the farmers faced before Cyclone Nargis hit Burma was the rice milling period, between the times when it was harvested and when it could be sold. Farmers are not allowed to mill, store, ship or sell rice freely. Rice prices have always been unstable for these reasons. Normally, the price of rice tends to drop when harvested rice is in the hands of farmers and it goes up when it is in the hands of merchants. Therefore farmers do not reap the benefits of high rice prices. Companies owned by the army and by the children of top army leaders are the main exporters of rice and reap most of the benefits.

During the 2008-2009 financial year, farmers in the Irrawaddy delta were in completely ruined when Cyclone Nargis hit the region. Paddy fields were destroyed. Rice mills collapsed and rice barns were ruined. Both Burmese people and the international community were worried that there would be a rice shortage. Therefore, the military instructed that rice needed for cyclone victims should not be bought from sources within the country. That is why UN agencies had to buy rice from abroad at higher cost.

On the other hand, rice was allowed to be exported secretly. During 2008-2009 financial year, more than 127,000 tons of rice were exported with the permission of the military. The army’s Myanmar Economic Corporation was the highest exporter with 35,000 tons. The other exporters were those owned by the children of army officers and their cronies, Shwenaingan East company, First Rice Trading company, Irrawaddy Rice Trading company, Myanmar Chindwin company and so on. These companies were also awarded new export permits.

It is clear that it was only these companies making profits in the whole process of rice production and sales. The farmers are now facing extremely low price for rice now. If the farmers have to sell their rice at current rates they are bound not to make profits, but will lose money to the extent that they are unable to buy fertilisers for summer paddy. One of the reasons for the low price is that these companies are not making any effort to buy rice or export it, so some farmers who refuse to sell their rice due to the low price are selling and pawning their family jewellery to survive.

Knowing this, the companies are waiting to pounce on their victims, the farmers. Their slogan is contract farming , which they claim is cooperation between regional military command and local people. Among those involved in this are the Tayza-owned Htoo company, Asia World company, owned by opium warlord Lao Sit Han’s Tun Myint Naing, Yuzana company owned by Htay Myint, Shwe Nagarmin owned by Union of Myanmar Federation of Chambers of Commerce and Industry chairman Win Myint, Myanmar Rice Traders' Association chair Aung Than Oo’s Pinle Koe Thwin company and Win Aung’s Dagon International company. The companies will provide rice seedlings, diesel, labour costs, electricity, water supplies and other costs. According to UMFCCI chairman Win Myint, there has been an agreement that the companies will receive 60 percent of the profits while the farmers will get the rest in return for their labour.

A contract farming system is to be introduced on 3000 acres paddy fields in Barlar Sanpya village, Hlegu township and Hmawbi and Mingaladon townships by Myint Aung Myat company director Aung Maw. He has said he will give the farmers five tin of rice per acre to borrow their farms and the farmers must provide seedlings, tractors and labour costs. The company will provide fertilisers and other agricultural supplies. The company and the farmers will divide the profits 50-50. But there has still been no response from farmers. The farmers have no right to express their opinions through domestic broadcast media, and they have been told their farms will be confiscated if they do not accept the terms of the contracts.

According to the law drawn up by the Burma Socialist Programme Party, State Law and Order Restoration Council, SPDC, farmers are entitled to work on land but they do not have the right to own the land. Using this legal loophole, companies are bullying and inflicting cruelty on farmers with the help of the military authorities. The army is giving them back-up support and no one believes that the unilateral contract farming system will be fair. Furthermore, no one believes there will be fair arbitration when there are problems between the farmers and companies.

Some companies started big projects to cultivate wilderness land and grow rice before 2000 without success, incurring losses. They tried to tame the virgin land with the help of heavy machinery and form the paddy fields using private labour. But now they are instead confiscating cultivated farmland, forcing farmers to sign agreements, paying them a pittance and making them work like slaves, sucking their blood to make profits.

If the government wants to improve the agricultural sector, it could do some sensible things. Improve the banking system. Allow farmers to get loans from banks easily. Allow fertilisers and other agricultural materials to be imported freely and not monopolised by the SPDC generals’ children's companies, so that farmers can buy them at affordable rate. Allow farmers to mill, store, carry, sell, buy and export rice freely in accordance with free market principles. If these actions were taken, they could bring about good results and fruitful production.

But if the junta allows the companies to suck the blood of farmers in the name of contract farming, the lives of farmers will become as dire as those under the Chettiars.