Salt industry to collapse, experts fear

Myanmar’s once-booming salt industry, destroyed by Cyclone Nargis, will be completely wiped out within a couple of years unless it receives financial aid from the government, industry experts warn.

The storm, which killed an estimated 138,000 people and caused billions of dollars’ worth of damage to the economy when it struck in May 2008, also dealt a heavy blow to the once burgeoning salt trade, wiping out hundreds of salt farms in Ayeyarwady Region.

Farmers claim they have never been able to recover from the cyclone and despite loans from the government could not turn a profit as prices for locally produced salt have tanked as a result of less demand.

“Nargis struck in 2008, but we are still dealing with its aftermath. We have never been rehabilitated,” said U Zaw Min, secretary general of the Salt Producers Association in Labutta township, which bore the brunt of the storm.

Prior to the cyclone, there were more than 700 registered salt farmers in Ayeyarwady, and another 260 in Rakhine State, where a vast majority of the local industry is based. Once Nargis hit, only 472 were able to continue production.

As a result of the supply drop-off, domestic salt prices spiked more than 10 times to reach K300 per viss (one viss equals 1.6 kilograms or 3.6 pounds), but soon dropped to as low as K25 per viss in 2010 as the market turned to Thai imported salt to cover demand.

With the industry reeling and the price of salt barely able to cover expenses the government opted to give salt farmers a “preferential rate” of K60 per viss as well as began offering low-interest loans through several banks.

According to government data, salt farmers in Ayeyarwady took out a total of K305 million in loans to repair their land, but even at just 1.5 percent interest per month, or 18pc per annum, many farmers were unable to pay anything back and defaulted, with K90 million still unaccounted for six years later.

“We didn’t get loans for all our land, just for the land we have a licence for and the salt prices are going down all the time after the cyclone,” U Zaw Min said.

Banks were forced to either write off the debt or have offered an extension on the loans, though the indebted farmers doubt they will ever be able to make the payments.

“Our industry left in notoriety and only producers can understand why we can’t pay back the loans,” U Zaw Min said.

Since 2010, salt prices have only rebounded marginally, to between K80 and K90 per viss today, as farmers increasingly turn elsewhere to make income.

In Labutta township alone, where more than 190 salt producers once were, today just 64 remain, according to data by the Salt Producers Association. In the same area, which once produced 71 million viss of salt on 8992 acres, just 30 million viss of salt are produced while the lands used to make it have been reduced to 3821 acres – and that number is dropping.

“Nearly the whole industry will go out of business soon if we don’t get aid from the regional or national government,” said U Zaw Min, adding that Ayeyarewady Region produces 200,000 tonnes of salt a year, 66pc of Myanmar’s total salt production.

The remainder of domestic salt comes from Rakhine and Mon states, where farmers are facing similar problems, he said.

“This is a national issue. This township was built on the salt industry,” said U Tin Win, a salt producer in Ayeyarewady Region. “If the industry is destroyed, we don’t know what will happen.”

U Soe Win Mg, a former salt farmer, said that the loans he received from the government only covered half of the cost incurred from damage caused by the cyclone.

“I was able to get K15 million from the government after Nargis, but my cost was more than K28 million, so I could only pay back 50pc of the loan,” he said.

“I decided to stop production this season and now I have opened a grocery in my township,” he said.

With profits from the salt trade dwindling, the industry is facing other issues as well, as domestic salts are notoriously poorer quality than the imported alternatives.

“Local salt costs K80-90 a packet and imported Thai salt costs K250-280, but people prefer imported salt because of the quality,” said the Salt Producers Association’s joint secretary general, U Soe Win Mg.

To make matters worse, salts are no longer being used the way they once were as fruit and seafood producers have moved away from using salt in food preservatives in favour of more modern practices.

“Now salt is sold only for personal consumption and demand is much lower,” he said. Profit margins are very narrow,” he said, adding that the only hope left for the industry is for the government to either fund or promote private investment in constructing refineries able to produce better-quality salt.

Source: Myanmar Times

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