ONLY a small number of rice export companies are purchasing the rice at present owing to the disruption in banking, said U Than Oo, secretary of Bayintnaung Rice Wholesale Centre. Since early February, the local private banks have shut down, disrupting banking. Consequently, export companies are buying less in the domestic market. The rice exports are currently conducted for the previous contract only. The brokers have started buying the summer rice crop. However, the number of buyers has sharply reduced. The banking disruption hinders a new deal.
Only the old contracts are being sorted out. Yet, the rice trade is not regular. What a main problem is the shipment with ocean liners. Additionally, the US dollar is appreciating against the Kyat. However, the farmers are paid lower than the actual market price and suffering losses, he added. Despite the gain in US dollar, the rice and paddy are priced lower in the domestic market. The prices should have been offered higher along with the high exchange rate. Moreover, the number of buyers is smaller in the meantime. Only the cash payment is accepted amid political changes. The farmers are also holding the stocks for now.
The informal money transfer system Hundi is available in border trade, whereas it cannot be done in maritime trade. In Sino-Myanmar border, exchanging Yuan is quite easy through a hundi agent. Similarly, the traders use hundi for exchanging Baht on the Myawady border with Thailand. Nevertheless, overseas trade with European and African countries is carried out with a letter of credit through banks. The disruption in banking poses difficulties to the maritime trade. The price of low-quality rice stands at K21,500 at present, with a slight decrease of K2,500 against the previous months, as per the domestic rice market. Bayintnaung rice wholesale centre, a primary market for rice exports via maritime trade, has been closed down since 11 February.
Source: The Global New Light of Myanmar