Burmese Oil Mills in Crisis

By THE IRRAWADDY
An estimated 500 out of 700 small oil mills in Burma are on the verge of going out of business and most are almost at a standstill because of the rising cost of industrial lubricants and diesel, combined with a lack of oilseeds, according to Myanmar Edible Oil Dealers Association.

According to sources from Myanmar Edible Oil Dealers Association, based in Rangoon, one of the largest producers of palm oil in Burma, 150 of the 202 palm-oil mills in Mandalay are on the verge of closing down.

Win Myint, chairman of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), said at a meeting in Mandalay on March 11 that a large number of oilseeds—mostly groundnut and sesame—were being illegally exported from Burmese border town Muse to China. Win Myint said that the Burmese authorities would take action against the smugglers.

An anonymous trader at the Sino-Burmese border said recently that smugglers buy the oilseeds from Burmese farmers and sell the crops in China at a much higher market price.

“Oilseed farmers want to sell their crops for a higher price and illegal traders, or smugglers, have been offering an extra 200 kyat (US 0.18 cent) per viss (1.53 kilograms),” the trader said. “Local oil millers can buy crops at reasonable prices at harvest time, but they can’t pay more than the smugglers who buy and sell the oilseeds in China.”

He said that smugglers are not only involved in the selling of groundnuts in China; they also buy crops directly from the farmers.

The rising price of fuel to run the mill has affected the oil millers and many mills have consequently ground to a halt.

“We pay 5,000 kyat (US $4.46) per imperial gallon for diesel on the black market, but I still can’t buy as much as I need due to the scarcity,” an oil miller in Rangoon said.

“If the price of diesel goes up, production costs go up,” the miller said. “If the authorities stop smugglers from selling the oilseeds across the [Chinese] border, the price of edible oils will decrease,” he added.

Burmese consumers currently pay 4,500 kyat ($4.02) for a viss of groundnut oil and 3,000 kyat ($2.68) for a viss of palm oil. Each Burmese citizen consumes on average 10 kilograms of edible oil a year, amounting to some 560 million kilograms for 56 million Burmese people, according to data from Myanmar Edible Oil Dealers Association.