Weathering a Crisis through Cooperation in Myanmar

Since the outbreak of the COVID-19 pandemic in 2020, Myanmar has suffered massive economic difficulties due to several lockdowns. In addition, the seizure of power by the military in February 2021 has led to severe political and social upheaval. This further exacerbated the serious economic crisis. The third and worst wave of the pandemic hit Myanmar amid this turmoil. While most South-East Asian countries are heading for economic recovery, the World Bank estimates that Myanmar’s GDP will decrease by 18% in 2021.

Especially rural communities have been suffering under the ongoing crisis. The limited availability of cash, movement restrictions as well as safety concerns have severely disrupted local supply chains. Prices for input factors such as fertilizers and gasoline have soared resulting in higher costs of operation. Additionally, many households lost income because factories in which family members worked had to close temporarily or permanent. These are just a few examples of the challenges the people face. But it makes clear that the ones who feel the effects of the crisis most are those who have already lived in more precarious economic circumstances.

Yet, cooperatives continue to operate in some areas despite the unfavourable conditions. Facing severe difficulties, they provide a forum to jointly discuss and work on solutions to mitigate the adverse effects on its members and affiliated households. Cooperatives continue to serve in times where other public and private services are not available. DGRV supports several cooperatives and self-help groups in the Township of Htantabin which has been hit hard by the crisis especially during the summer when many families lost income due to the factory closures.

Maintaining the rice value chain

At the end of the rice harvest season, traders usually come to the villages to purchase the rice paddy directly from farmers and transport it to rice mills for further processing and marketing. However, during the pandemic in 2020 and again during the crisis in 2021, the value chain was disrupted. Due to lockdowns and restrictions in movement, rice traders were not able to enter many villages. Yet, the members of the cooperatives Doe Letha Mar and Khit Thit were able to react quickly. On behalf of them, Board members of both organisations contacted the rice mills, bargained the price, and organised transportation. The full harvest of all members was sold even with a slightly increased profit in 2020.

The two rice cooperatives are currently struggling with soaring input-factor prices. Fertilizers cost almost triple compared to the year before. For many farmers rice production becomes hardly sustainable. Income from sales barely covers the costs and net-surplus for the families diminished. During this challenging time, the members of the cooperative met frequently to discuss their situation. Acknowledging that a quick solution cannot be achieved, both groups have been developing plans to diversify their business in order to weather the current challenge jointly with results yet to be seen.

Financial services in times of crisis

Access to financial services had also become hampered for many people during the crisis. ATM’s have been empty, banks limited theirs services due to a cash crunch and microfinance institutions were at times unable to reach the communities. However, Inn Arr Thit Savings- and Credit Cooperative has been continuingly able to maintain business for its members. The continued provision of small loans and the access of members to their savings deposits helped many people to bridge temporary money shortages. As most funds of the cooperative are not stored in bank accounts but circulating as loans between members and in the form of self-help funds within the communities, it was not impacted by the liquidity crisis. Furthermore, the Board of Directors offered members struggling financially to reschedule loans without penalty fees due to the special situation.

Mrs Hla Hla is a farmer with her two children working at a local factory. She is paying off a loan she received from the self-help group which is linked to Inn Arr Thit for an emergency operation. As both children lost their employment due to factory closures and the rice harvest generated lower income this year, she had trouble to meet the scheduled repayments. After consultation with the other self-help group members and with the Board of Directors from Inn Arr Thit, they agreed to reschedule the loans making it easier for the family to overcome this difficult period. A treatment that clients of banks and microfinance institutions do not receive. Mrs. Hla Hla said, “I am very glad that Inn Arr Thit was there when I was in need.” It shows that even in times of crisis, cooperative institutions are not driven by profit, but for the benefit of the member.

Moreover, In Arr Thit is continuing to cover its costs despite the economic hardships. The overall profit will be low this year, but this is only a secondary concern as the cooperative is providing real value for their members when they most need it.

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