Criticism dogs Myanmar Rice Federation’s China choices

The Myanmar Rice Federation’s choice of companies that will be registered for legal exports to China is receiving criticism from small-scale players as well as large businesses.

Some of the country’s largest exporters were left off last month’s list of nine companies that would be permitted to handle the rice trade, while several of the chosen firms are relatively unknown and have not yet been formed.

Now smaller companies are saying they have also been excluded, missing out on a chance to take part in the lucrative trade.

Myanmar Rice Federation officials counter that China has established a strict set of criteria that must be met, and many local firms simply fall short.

Following criticism from traders of its selection of the first nine companies, Myanmar Rice Federation organised a second round of permitting. No companies submitted applications, despite over 100 companies having submitted bids for the first round.

Federation officials have said they always intended to organise subsequent rounds of licensing, and say a third licensing round is now in the works – though critics say the process needs to be more transparent.

U Thein Aung, president of the Freedom Farmers League, said the company selection has so far left well-connected firms in the lead.

“If the exports only travel via the selected companies, we farmers can only rely on those companies, and the rice price will be low, even though China pays a good price,” he said.

“It’s not a market-oriented economy if only one group of people hold the whole market.”
A deal was brokered to legalise rice exports to China last year, which had long been illegal from Beijing’s point of view, but usually allowed anyways.

Myanmar Rice Federation has been given the responsibility to facilitate trade with China National Cereals, Oils and Foodstuffs Corporation (COFCO), including registering local companies to enter the trade. The chosen companies must also meet China’s health standards for the rice before they can begin shipments by sea as well as overland.

Small businesspeople say the Myanmar Rice Federation’s selective criteria hinder local businesses which would like to expand.

Local exporters shipping rice through Muse border gates have faced challenges in their bids to become registered.

U Sai Kyaw, president of Tawwin Adipati and managing director of Sanpya Nwe – both companies which export through Muse to Ruili in China – said as far as he can tell there is no avenue open to him to legalise his exports.

“If companies like mine want to export normally, they have no choice other than to connect with the selected companies,” he said.

“The criteria is simply too high for my companies to be selected to participate.”

U Sai Kyaw exports an average of 25,000 tonnes of rice to Yunnan province per month.

Industry insiders say China Certification and Inspection Group will open offices in Yangon, Mandalay and Muse to monitor the quality of Myanmar’s rice before it is exported to China.

To receive official approval, local companies must meet seven different standards set by China’s General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ).

Myanmar Rice Federation has formed a 36-member committee to tackle issues arising from the China trade and assist the selection of companies.

Members of the committee have attempted to shift blame from the committee to Chinese authorities, saying it has been responsible for the selections.

“Though we are receiving comments from SMEs and companies not listed in the first round [for legalising exports], it is not the MRF who selects the companies to be registered, but China itself,” said U Nay Lin Zin, committee member and managing director of Myanmar Rice Mail, which is one of the nine companies that was originally selected.

“Some companies can’t meet the criteria [China] is calling for,” he said. “We don’t have any choice in options other than the criteria they laid out, as the shipment rules and payment system cannot differ after the stock arrives.”

U Nay Lin Zin said SMEs generally cannot meet the criteria. Their milling capabilities and export volumes are usually too small, while areas like warehousing quality are too poor to meet the high bar set by Chinese authorities.

A third round for Myanmar firms interest in receiving permits for rice exports is under way, with a committee meeting set for March 12 and a winner to be announced March 20.

In coming April or May, MAPCO is set to export the first 3000 tonnes of the total 100,000 tonnes of rice Myanmar may export to China this year.

Source: Myanmar Times

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