How Competitive Is Myanmar's Rice Sector? A Comparison of Production Costs and Efficiency

Abstract

This paper analyzes the cost competitiveness of rice production in Myanmar by examining production costs, cost efficiency, and the potential effect of improving cost efficiency on the country's global competitiveness. To achieve this, we conduct a comparative analysis of production costs among major rice-producing countries and estimate the cost efficiency of rice farming in Myanmar using a stochastic frontier cost function model. Subsequently, we examine how cost efficiency affects domestic resource costs (DRC), a key indicator of global competitiveness in rice production, by addressing the endogeneity issue that prior research has not dealt with. We also consider seasonal variations across both the dry and wet seasons in Myanmar, an aspect often overlooked in previous research. Our findings reveal that Myanmar ranks as the second least expensive rice-producing country among selected Asian countries. The mean cost efficiencies are 89% and 86% for the dry and wet seasons, respectively, indicating high cost efficiency during these seasons. Both dry and wet seasons of rice production demonstrate a comparative advantage, with DRC values of 0.31 and 0.54, respectively. The results also show that cost efficiency positively contributes to global competitiveness in both seasons, implying that the global competitiveness of Myanmar's rice sector can increase by improving cost efficiency. Therefore, policy interventions aimed at developing demand-driven high-yield potential with stress-tolerant rice varieties, promoting the utilization of quality seed, and providing more extensive training on input management practices and educational programs are recommended to enhance cost efficiency, which can further strengthen the country's competitiveness in the global rice market.