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Prospecting in Myanmar: Market potential explored in Southeast Asia

PROSPECTING IN MAYNAMAR

MARKET POTENTIAL EXPLORED IN SOUTHEAST ASIA

During the California Gold Rush, prospectors sifted, rinsed and repeated in hopes of discovering gold. In business today, prospecting is the art of identifying potential customers.

A group of Midwest soybean associations are hoping that a recent prospecting trade mission in Southeast Asia will help them strike gold when it comes to building demand for U.S. soy.

Representatives from the Iowa Soybean Association (ISA), Kansas Soybean Commission and Nebraska Soybean Board, with the help of Mishek Incorporated, hope to add Myanmar and Malaysia to a list of emerging countries that could help whittle down abundant U.S. soybean supplies.

Two women shade themselves from the heat of the sun while walking along the main port in Yangon, Myanmar.

“We’re prospectors right now,” Peter Mishek, a consultant with the ISA, says. “We are digging and gathering information. We’re like gold prospectors. It is like landing on the moon. It is uncharted territory, and we have to figure out what is going on to build a market profile.”

The Myanmar livestock feed industry is poised for expansion, but experts say U.S. soy will need to establish customer preference first to fully capitalize on the market.

A three-day trade mission to Myanmar in May revealed an untapped market that, combined with other southeast markets, could drive demand in a supply heavy U.S. soybean market.

By some estimates, Myanmar's feed industry could experience double-digit growth for the next five to seven years. For U.S. soybean meal to be part of that growth, soy representatives say an understanding of infrastructure and logistics in Myanmar will be key. U.S. representatives will also need to educate owners of feed mills about the quality of U.S. soy.

“If we aren't here someone else will be,” Mishek says after visiting Crystal Diamond Livestock Company's feed mill south of Yangon, Myanmar.

Crystal Diamond is an integrated business native to Myanmar specializing in feed, poultry, eggs, duck and swine. The company has experienced growth in its feed industry. Members of ISA, Nebraska Soybean Board and Kansas Soybean Commission told the company they want to be the preferred supplier of soybean meal for their operations.

The company has two feed mills in Myanmar – one in Mandalay and another in Yangon. Crystal Diamond's Mandalay facility produces 86,000 metric tons (MT) of feed per year. The feed is bagged and transported by the company to farms. The Yangon location produces 240,000 MT of feed per year. The company utilizes modern facilities that have large commodity bulk storage bays and hydraulic assisted truck unloading.

Hla Hla Thein, owner of Greenfield International Company and vice chairman of Myanmar Livestock Feed Association, was one of four Myanmar feed mill representatives who attended a meeting with the U.S. trade team while in Myanmar. She owns a 60,000 layer farm and dairy that produces about 600 gallons of milk per day at a farm near Yangon. She says she would like to purchase soybean meal for her farm but logistics can be problematic.

“We would like to buy our soybean meal directly from the U.S., still we can't buy directly from the U.S. because the problem is logistics and payment,” Thein says.

Sunjin, a Korean-based company with holdings in Vietnam, Thailand and China, has been operating in Myanmar for seven years. Byung- (Ha)Bruce Lee, CEO and part owner, believes Sunjin will expand in upcoming years.

“The livestock market is growing but still very small,” he says. “We (Myanmar) have broiler stock of one million, but if you go to Indonesia, they have 30 million. It's a big difference.”

Lee also compared Myanmar to Thailand because both countries have similar populations of 53 million people. Currently, Myanmar produces 3 million metric tons (MMT) feed annually and Thailand produces almost 20 MMT of feed. Sunjin imports 500,000 MT of soybean meal annually from the U.S and South America, according to Lee.

“We hope someday that feed production may reach 10 MMT,” Lee said. “That is why I came here, because of the opportunity.”

Total animal feed demand in Myanmar increased 13-15 percent from 2016 to 2018 due to the rapid growth of the livestock sector. The USDA forecasts aggregate animal feed demand will increase to 4 MMT in 2020. The growth of the industry, which attracted Sunjin to Myanmar, is now attracting larger companies.

“The big companies, the big players will eventually integrate, and the market here is going to shift very fast,” he says. “There is no big investment from the U.S. yet because there are still sanctions in place.”

In 2017, the U.S. Treasury Department issued economic sanctions on Burmese security forces and also indicated Myanmar, formerly known as Burma, was guilty of human rights abuses. But Mishek and others believe the sanctions will be lifted soon.

MYANMAR'S FEED INDUSTRY COULD EXPERIENCE DOUBLE-DIGIT GROWTH FOR THE NEXT FIVE TO SEVEN YEARS.

As trade tensions escalate between China and the U.S., countries in Southeast Asia are becoming valuable pieces in a trade puzzle that doesn't include China. The U.S. Soybean Export Council (USSEC) has held multiple workshops in the area to educate farmers and feed companies about the advantages of U.S. soy.

Since the tariff war began last year, USSEC has been conducting a global tour, called Experience Today's U.S. Soy Advantage, to expand markets around the world. The meetings are a part of USSEC's efforts to maintain and further build relationships with U.S. exporters and stakeholders in markets around the world.

State soybean representatives visit Sunjin in Yangon, Myanmar. 

“This is an industry that thrives on a clear and transparent market,” Timothy Loh, USSEC regional director for Southeast Asia, says in reference to damage being caused by the U.S.- China trade war. “When uncertainty creeps into the market, we see restraint. That uncertainty doesn't lend itself well to the type of work we want to do. We want to sell, and the U.S has plenty of beans to sell. I hope this process comes to an end soon.”

Brazil has experienced a monetary windfall by being the preferred supplier of soybeans to China. But Mishek said all is not rosy for Brazil. He believes they will have difficulties exporting their crop in upcoming years due to the scourge of African Swine Fever on the Chinese pork industry.

“We have a year head start over South American competitors to establish these markets,” Mishek says. “We need to work to establish these relationships and make deals.”