You are here
Taste for Western diet reshapes trade in Myanmar
THE arrival of a large cargo of American wheat at Myanmar's newly opened port signals its leap into the global grain trade as the country's demand for Western food rises.
The bulk carrier New Journey offloaded 22,000 tonnes of US dark northern spring wheat last week at the International Bulk Terminal Thilawa near the capital city of Yangon, which has a planned capacity to import one million tonnes a year. While Myanmar has been buying smaller containers of grains, this may be the first time that it has purchased the commodity in such large amounts at one go.
Though still one of the world's most underdeveloped countries, Myanmar's more liberalised market and forecasts for surging growth have led to an increase in foreign investment since 2015, when it held its first democratic election in 25 years. By opening up to bigger vessels carrying more volumes, it will not only help lower costs but also allow Myanmar to feed its population of 50 million as the government works to lower poverty rates and malnutrition.
"It's representative of the huge growth in South-east Asia," said Darin Friedrichs, a senior analyst in INTL FCStone's Asia commodities division. "There's huge demand growth in the region for both grains and oilseeds."
Those in the global grain industry, which has been suffering from a supply glut over the past seven years, have been eager to tap into this new demand as consumption in developed markets flat-lines. The local unit of Asian food powerhouse Wilmar International is setting up new wheat flour mills, and currently importing wheat flour directly and distributing it to local snack and bakery manufacturers.
Myanmar's wheat imports are expected to rise 6 per cent this year to 500,000 tonnes, according to the US Department of Agriculture, while flour imports have been increasing by 7-10 per cent annually since 2017.
The shipments of wheat were sold by Japanese trader Itochu Corp, according to people familiar with the transaction. This is the first time that Myanmar has bought wheat in bulk, said the sources, who asked not to be identified as they are not authorised to speak to media. Previously, grains were transported in containers that each hold about 25 tonnes.
Itochu declined to comment, while representatives at the port operator were unavailable.
The new terminal, which completed construction last month, focuses on handling grain, feed and other bulk cargoes. The port has silos and warehouses for grains and feed crops, and is partly owned by Capital Diamond Star Group, a conglomerate in Myanmar.
Japan's Mitsubishi Corp, Kamigumi Co, and Japan Overseas Infrastructure Investment Corp for Transport & Urban Development (JOIN) are also shareholders of the project. Japan was the third-biggest foreign investor in Myanmar in 2018 after Singapore and China, according to data by the Ministry of National Planning and Economic Development.
"The transition of Myanmar to a democratic government propelled the country's economic growth, which led to the expansion of food consumption and consequently the increase of imported wheat and other grains," JOIN said in a statement in March.
As the volume increases, it is expected to shift more shipments to bulk carriers and grain silos which would reduce logistic costs on the back of larger volumes, said the Japanese fund that invested in the port operator.
"Historically, the market has been more containerised but we're now seeing much more infrastructure development which should allow large vessels, which means lower costs and increased efficiency," INTL FCStone's Mr Friedrichs said. WP