Chinese businessmen have struck a deal with Burmese farmers’ representatives to grow and procure rice in Burma in 2013-14 to benefit from low prices in the country, according to local sources.

Under the deal, China is expected to provide fertiliser and other [equipment] to Burmese farmers for rice cultivation. The entire harvest will be purchased by the Chinese businessmen at local prices as per the agreement.

Indian businessmen have also struck a similar deal with Burmese representatives, sources say.

Burma is aggressively looking for foreign investment in its rice sector to help the country regain its status as a prominent rice exporter. Currently, rice production in Burma is below potential partly due to fluctuating prices and constant farmer debts. The Irrawaddy Delta in Burma is larger than Vietnam’s Mekong Delta, and foreign investment in the region could boost Burma’s rice production and exports significantly.

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According to the US Department of Agriculture, Burma’s annual rice production is estimated at around 11 million tons, against a consumption of around 10 million tons. However, local sources say that Burma’s rice production has increased to around 13-14 million tons. In the fiscal year 2012-13 (April – March), Burma exported around 2.1 million tons of rice, up about 40 percent from the targeted 1.5 million tons, and almost three times the 750,000 tons exported in the previous fiscal year.

Burma rice exports have surged mainly due to low prices. Neighboring China is a major buyer of Burmese rice. Recently, the EU removed import tariffs on rice from Burma under the preferential trade scheme for least developed countries.

This article was first published in Oryza on 16 October 2013. Oryza is a think-tank and specialist on the global rice industry.