Agricultural Machinery Business Development in Shan State: A Comparative Analysis

The report presents analysis of data from a survey of the 37 agricultural supply businesses in Shan State, Myanmar. The patterns reported are broadly consistent with the rapid growth of agricultural machinery supply businesses in Myanmar’s Dry Zone and Delta, and with demand side surveys of agricultural machinery use in Shan. The following points stand out: The growth and spread of machinery suppliers over the past decade has been dramatic. The total number of machinery supply outlets nationally jumped 338% from 2008 to 2018, from 72 to 315, while the number of townships served by machinery dealerships increased from 36 to 88 A total of 44 machinery supply businesses are operational in Shan, accounting for 19% of the national total in 2018. Three-quarters of all machinery supply enterprises currently operating in Shan were established after 2010. Growth in business numbers accelerated particularly rapidly from 2012 to 2016, but slowed somewhat in 2017-2018. The variety of machinery supplied by these businesses has diversified rapidly since 2012. Engines, two-wheel tractors, and trawlerji are the best selling items. Total annual sales of these items remained fairly constant from 2014 to 2018. The number of businesses selling machinery jumped 76% over this period, suggesting that new entrants have secured a diminishing market share. Sales growth in recent years has been driven by larger machines. Annual sales of four-wheel tractors jumped from 53 to 463 (an increase of 773%) while annual sales of combine harvesters climbed from zero to thirty. Combine harvester sales started later in Shan than in the Delta and or Dry Zone, beginning in 2016. Access to hire purchase loans for machinery is less widespread in Shan than in the Dry Zone. Two-thirds of machinery suppliers in Shan offer some form of hire-purchase credit, as compared to 94% in the Dry Zone Banks play a smaller role in financing agricultural machinery sales in Shan than in the Dry zone. Hire-purchase finance from banks account for a smaller share of sales than hire purchase loans from machinery suppliers or sales made without finance. This is the inverse of the situation to the Dry Zone Access to finance may be less common in Shan than the Dry Zone because fewer farmers in Shan possess land-use certificates that machinery dealerships often require as a guarantee for loans.