Myanmar is not a country that comes to mind when one thinks of exquisite blends of coffee.
But an olfactory and flavorsome revolution is in the making, infusing value into a beverage that has long lagged a poor second to Myanmar’s national beverage, tea.
Coffee is growing in popularity. And the export potential is up, with smallholder coffee growers beginning to be able to compete or develop a niche in the world’s coffee market.
Coffee is the second most sought-after commodity in the world, with an industry that is worth over $100 billion across the globe. Over 2.25 billion cups of coffee are consumed in the world every day.
Over 90 percent of coffee production takes place in developing countries, mostly South America, while consumption happens mainly in the industrialized economies.
TRANSFORMING THE RURAL IDYL
It is far too early to see a Starbucks crop up in every town and city in Myanmar. But what we are seeing is the development of standard and specialty coffees aimed at local and foreign palates.
Everybody knows that Myanmar’s agricultural sector makes up the backbone of the economy with over 60 percent of the working population toiling the land. But up to a few years ago it was a backward production model typified by scenes of bullocks ploughing the fields and poor communications, mud roads and supply chains.
Thanks to a partnership between small-holder coffee growers and the U.S. Agency for International Development (USAID) Value Chains for Rural Development project over the last few years, the agricultural sector in the Myanmar ethnic hills has gained a significant boost.
The coffee component is part of a bigger scheme to upgrade the potential of a range of agricultural products including melon, sesame, ginger, and soybean.
Nimish Jhaveri, Chief of Party, USAID Value Chains for Rural Development says their Myanmar project promotes farmer prosperity in rural areas of Southern Shan State and the Central Dry Zone.
All these crop sectors offer promise. But when it came to coffee, it took some effort to persuade local coffee producers to realize that there is a potentially big market for something they don’t necessarily drink at home, tea being the default beverage.
Myo Aye, chairman of the Myanmar Coffee Association, says demands for Myanmar’s specialty coffee has surged a lot, and it is being exported to Asian and Western countries.
“We sold coffee within small villages at a low price before. We never imagined that we were going to the U.S. and Europe to meet famous coffee buyers and companies. That is a significant change we have seen through this project.”
Thanks to this project, the producers have embraced the cultivation and processing standards and other changes necessary to see their coffee begin to be drunk locally and on the streets of New York, Paris or London.
At a recent event on October 8 to mark the completion of the current programme running under the title, #MarketNext, US Ambassador Scot Marciel spoke of celebrating the achievement of a United States and Myanmar partnership in Myanmar’s coffee, melon, sesame, ginger and soybean sectors.
The US Ambassador answered questions from trade association leaders, farmers and other Myanmar partners during the event.
He said agriculture is vital to the livelihoods of the majority of people in Myanmar and stressed the importance of the “value-added” component in the USAID and Winrock International programme.
“Myanmar has tremendous potential to produce and export a wide range of agricultural products. Our programmes are designed to help farmers and others expand quality production and find good markets that allow them to increase their incomes,” the US Ambassador told the gathering.
Earlier, on September 2, Winrock International and the Myanmar Trade Promotion Organization (Myantrade) under the Ministry of Commerce have signed a cooperation agreement for the export promotion of six crops including coffee.
In 2014, USAID began a five-year, $27 million project in Myanmar called Value Chains for Rural Development, implemented by Winrock, to develop better agricultural practices and link to new markets in five different crops. In the coffee value chain, the project has engaged extensively with private sector partners to help farmers produce more quality cherries and connect to better markets. USAID calls this work “upgrading value chains.” Coffee is one of the crops in Myanmar undergoing value-chain development.
The USAID and Winrock International’s Value Chains for Rural Development project has been partnering unofficially with MyanTrade in all five of the value chains they cover, namely coffee, soy, melons, sesame, ginger, over much of the past year, but now have an official agreement to collaborate on building markets and trade for all five of those crops.
In terms of primary export markets, watermelon, musk melon and soybean are exported primarily to China at present and ginger is exported to Bangladesh. Sesame is exported mostly to regional markets like Japan and Korea. Coffee is exported to Hong Kong, Korea, the US, the European Union, Australia, Canada, Singapore, and other countries, including United Arab Emirates and Russia.
The #MarketNext event marked the end of the USAID Value Chains for Rural Development project, which wraps up its work at the end of December this year. This project has helped 40,000 farmers, at least a third of whom are women, linking with 400 private sector partners. Strong producer and exporter associations such as Myanmar Coffee Association, Myanmar Fruit, Flower and Vegetable Producers and Exporters Association, and the Sesame Farmer Development Association will carry on the work of helping farmers improve their production while also establishing new markets for Myanmar products.
USAID Mission Director Teresa McGhie, speaking to more than 40 private sector firms and associations at the event, stressed three key points.
“In its work around the world, USAID has learned that three things are essential to inclusive economic growth. The first is that agriculture is important. The second is that women must be part of the solution. And the third is that responsible private investment is necessary to drive sustainable economic transformation,” she said.
In Myanmar, the US Government continues to invest over $17 million each year as part of the U.S. Government Feed the Future Initiative.
THE VALUE ADDED CHAIN MODEL
The concept of adding value to the business of agricultural production and sales is not new. But Myanmar has been behind the curve in terms of rural development following decades of military rule and only started to embrace an outward-looking approach following the Thein Sein government’s rolling out of the red carpet to foreign investors and experts from 2011 onwards, a drive subsequently embraced by the current National League for Democracy-led government.
When it comes to coffee, neighbouring Thailand is worth assessing when considering where Myanmar may be headed in the coffee market.
Three decades ago, the only choice for Thais was “kafe boran,” a rough local brew, and instant coffee. But today the Thai coffee market has a wide range of products worth $1.2 billion, of which just over half belongs to instant coffee, and about five percent is the premium market and other segments. Key players in the market include Amazon, Starbucks, Doi Chaang, Coffee World, True Coffee and All Café, according to the Bangkok Post.
Visiting coffee connoisseurs traveling in Thailand will soon recognize that the country has embraced a wide range of coffee brands, with specialty coffee including Arabica beans grown in the Thai hills, the latter initially starting as a way to encourage hill tribes to stop growing opium poppies as part of the late King Bhumibol Adulyadej’s hill development projects.
There is little doubt that Myanmar’s rural heartland holds great potential. The country’s coffee, melon, sesame, ginger and soybean sectors are being improved for the local, regional and world market, part of a seismic shift in agricultural industry practices.
Nimish Jhaveri, Chief of Party, USAID Value Chains for Rural Development is upbeat on prospects.
“We work directly with over 48,000 coffee, ginger, soybean, melon and sesame farmers in these areas and over 60,000 through partners in other regions,” he said (see accompanying interview).
Mr Jhaveri noted that the project fosters not only entrepreneurial opportunities for women, but leadership and empowerment generally for women and people from different regions and ethnic groups across all five value chains.
He says women are now increasingly participating in household-level decision making on important matters including adoption of new farm technologies and management practices, indicating a shift toward increased inclusion and involvement of women in the business of agriculture.
What is clear is the expertise brought by specialists under the USAID Value Chains for Rural Development project is a game-changer in improving the livelihood of a variety of crop producers and those who benefit from the value chain.
And when it comes to coffee, Myanmar is now “on the map!”