AgroPages-Myanma Awba: Staying Competitive in a Budding Market-Agricultural news

U Thadoe Hein
Founder and Chairman of Myanma Awba Group

During its business tour of Myanmar last month, AgroPages had the opportunity to visit Myanma Awba Group, the leading group of companies in Myanmar with a focus on agriculture. The group’s Founder and Chairman, U Thadoe Hein, sat down with AgroPages to tell us the story of Myanma Awba and his thoughts about the future.

Could you please introduce your company, its market position and brand influence in Myanmar?

Myanma Awba Group is a 24 year old company, established in 1995. The group has grown exponentially, making investments in the first privately-owned fertilizer plant, chemical formulation plants, seed production facilities and R&D facilities. With over 1,500 agronomists, Myanma Awba has the largest agronomist team in ASEAN.

We are one of the first of only a few local companies in Myanmar to have received investments from the International Finance Corporation (World Bank Group). The group is among the top ten taxpayers in Myanmar for 2016-17 and 2017-18.

We are the market leader, holding significant market share – serving 3.5 million farming families, out of 7 million in Myanmar. Our core products and services include fertilizers, crop protection chemicals, hybrid and OP seeds, agricultural finance and micro loans, mobile based payment systems and mobile based farm advisory services. We also have enough formulation capacity to meet 50% of the country’s requirement for the next 5 years.

The group seeks to increase the agricultural output of farmers, lower their costs and increase efficiencies. The primary objective is to boost grower incomes and alleviate rural poverty.

Could you explain Myanmar's crop plantation structure?

Myanmar has six agriculture climatic zones, from very hot tropical zones to snowcapped mountains. As such, our crops are diverse. Rice, beans, pulses, corn, sesame and ground nuts are major crops, followed by vegetables, such as potato, tomato, chilli, onion, garlic and fruits, such as melons and others. In the southern part of the country, Myanmar has oil palm and rubber plantations.

Have your services helped resellers and farmers see sustainable benefits? Could you comment about the core problems in the development of Myanmar's agribusiness sector?

We aim for a Win-Win-Win. Company, dealers and farmers must all gain – sustainably. We employed very large teams of agronomists to assist farmers grow better crops and see higher profits. At the same time, we teach farmers to observe Good Agriculture Practices and wait during Pre Harvest Intervals. Farmers have very little knowledge about the safety and effective use of agricultural chemicals. Therefore, extension services are essential to educate farmers.

Another core issue is the lack of financing available in rural areas. We are trying to provide credit to farmers, as much as we can. In fact, 95% of our sales is sold on credit. Credit risks are very high and we have to be very careful.

What are the current regulatory circumstances in Myanmar?

Myanmar's regulations are becoming stricter, as Myanmar is catching up with other ASEAN countries, such as Thailand and Vietnam. Myanmar also follows the Rotterdam Convention and, thus, Myanmar bans all products listed in PIC.

How are multinational agrochemical companies performing in Myanmar?

Over the last two years, we have seen multinationals establishing offices in Yangon. However, their activities are quite limited, as the market is in its very early stage and price sensitivity is high. Certain patented insecticides work well, as current generics may have some resistance issues. Also, multinationals may not distribute directly into the market yet, due to credit risks.

As per China customs pesticide export data, we note that there were 8 thousand tons of pesticides imported to Myanmar from China in the first half of 2018, dropping almost 11.3% y-o-y. What do you think was the cause? Is there any influence to your business, and what is your coping strategy?

The drop is contributed to by four factors:

● Beans and pulse exports were restricted by Indian government policies. Also, beans and pulse prices dropped substantially, and farmers do not want to use agrochemicals

● Floods during Monsoon season in 2018

● The limited supply from China, due to factories closing

● The overall Myanmar economy is not performing well, and the local currency, the Kyat's, depreciation

Profit margins of certain products became compressed due to shortages and prices increasing in the cost of China pesticides, however certain products have maintained their presence.

This year, the Myanmar Kyat depreciated by more than 20%. Together with the price increase in China, farmers are now paying much higher prices.

In the past, we imported a lot of products from trading companies. To cope with the recent challenges we are facing, we have been trying to buy directly from manufacturers for most of these requirements. However, in some cases, due to payments and other issues, we have to ask our trading partners to buy from the manufacturer. For the long term, we want to collaborate with manufacturers directly.

All in all, we hope that the market will recover soon.

The global agriculture industry is undergoing a big change, as Chinese companies now have a bigger appetite to develop a global presence. May I have your opinion about how you work with your Chinese partners, and your vision for the future?

We have been working with Chinese manufacturers for the past 15 years. We purchased up to 80% of the total requirement. In the future, we are looking forward to work with big Chinese companies. Chinese suppliers will be key partners for our company and we are ready to collaborate.

To know more about AWBA, please visit www.awba-group.com .

(Editing by Erwin Xue, project manager of AgroPages)