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A Currency Crisis and Food Insecurity in Myanmar
The weakening of Myanmar’s currency is pushing people toward poverty. Myanmar is losing human capital as many people are leaving the country for jobs abroad.
22 Jun 2023
Written By Maung Khaing Tun (Pyi Thit)
The weakening of Myanmar’s currency is pushing people toward poverty. Myanmar is losing human capital as many people are leaving the country for jobs abroad. Meanwhile, many of the people left in the country are unemployed. The political instability coupled with an unprecedented slump in the value of the kyat is posing ever growing threats to the grass-roots.
The price of gold has increased from 1.1 million kyat per tical in 2019 to 2.8 million kyats in 2022, and hit over 3 million kyats in mid-2023. Before the military coup in 2021, the exchange rate on the open market was 1,650 kyats per dollar. Myanmar’s currency has fallen since the coup, and is around 2,850 kyats per dollar in the open market now though the official exchange rate set by the junta-controlled Central Bank of Myanmar is 2,100 kyats per dollar.
The regime has tried various means of controlling the exchange rate, which has been stable at around 2,900 kyats per dollar for several months. But compared with the situation before the coup, we can see that inflation has run rampant of late.
The increased cost of living is taking a heavy toll on Myanmar people. In this article, I will focus on food security in Arakan State. Today, people in Arakan State have to pay 25,000 kyats for a basket of average rice. Normally, Arakan State is 100 percent self-sufficient in rice. However, due to the lack of support under successive governments and market manipulation by dishonest businesspeople, Arakan State is at risk of food insecurity today.
Many people in Arakan State have left their farms for jobs in China, Thailand and Malaysia. The majority of the working population have left Arakan to do whatever jobs are available in foreign countries, and they typically remit money back to their families in Arakan State. In some villages, all the male villagers have left because there are not enough males to handle and help with the village’s affairs. In many villages, only elderly persons and children are left.
As a result, rice production has significantly declined in Arakan State. As local farmers have never received any systematic and broad-based technical assistance, the rice produced in Arakan State can’t compete with rice grown in other parts of the country in terms of quality. The result is the collapse of the local rice industry. Today, town residents prefer better quality rice from Yangon, Ayeyarwady and central Myanmar over locally grown rice. This is one of the reasons local farmers have left their farms to work in foreign countries.
This has caused serious impacts not only on human capital but also on the food security of Arakan State. Some half of the farms in Arakan State are irrigated by dams built over rivers and streams. Around 90 percent of dams were damaged by flooding at the end of 2022, with serious impacts on the rice output of Arakan State.
Meanwhile, not only town residents but also the majority of rural people no longer store rice for one year or for the rainy season. Instead of locally grown rice, they buy rice sacks from markets in towns. Even rice farmers no longer store rice for their families’ consumption. They sell all of their harvest for money and buy rice sacks from markets for consumption instead of storing their home-grown rice.
They have two intentions in doing so. The quality of their home-grown rice is not so good. So farmers sell it off instead of eating it. They buy better quality rice from the market for consumption. Secondly, they can earn a large sum of money from selling all their harvest and they can use that money to invest in some other business in summer. But the major challenge of this practice is the gap in rice price, and currency instability.
The price of a sack of a middle-grade rice in Arakan State is around K50,000 and one tin of rice costs about K800. The price of rice for one person is up to K1,600, and one meal with meat curry is around K3,000. This will be a big challenge for the ordinary people of Arakan, who are underemployed and heavily affected by natural disasters, during this rainy season.
One basket of paddy was around K7,000 in December when local paddy varieties in Arakan State were harvested, and the price of one basket of paddy has increased to K25,000. The rise in paddy prices has gone beyond the level of threatening food security for the grassroots in Arakan State.
Cyclone Mocha, which made landfall with destructive force on May 14, destroyed hundreds of thousands of homes in some townships in Arakan State, leaving over 200,000 people homeless. Due to this storm, there will be many farmers who will not be able to work anymore, and the rice production rate of the people of Arakan will be threatened again. According to my experience and study, about 70 percent of all the agricultural land that was damaged by the river flood in 2022 has been sold by the farmers to the rich people. Wealthy people will convert these lands into prawn farms.
About 40 percent of all the land along the rivers in Arakan State is owned by the wealthy few people. These lands have been in the hands of capitalists for generations in various ways, and the future of Arakan State is headed toward a return to the rich and poor disparity and a return to the landlord system.
After the military seized power in 2021, massive inflation occurred, and the threat to grassroots food security grew.
The food security problem of the grassroots not only drags the country and the people into poverty, but also into conflict. Financial stability, which is a source of food security, is the lifeblood of a country’s economy, and only financial stability can prevent inflation and high commodity prices. In order to protect against inflation, the country needs enough reserves, and as a country that does not have enough reserves, it will be very difficult to protect it otherwise.
In order to stabilise the country’s economy, economic policies based on resources and products that are suitable for the region are needed, and the government must provide the necessary support for public infrastructure. As Arakanese people, public food security measures should be a top priority.