CHAPTER FIVE TAMANA NISHIGUCHI THE IMPACT OF POLICY ON AGRICULTURAL TRANSFORMATION IN BURMA -APPROACH FROM AGRICULTURAL DEVELOPMENT- Introduction Burma is located on the western edge of mainland Southeast Asia. A surface area of about twenty six thousand square miles, makes it the largest country in that region. The population, estimated at about 43 million (1994/95), is composed of as many as 135 ethnic nationalities. From the southern Himalayas, the Ayeyarwady river runs through the country for 1350 miles, flowing into the vast Delta stretched 150 miles wide and 180 miles long. The Ayeyarwady Delta, the center of rice culture, shows us a significant view of the rice paddy. One of the Least Developed Countries (LDC), Burma has recently showed political, social and economic change. Historically, the key sector in Burmese economy is agriculture, which provides employment for 60-70 percent of total labor force, and accounts for the country's major export earnings. The people, of whom about seventy-five percent live in rural areas, engage in subsistence agriculture. In 1988 when the military took power, economic policies shifted from centralization to market-oriented system. As a result, Burmese economy showed dynamic performance. However, the people in rural area tend to be bypassed by whatever economic progress has been attained. In order for Burma to become economically self-sustaining, the government's development strategy must take the rural area into consideration, particularly the agricultural sector. Without integrated rural development, industrialization in Burma either would be stultified or, if successful, create severe internal problems such as poverty, inequality, and unemployment. A focus on impact of policy on agricultural development will make clear to which extent Burmese agriculture has been developed, and how it has the potential to cause structural change for further national economic development. An understanding of these concepts will contribute to discovering an effective strategy for development in Burma. My approach in this paper starts with an brief account of agricultural development and its transition. I will also discuss a desirable policy setting in each transition. With its characteristics, I will describe and analyze the feature of Burmese agriculture, leading to an examination of future development strategies. Agricultural Development Historical Perspective Agriculture has been the main component of the economy in the Third World, which implicates that, for the vast majority of the world's poorest people living in rural areas, agriculture has been not only an economic activity for survival, but also a way of life. In spite of this fact, the role of agriculture in most country's economies was historically considered as passive and supportive. Empirical experience reveals that the growth spectrum of agricultural sector in general spans from 2 to 3 percent to 4 to 6 percent even in case of accelerating condition. In the short term, however, agricultural growth occasionally shows beyond that level in some areas, due to the sudden implementation of the modern technology on a broad scale. On the contrary, nonagricultural sectors demonstrate a high growth rate at the rate of 8 to 10 percent and higher. Therefore, under the promotion of economic development, governments in developing countries were inclined to give priority to the faster-growing nonagricultural sectors to a slower-growing agricultural sector. However, the changing view of agriculture has emerged since 1950. During the period called the economic-growth-and-modernization era of which has formulated 1950s and 1960s, many developing countries had launched a development strategy along the guidelines emphasized in rapid industrialization. Although the economy of many countries in the Third World demonstrated a respectable performance in the manufacturing and commerce sectors, it became obvious that rapid economic growth in some countries caused a country's socioeconomic structure to be deleterious and disastrous rather than improved. As a result, the disappointing experience through 1950s and 1960s forced many the governments to recognize the important role of agriculture in the early stage of development and, in addition, caused to a remarkable shift of the development strategy and policy-making. Taiwan and Thailand are two of the countries where the shift to an agricultural-oriented strategy since the early 1970s has resulted in the achievement of structural change favorable to pursuing further industrialization. This suggests that agricultural development is an important element in the early stages of economic development and a driving force leading to structural transformation. Despite of the growth pattern of nonagricultural sectors, why does a set of strategies, which emphasize such industrialization at the expense of the agricultural sector, end up in failure, causing such serious problems as widespread poverty, inequity and unemployment? Moreover, why do the countries which promoted both sectors equally attain success? John W. Mellor (1995) offers us one of the answers; "Agriculture plays an important role in structural transformation because of its preeminent size, not its preeminent growth rate." Figure 1. Output and Employment in Third World Agriculture, 1990.

FIGURE #2 shows that in the Third countries the portion of agricultural employment in the total labor force has, as a whole, doubled the output of agriculture as a percentage of the Gross Domestic Product (GDP). In spite of a much lower share of the output in the GDP, agriculture has been the major sector which absorbs in large numbers of the labor force in the developing countries. This indicates that the agricultural sector owns a large labor force of low productivity, comparing to other sectors such as manufacturing and commerce. In the early stages of development, dominance of agriculture is reflected the most in the land, labor and capital of one's developing countries. Therefore, the development of agriculture has great potential in terms of socio-economic structural change. In order to achieve further economic development, the government of the Third World countries need to comprehend the role of agriculture in their economic structure, while their development strategies should strive to create an appropriate policy for the transition stage between economic development and an agrarian system. Transition of Agricultural Development and Policy Setting The experience of some developing countries during 1970s and 1980s witnessed that agriculture played an important role and had a great potential to achieve structural change in the process of development. The agricultural transformation can be divided into four stages, requiring desirable policy setting for each stage. In the early stage of development, agricultural sector is composed of a high percentage (70-90 percent) of labor force, and creates a lower agricultural output which has no reflection of the proportion of labor input. The increase of labor productivity in agricultural sector, caused by external or internal factors, creates a significant surplus, because the rest of the economy is so small. In this stage, policy must be concerned with "getting agriculture moving," or creating a better environment in the agricultural sector. Thus, surplus needs to be allocated in public investment such as infrastructure, and in favorable price incentives for farmers to adopt new technologies. Agricultural surplus, which was created in the first stage, is absorbed directly or indirectly in both public and private sectors and mobilized for development of nonagricultural sectors in the second stage. The agricultural sector then becomes a key contributor to the overall growth process. But as the nonagricultural sector, in particular the industrial sector, develops, the disequilibrium between agriculture and industry comes to light. When this gap in labor productivity and measured income( not psychic incomes) between rural and urban sectors starts to narrow, agriculture takes a step to the third stage. Policy during the second stage should strive to link the agricultural sector with the industrial sector, and to improve factor markets to mobilize the rural resources. Sufficient input and output in the agricultural sector will help to integrate rural markets, creating a linkage between rural and urban economy. As result, integration of rural and urban economy accelerates the process of extracting labor and capital from agricultural sector, and mobilizing them into industrial and service sectors with high productivity in the third stage. Due to the integration into macro economy, policy should consider the environment surrounding the agricultural sector, such as the fluctuation of macro prices, level of aggregate activity, and trade. Agriculture receives pressure to change the traditional management, and move into industrialized economies in the forth stage. Although agriculture has the small share of the labor force, it gains the influence on political issues. The countries which have attained success in the transition face to serious problems, such as resource allocation and competition in the world economy. Agricultural protection and its impact on the world economy become essential elements in the process of agricultural policy making. Transition of Agrarian System Agrarian systems tend to evolve from predominately subsistence and small-scale peasant farming, to more diversified and larger extended family farming, and finally to specialized and commercial farming, which dominates in total production. Although subsistence farming tends to dominate in developing countries and specialized farming does so in industrialized countries, these stages can be seen in every country at any point in time. The purpose of subsistence farming is to produce outputs for family consumption and a few staple food crops for the local market to obtain necessities. Productivity of land and labor are at a low level, and capital investment has no expectation. In general, for peasants, land and labor are the principal factor and they use traditional methods and tools for cultivation, which is vulnerable to weather shifts. The laws and policies, such as taxation systems, place burdens on peasants and restrict incentives. The failure to collect sufficient outputs causes farmers to create outstanding debt from moneylenders, leading to a critical condition in their lives. Most subsistence-farming peasants in the Third World are confronted with difficulties due to technological limitations, rigid social institutions, and the lack of communication systems connecting rural to urban areas. It is obvious that the environment surrounding peasants is static and uncertain. Since the nature of subsistence agriculture is highly risky and uncertain, farmers in that level are reluctant to adopt new technologies and crop patterns, even though they promise to attain higher productivity. This is because the motivation of small-scale peasants is based on the maximization of their chance of survival and they tend to avoid risks which will endanger their lives. Moreover, environment surrounding peasants, for example, the restrict land tenure condition, inadequate credit facilities, and immature local market, can be the major stumbling block in preventing the farmers from responding to proposed technical change. Without an effort to reduce risk and remove social and commercial impediment, there is little possibility for small-farmers to accept innovation which raises agricultural productivity and affects structural change in society. Peasants begin to act economically and rationally when given alternative opportunities and provided adequate insurance. The increase of productivity per worker under desirable social, commercial, and institutional condition causes to a shift from subsistence farming to mixed and diversified farming. In mixed and diversified farming, new cash crops such as fruits, vegetable, coffee and tea take the place of staple crops. Along with diffusion of cash crops, simple labor-saving devices like small tractor can be introduced, freeing the labor force for other farming activities. In addition, the introduction of better seeds, fertilizers and irrigation help to increase the productivity of the land, creating a surplus to invest for improvements of agricultural input, while adequate supply enable farmers to use their land for cash crop cultivation. In this stage, a reasonable and reliable access to credit, fertilizer, water, the information network and marketing facilities become essential requirements. Specialized and modern commercialized farming is the dominant form the agricultural sectors in advanced industrial countries. Its goal is to produce commercial profit, not take into provide food for family. Adopting the economic concepts which will be referred to costs, saving and investment, price fluctuations in market and proper resources utilization, the farming system is mobilized effectively with quantitative and qualitative significance. A particular cultivation method becomes the prominent feature of all specialized farms, in which capital-intensive labor-saving technology allows a single family to cultivate a large land. In some cases, it can be seen in both developing and industrialized countries that specializes farming operates similarly to large agribusiness multinational corporate enterprises. Agricultural and Rural Development Strategy In developing countries, we see that most people live in rural areas and engage in subsistence agriculture for survival. Despite the fact that these countries showed dynamic economic growth, such people were overlooked. Recent serious problems, such as widespread poverty, inequity and unemployment, has developed as a result of the severe imbalance between rural and urban areas caused by rapid industrialization. While the transformation of the agricultural function occurred in the economic development, the agrarian system also shows the morphological transition from subsistence farming to specialized and commercial farming. As far as the traditional society in rural area is concerned, agriculture is no longer an economic activity, but a way of life, therefore, it is necessary for any government to recognize and to understand the structure of farm economy in terms of the process of agricultural modernization. Policy should involve not only meeting the demands for increased production, but also causing profound changes which affect the whole social, political, and institutional structure of rural society. The major objective of agricultural and rural development should focus on the improvement of living standards in rural areas through increases in small-farm incomes, output, and productivity. To achieve these basic conditions, development strategy must comprise the essential and fundamental elements in terms of small-scale agricultural progress and rural integration. The main requirements is as follows:

Small-Scale Agricultural Progress 1. Application of technological change and innovation 2. Appropriate government economic policies 3. Creation of supportive social institutions Rural Integration 4. Modernization of farm structure to meet demands of increasing food 5. Creation of effective supporting system 6. Social and physical change of the rural environment

There are two major sources of technological innovation, which enable farmers to increase their yield. However, new technology, in some aspects, possesses problematic elements. The introduction of labor-saving technology such as mechanization has drastic effects on the increase of output per worker. In reference to the land, most farmers in the developing countries own small plots of land without sufficient capital. Thus, this can not be suitable for the small-landholders. On the other hand, land-saving technology such as improved-seeds, irrigation and chemical fertilizers raises land productivity by improving quality. Theoretically, many economists agree that this has a positive effect on small scale agriculture because of it does not require a large capital input. To promote this measure, of course, adequate government policies and supportive social institutions will be needed. Otherwise, this will turn out to be a failure and cause the further impoverishment of the masses of rural peasants. Green Revolution fortifies this proposition. Following the recognition of the role of agriculture in the world, the new high-yielding varieties (HIV), called "miracle seed," of rice, wheat and corn have been introduced to many countries in the Third World, starting the early 1970s. Some countries achieved success, but the others did not. This is because this new HIV requires access to related resources such as irrigation, fertilizer, insecticides, credit, and agricultural extension services. Large landowners, with their disproportionate access to these resources and support services, have the opportunity to take advantage of HIVs over smallholders and eventually drive them out of market. The inevitable result is that an innovation with great potential for alleviating rural poverty and raising agricultural output can be antidevelopmental if government policies and social institutions militate against the active participation of the small farmers in the evolving agrarian structure. Pricing policies of agricultural commodities can be one of the critical areas for major improvements. It is obvious that small-scale agricultural development with full benefits is critical to the role of government. In many parts of Asia and Latin America, land reform is essential through a joint effort of the government and all farmers. The most important determinant in the existing highly inequitable distribution of rural income and wealth originates from the unequal structure of land ownership. Although there are many forms, land reform as a whole entails a redistribution of the rights of ownership in favor of cultivators with limited or no land holdings. The transfer of acreage from the land owner to the people who actually work the land can be encouraged under the overall protection of government. In addition to social structural reforms, rural development needs substantial support of public sectors in the form of, for example, transportation, a communication network, research and education, leading to the development of small- and medium-scale industry and upgrading of consumption pattern for rural modernization. Burmese Agriculture: Its Structure Historically, the Burmese economy was supported by agriculture, which provides sixty to seventy percent of employment and occupies over one-third of the Gross Domestic Products (GDP). Figure 2. Total Labor Force and Employment in Agricultural Sector, Burma.

FIGURE #2 shows Burma's total labor force and employment in the agricultural sector. Obviously, the majority of the labor force is absorbed by the agricultural sector. However, the lack of significant change in employment of agricultural sector implies that fluctuations in the economy (Asian Development Bank) have no effect on the mobilization of the agricultural labor force to nonagricultural sectors. Figure 3. Output and Employment in Burma.

Unlike the other developing countries, Burma's agricultural employment from 1985 is in relatively close proportion to the agricultural output. The growth of GDP percentage of agricultural output reveals that the agricultural reforms of 1974 were successful. Moreover, this recent trend indicates that Burma appears to be in the higher level of labor productivity in the Third World. However, it should be noted that, in terms of the agricultural production index per capita, this presumption is not supported by the evidence. Figure 4. Output and Employment in Thailand.

Thailand is a typical country in the Third World where the agricultural sector shares much less percentage in total than agricultural employment does in terms of the economic structure (Fig.4). By one set of criteria of "output and employment," Burma has done better than Thailand. However, when we evaluate Burma's growth according to the agricultural production index per capita in FIGURE #5, Burma's development has been at the same level as Thailand. Figure 5. Agriculture: Production Index Per Capita, Burma and Thailand.

Map #1-3 (Shares of Major Sectors in GDP ) give us a visible feature of the economic structure in the Southeast Asian region. According to this, Burma is referred to as one of the agricultural countries in the Southeast region because of a large portion of agricultural output in the GDP. Its history as an agricultural country dates back to the nineteenth century as a British colony. Its main rice field, Ayeyawady Delta, which contains about 3.5 million acres, experienced dramatic increased cultivation after the British arrived. Promotion of agriculture under British rule made Burma the "rice bowl" in Asia. This legacy has left paddy/rice as the main agricultural product which has shared over seventy percent of the total agricultural output in Burma today. Needless to say, the agricultural sector, because of its size, has played an important role in Burma. The rise and fall of this sector is a decisive factor in the performance of the national economy and the life of the majority of the populace. Since agriculture has affected the economy, government has attempted to have an impact on it through its policies. Historical Perspective of Agricultural Development in Burma The history of agricultural development in Burma has been similar to that of many other countries of the Third World. The military government, which established the "Burmese Way to Socialism" in 1962, gave priority to industrialization. The objectives of this new concept was self-reliance, nationalization and strict neutrality in line with 'socialism,' which was adopted for Burmese tradition and its natural features. Rapid nationalization and the neglect of the role of agriculture resulted in a disappointing growth in both the agricultural and the nonagricultural sectors, which caused stagnation in the whole economy. The lesson from this disappointing experience during 1960s turned the governments attention to the agricultural development. To overcome the stagnating economy, the government was forced to reform some of its economic policies, practice, and institutional structure with an emphasis on improving the agricultural sector. In 1971, the government carried out the "Twenty Year Plan," which was composed of the four terms of the Four Year Plan (FYP). In fact, it was launched from the Second FYP in 1974, which was adopted for the new policies under the 'modification' of Burmese Way to Socialism. A prominent landmark in this plan was the emphasis on exploitation and efficient utilization of natural resources such as agriculture, forestry and mining. In addition, the introduction of the Official Financial Aid (ODA) as well as other international inflows helped Burma pursue radical and further economic development. The authority's recognition of the importance of the agricultural role in the economy brought the highest priority to agriculture for economic development in the future. However, modification of the policies implied a slight change from strict nationalization toward liberalization, and the fundamental concepts remained unchanged; self-reliance, centralization, and regulation of domestic investment. During the Forth FYP, no measures were carried out in the agricultural sector, and economic growth started to wane in accordance with the decline of agricultural production. The global price-down in primary goods in the mid-1980s caused serious damage not only to agriculture, but also to the overall Burmese economy. In 1988, when the military took power through a coup, the economy in Burma was in a critical condition. The economic policies under the present administration, showed drastic change : the movement from inward-looking, nationalized policy to outward-looking, market-oriented. In order to promote this radical policy, the State Law and Order Restoration Council (SLORC) has formulated the Short Term Plan (STP) (1992/93-1995/96), in which the first and the second year were designed as "Economic Years", the third year as "All Round Development Year" and the last year as "Visiting Myanmar Year." In the name of economic liberalization, the current agricultural sector is considered as one of the three leading economic growth sectors: the other two, being tourism, and natural gas and mining. Land Policy Land reform is an essential condition for agricultural development. In Burma, land distribution from large landowners to small farmers moved smoothly. This was because the state was the ultimate landlord and considered that farmers should have the right to work on the land as individuals. The Tenancy Law of 1965, which abolished the tenancy system , contributed to the accumulation of about five million acres, or a quarter of the total cultivated area. Although lands were prohibited from sale, purchase or mortgage, lands allocation had taken place in accordance with this law. But the land reform emphasized equity rather than productivity, which caused further land fragmentation.

TABLE #1 Size Distribution of Farms, 1985/86 Size of Holding Farm Families Farm Families Area Area (acres) ('000) (Percent) ('000 acres) % Less than 5 2661 61.6 6078 25.11 5 to < 10 1058 24.49 7540 31.14 10 to < 20 491 11.38 6853 28.3 20 to < 50 107 2.47 3010 12.43 50 to < 100 2 0.04 129 0.53 100 and above 0.9 0.02 603 2.49 Total 4320 100 24213 100 Source: Mya Than, "Agricultural Policy Reforms and Agricultural Development," in MYANMAR DILEMMAS AND OPTIONS, Institute of Southeast Asian Studies, edited by Mya Than & Joseph L. H. Tan, 1990.

TABLE #1 shows that over fifty-six percent of lands was occupied by eighty-five percent of the families whose farm size are ten acres or less, whereas 15.3 percent of lands belongs to about 2.5 percent of families whose farm size are over twenty acres. This indicates that the majority of farmers in Burma were small land holders and a more equitable land distribution had been attained compared with neighboring countries, as a result of the emphasis on equity. In addition, farmers were protected by the Farmers' Rights Production Law, which was introduced along with the land reform. The land reforms emphasized on equity and strengthened government control over farmers, causing a strong relationship between the government, the owner and the cultivators. Credit Policy Credit is an advanced purchase which enables farmers to access agricultural inputs in advance. In the beginning of the Second FYP (1974-77), the government made more credit available to farmers. Although credit had been existed even during the previous government, about 85-90 percent of government agricultural loan was spent for the paddy crops. On the other hand, industrial crops, such as jute, sugar-cane and tobacco, were supported by lower interest rates. However, the farmers tended to depend on more expensive private sources of credit to meet their demand than official credit, whose lending rate covered only about eleven percent of the total cost of cultivation in 1972/73. These reasons sprang from the government purchasing system, where farmers, who took credit from the government, were obliged to sell their crops to it. In addition, credit distribution on a per acre basis allowed larger land holders to enjoy the benefits of this system. The objective is not the elimination of the private money lender, but administrative control over farmers. Therefore, the credit system, like the land reform, emphasized equity rather than productivity and efficiency. Marketing Policy The features of Burmese agriculture under the Burmese Way to Socialism accounted for the government procurement of rice and control over major exported agricultural products. The procurement system, though it had existed since 1946, aimed at providing stable prices for producers and consumers, obtaining sufficient capital to employ for the development plan, and stabilizing the economy. These tasks were assumed by the Union of Burma Agricultural and Marketing Board (UBAMB), which bought rice and "controlled" products at fixed price set by government directly from farmers, distributing them along both producers and consumers with lower prices, and exporting them with value added. Although the objectives of this system was to restrain the inflation to low rates, the government control in domestic markets coincided with the spreading of the black market, which was responsive to the actual demand. Along with the Second FYP (1974-77) the authorities modified the previous procurement system to the compulsory delivery system, which took into account land size, land productivity, and family size. This system was "actually a form of progressive taxation which favored the small farmers with poor performance." However, rice, as usual, emptied into the black market. Large farmers in particular tended to sell their products in the free market, whose price was higher than government price. This flow was because of the widened price gap between the official and free markets. Therefore, farmers responded to this price gap which is shown in FIGURE #4. Since 1974, the government had raised the official price twice to adjust by the widened price gap. This pragmatic price adjustment contributed to, to some extent, increasing the amount of procurement rice along with exaltation of incentives among farmers. Although the government continued to maintain the adjustment prices, the price in the free market far exceeded the official price. As a result, the amount of procurement started declining after 1978. Figure 6(4). Prices of Paddy/Rice.

In 1987, the government inaugurated the most radical reforms: the liberalization of agricultural trade. According to this announcement, once restricted agricultural products, rice, maize and seven varieties of beans and pulses, were allowed to be handled by the privately. After a short time, people enjoyed free trade, and demonetization was carried out. This was aimed at absorbing the black money to prevent the dominance of non Burmese People, most of whom were engaged in the commercial sectors. However, the government efforts resulted in economic chaos rather than economic recovery. SLORC, which took power through the political upheavals in 1988, replaced it with the former centralized procurement systems. In spite of the shift to the marketing liberalization in the national economic policy, farmers have remained obliged to deliver at controlled prices a certain pertain proportion of output in return for inputs. Since delivery of paddy still has been based on land acreage rather than production, without respect to the number of crops of paddy sown per year, its burden has fallen on farmers who have relatively low-yielding land unfavorable for new multiple cropping. Although official paddy price rises yearly, the authorities require additional quotas. The failure to deliver tends to cause farmers to loose their access to the land. Agricultural Reform -Green Revolution- The highlight of agricultural history in Burma could be a consequence of the introduction of High-Yield Varieties of paddy rice (HYV) through the "Green Revolution." The introduction of new technology, which started in 1974, had gained more momentum under "Whole Township Special Production Programme," spreading throughout countries, especially, Lower Burma. Since HYVs required more fertilizer, the government promoted the utilization of this new technology combined with fertilizer. FIGURE #5 gives the amount of 8466 thousand tons of paddy production in 1974, and 34.19 baskets paddy yield per acre. By 1982 in FIGURE #6 and #7 show that over 10000 thousand acres, half of the paddy land was covered, while four times of fertilizers were consumed, compared to in 1974 Along with these trends, paddy production per yield increased twice as much as before 1974, causing rise of total production to 13923 thousand tons. The increase of paddy production during the period between the mid-1970s and the early 1980s resulted from neither little or no extension of cropped area, nor introduction of agricultural machines, but did resulted in yield increase. Added to these new technologies, good weather, more available credit and incentive, which led to the rising price of official procurement, contributed to the increase of productivity per yield and consequent total paddy product. Figure 7(5). Paddy Production and Paddy Yield in Burma.

Figure 8(6). Paddy Production and HYV Area during 1974-85.

Figure 9(7). Paddy Production and Fertilizer Consumption.

Burmese Agriculture: Position Through the "Green Revolution," Burmese agriculture made a great progress. The introduction of land-saving technology was suitable, as long as concerned the feature of Burmese agriculture: land fragmentation, low land-man ratio, and scarce capital. The policy reforms, which gave the higher priority over agricultural sector during this period, seemed to bring benefits to farmers through rising productivity. however, despite of increase of gross income, high inflation, which caused by dual economy, had no effect on their real income. This was in favor of large-land holders. Even in 1993, most farmers used simple implements such as plows, harrows, and spades. TABLE #2 suggested that the Burmese agriculture have not given away to subsistence level.

TABLE # 2 Agricultural Equipment,1993 Thousand Numbers Implements Plows 2674 Harrows 2792 Spades 3600 Machinery Seed Drills 84 Rotary Harrows 409 Water Pump 46 Tractors 11 Vehicles Carts 1659 Source: Central Statistical Organization, STATISTICAL YEARBOOK 1993, Yangon, Myanmar, 1993.

The growth of agricultural sector, however, had slowed down when the effects of Green Revolution reached the 'saturation point.' This is largely because of the inappropriate allocation of surplus springing up from the agricultural sector, and the policies emphasizing on 'equity' rather than 'efficiency.' Thus, surplus coming from the agricultural sector was allocated to neither sufficient infrastructure, nor favorable price incentives. The progress of Burmese agriculture had no link to the next stage of transformation of agricultural development as well as to the agrarian system, keeping it to a subsistence level. Agricultural Potential and Strategy Suggestion through the Recent Policy The recent agricultural strategy under the ruling military junta, the SLORC, aims at the comprehensive progress of productive sectors including agriculture, livestock and fisheries. As for the agricultural sector, its feature can be described as the encouragement of production through small-scale irrigation and new multiple cropping. Multiple Cropping Rapid diffusion of multiple cropping, in particular, contributed to recovery of the agricultural output during 1991-1995. This seemed to result from the great efforts of the government, which extensively publicized nationwide instructions to farmers of when and what to cultivate on paddy land through all the state media organs. In addition, government formed 7000 "agricultural supervisors," and placed them throughout countryside mainly to communicate these instructions for reliable compliance in the process of the paddy procurement. The application of multiple-cropping brought about, to some extent, success, owing to farmers' voluntary response in some regions. The salinity problem, high flood risk and seasonal pest problem are major concerns in Delta region (Ayeyarwady Delta and coastal area), which occupies fifty percent of country's cultivated area. Flooding in this region which is caused by constant heavy rain during the monsoon season, in particularly, destroyed ten to fifteen percent of cultivated area in the Delta region. Flood protection will be badly needed. Irrigation On the other hand, this multiple-cropping technology required expansion of irrigation systems. Historically, irrigation had played a fairly limited role in Burma's agricultural development. As a whole, due to the need of capital input, the scarce budget of the government seemed unmanageable for the need. In spite of the large land possession of mainland Southeast Asia, only 12.69 percent of the total area of 67.6 million hectares is under cultivation in 1994. TABLE #3 reveals that Burma has a vast room available to cultivate.

TABLE #3 Land Use, 1994 Type of Land Hectare Percentage (Thousands) Net Sown Acreage 8587 12.69 Current Fallow 1489 2.2 Cultivable Waste 8191 12.11 Reserved Forest 10260 15.16 Other Forests 22130 32.71 Others 17001 25.13 Total 67658 100 Source: Ministry of National Planning & Economic Development, Economic Development of Myanmar, Government of the Union of Myanmar, 1995

As for both the Dry zone region in the center of Burma and the Hill region along the boarder, paddy, as well as other crops which is share about forty percent of the total agricultural products, are available only in the area where the irrigation is provided, or conditions are relatively favorable. It is necessary that irrigation development which based on the construction of dams and diversion water, pump irrigation of both surface and ground, and the establishment of village-level irrigation schemes. Recently, under government pressure, total irrigated areas have increased from 2.5 to 4.1 million acres, and irrigated paddy cultivation from 2.1 to 4.3 million acres during 1989/90-1994/95. This is because the state irrigation construction projects were accomplished by a large number of people with little or no compensation in the name of "people's contributions." Thus, without a large amount of capital input, irrigation had and has been undertaken. Since Burma has a vast potential of land resources, land expansion will lead Burma to the next stage. Small-Scale Machinery and Diversified Farming Considering different land conditions, the diversified farming and the shift to producing cash crops, will be desirable in the Dry zone and the Hill region, where its soil does not retain moisture long enough. On the other hand, the Delta region, although this is true for other regions as well, will be need the introduction of small-scale machinery. As we noted above, Burmese agriculture still mainly depends on simple devices whereas agricultural machinery is insufficient. However, the numbers of tractors and harvesters in 1961 was three times greater in 1974, and has grown further to five times greater. FIGURE #8 provides visually the demonstration of its rapid growth. Figure 10(8). Tractor and Harvester in Use, Burma.

The recent trends of tractors and harvesters basically demonstrates upward growth. It is largely because the utilization of both machines is under the promotion by the present government through encouragement of private sector suppliers. Even though, agricultural mechanization in Burma continued to lag behind in Asian countries and North and Central America, as provided in FIGUREs #9 and #10. Figure 11(9). Tractor in Use, Burma, Asia, North and Central America

Owing to land fragmentation and the different condition of the region in Burma, it will be more efficient in Burmese agriculture to introduce diversified farming to suitable areas and to encourage small-scale labor-saving technologies with knowledge of management. However, recent strategy without proper guidelines possesses a room to discuss the utilization of human resources and the impact on the environment. Other Recommendation As long as government procurement exists in marketing policy, there will be little hope to expect efficiency and productivity. Furthermore, it is obvious that the link between the agricultural input supplies and the delivery of output in return has had an adverse effect on farming efficiency. The government needs to relinquish its monopoly in respect to actual demand. The legalization of border trade has strengthened price incentives in agriculture and will call forth a strong supply response. It is important to offer opportunities opened up for export demand. Achievement of the structural change for further development in the agricultural sector must follow rural development. Infrastructure, particularly transportation, which had been mostly intact since World War II, is critical to Burma. Toward "Myanmar Visiting Year of 1997," the ruling military junta devotes itself to invest in the tourism infrastructure. Although transportation is under renovation or construction by numerous uncompensated workers, its objective is convenience for tourists, having little relation to the rural areas. Future strategy must have a direct impact on the integration of the rural development. Burma has suffered from a lack of priority for rural development in national policies and donor-country assistance. There will be many constraints and obstacles that still have to be eliminated. However, without such efforts, sustainable growth can not be expected in the future. References Alex Sell, Economic Structure and Development of Burma, Berichte aus dem Weltwirtschaftlichen Colloqium der Universitat Bremen, 1985. Asian Development Bank, ASIAN DEVELOPMENT OUTLOOK, 1989-95(Serial) Carl K. Eicher & John M. Staatz, Agricultural Development in the Third World second edition, THE JOHNS HOPKINS UNIVERSITY PRESS, Baltimore and London, 1990. Jan Becka, HISTORICAL DICTIONARY OF MYANMAR, The Scarecrow press, Inc. Metuchen, N.J., & London, 1995. Khien Theeravit, Sai Kham Mong, David Ruffolo, and Benjamin Chiang, Cooperation in the Mekong Development: Papers and Proceedings of the Seminar Held in Bangkok on 27-29 June 1991, Institute of Asian Studies, Chulalongkon University, Bangkok, Thailand, 1992. Open Society Institute, BURMA DEBATE, July/August 1996. Rohana Mahmood and Hans-Joachim Esderts, MYANMAR and the Wider Southeast Asia, Institute of Strategic and International Studies (ISIS),Malaysia, 1991. Mya Than, The Second Agriculture Revolution in 1974/75-1985/86, Institute of Southeast Asian Studies, Singapore, 1988. Mya Than and Joseph L. H. Tan, MYANMAR DILEMMAS AND OPTIONS-The Challenge of Economic Transition in the 1990s- , Institute of Southeast Asian Studies, Singapore, 1990. Michael P. Todaro, Economic Development (Fifth Edition), Longman,1994. The Government of the Union of Myanmar Ministry of National Planning and Economic Development, STASTICAL YEARBOOK 1993, CENTRAL STATICTICAL ORGANIAION, YANGON, MYANMAR, 1994. The Government of the Union of Myanmar, ECONOMIC DEVELOPMENT OF MYANMAR, Ministry of National Planning and Economic Development, 1995. Valentine U. James, Urban and Rural Development in Third World Countries -Problems of Population in Developing Nations-, McFarland & Company, Inc., Publishers, Fefferson, North Carolina, and London, 1991. Valentine U. James, Sustainable Development in Third World Countries -Applied and Theoretical Perspectives-, PRAEGER, Westport, Connecticut and London, 1996. John W. Mellor, Agriculture on the Road to Industrialization, THE JOHNS HOPKINS UNIVERSITY PRESS, Baltimore and London, 1995.

MAPS Map. Industrial Sector in GDP. Southeast Asian Region, 1993.

Map. Service Sector in GDP. Southeast Asian Region, 1993. Map. Agricultural Sector in GDP. Southeast Asian Region, 1993.