Notes on the QSEM

The Qualitative Social and Economic Monitoring (QSEM) is a study conducted annually by Livelihoods and Food Security Trust Fund (LIFT), a multi-donor platform, to look at the changes resulting from the development interventions in various parts of Myanmar. The Round 4 of the QSEM conducted from March to May 2014 involving 1,474 respondents was recently released by LIFT and World Bank, highlighting the trends and transformation happening in the rural areas of the country. It covered 54 villages from the following states where LIFT has concentration of projects: Ayeyawardy, Chin, Magway, Mandalay, Rakhine and Shan.

Round 4 results have shown positive developments in the rural areas. The main findings were summarized as follows:

1. Villagers experienced better returns on their livelihoods than in previous years, though underlying structural constraints persisted;
2. Non-farm diversification and migration increased;
3. Certain poorer households were not able to benefit equally from such positive trends; there were risks of inequality; and,
4. There were small but important shifts in how people interacted with local government officials.

The results are important in a way that showed the effectiveness of the development efforts in Myanmar and the receptiveness of the people in the development efforts. Among the other noteworthy issues raised in the Round 4 report and discussed during the presentation last February 5, 2015 included the following:

1. Labor migration is increasing. As development is felt in key cities, people from the rural areas are moving to the cities particularly Yangon and Mandalay looking for more opportunities. Migration outside the country is also observed. Because of this, labor for agricultural production may be affected in the future although it is not yet felt at present. It was also observed in some areas that during peak seasons like planting and harvesting, there are no enough farm laborers to hire. Inversely, during non-peak season, there is no work for labourers, pushing them to find work in the cities.

2. Diversification of income source. The increasing number of non-farm activities rural people to move away from agricultural production. This may be an issue for food security if people stay away from agricultural production activities.

3. Increasing influence of village tract leaders. This is an additional layer in the bureaucracy. We not only deal with village heads and township officials but also with the village tract leaders. This may also be an opportunity in area where the village heads are uncooperative, with the village tract leaders may be an alternative source of support.

4. Social capital and institutional development. Most of the people’s organizations were formed for mobilization. There is a need now to transition these organizations to do economic activities and provide them with capacities and skills in managing not only organizations but enterprises as well.

5. Connectivity is promoted by cellphones. The use of cell phones for development initiatives has yet to be maximized. With apps for mobile money, market information and other updates, the community can benefit much from utilizing it as a tool for development work.



The rolling hills looked like a manicured green in a golf course. As we came nearer, terraced slopes revealed the rows of tea shrubs. The village is 85 kilometers from Hanoi, and can be reached in a two-hour leisurely car ride.  Despite the short distance from the main market, farmers in the area earn less from their products for the simple reason that they sell immediately during harvest.

Consider the price of freshly harvested tea leaves at VND 800,000 ($40.00) per ton.   Consolidators buy  the leaves on the day of harvest and send it to tea processing centers which is less than an hour travel from the village. The price may even be lower during the harvest season months of June to August.

Some farmers do have equipment to dry the leaves. The processing has an average recovery rate of 20%, transforming one ton of fresh leaves to 200 kilos of processed tea leaves. A kilo of processed leaves is sold at VND80, 000 ($4.00) giving a value of VND16million ($800.00) for the processed tea leaves.

There is a big difference between the price of the freshly harvested and processed tea leaves, but for the farmers, the concept is simple – they have cash after the harvest is taken from them. Processing will mean additional labor and cost, and they will have to look for buyers of processed tea.

There is still a third stage in the value chain.   Branded tea products are sold at an average of VND200, 000. ($10.00) per kilo. So if additional efforts will be done in further processing, quality control, packaging and branding, the 200-kilo harvest can roughly amount to $2,000 in the market.

This is rough computation shows how productivity of the farmers can be enhanced.  It does not mean pushing the farmers to do marketing which is not their line of work. Let the farmers do farming, but efforts can also be done to consolidate the resources of the farmers for them to be able to “hire” professionals who can do the marketing or even the product development for them.

Developing Agri-Microfinance (AMF) Loan Product


Developing agricultural microfinance (AMF) addresses two main issues in development finance: first, to ensure that small farmers have access to credit for production expenses; and second, to address the risks involved in agricultural production. Risks is agricultural production  is so high that most formal financial institution do not venture in the agricultural sector, leaving  government  banks and the informal money lenders to serve this sector. Developing AMF products involved several activities:

  •  The Market Study includes market-understanding research to determine the features of the loan products. It will also provide information of the specific agricultural commodities that can be financed. It also includes a risk profile identifying various risks related to the commodities and the coping mechanisms to address the risks.
  •  During the Product Development Workshop,  information from the market study are used to develop the “product architecture” – the features of the loan product fit to the needs of the clients and the production cycle of the  commodities identified for financing. It shall also review of the loan process.
  •  The Pilot testing is the phase where the product prototype designed during product development workshop will be implemented in a limited scale, say a branch, to check its applicability. Monitoring and coaching sessions are done during this period to check the development, the variance in the features and processes and other observations that will enhance the product.  Refinements in the features and the process can be done during this phase.
  •  The final phase is the Mainstreaming where the tested products will be installed in all operating units of the financial institution.

Based on our experience, AMF loan products are appreciated by the farmers because the loan term is fit to the production period and the harvest season, and they understand the production cost of each agricultural commodity. On the part of the credit staff, the commodity profile assisted them in speeding up the loan appraisal process. It became easier for them to determine loan amount based on the production activities in the commodity profile.

In mainstreaming AMF, there are several pointers that have to be strictly observed.  Agricultural production should be treated as a separate economic activity that requires a specific loan product. Agribusiness or enterprises that are not directly related to the production process like trading, provision of inputs and the like should be categorized under enterprise or business loan and not as part of AMF. Portfolio management should prescribe percentage allocated for AMF, taking into consideration the suitability of the area to agriculture (irrigated or not), the frequency of natural calamities and other factors.

Cambodia MFIs: At the forefront of agricultural finance

The government of Cambodia is in full-swing mobilizing resources to upgrade the country’s infrastructure in support of agricultural development. Roads, ports, irrigation and other support facilities are fast-tracked to reach the target of making Cambodia one of the main rice-exporting countries in the region, in the league with neighboring Thailand and Vietnam. Resources for these upgrading projects are sourced from a mix of loans from bilateral and multilateral agencies and from private investments.

In the absence of a massive government financing program for agriculture, resources for the production phase remains with the informal moneylenders and the microfinance institutions. For small farmers, these two sources are the most accessible and relevant to their needs. Of the 32 MFIs licensed by the National Bank of Cambodia (NBC), almost half has loan products for agricultural production. It is estimated that more than half of the $732 million outstanding loan portfolio of the microfinance industry is invested in agricultural production and other agriculture-related economic activities, benefitting 1.1 million clients nationwide.

The MFIs have also started re-designing their loan products. Most are still having the traditional group or individual loans, but some have already fine-tuned their products, infusing features that fit to the needs of the farmers. In a project funded by European Union (EU) and the Agence Francais de Developpement (AFD), MFIs are assisted to develop agricultural-microfinance (AMF) loan product. The loan product will specifically be used for agricultural production and agriculture-related economic activities.

The contribution of the MFIs in the development of agriculture is also part of the poverty reduction goals of these institutions. While most MFIs started as non-government organizations and projects of development agencies, social mission is considered as the ultimate mandate even as commercial investors are gradually becoming the main source of funds.

The situation in Cambodia where the private sector is the main providers of funds is better compared to other countries where the government is heavily involved through special government-owned banks. With a subsidized lending program, inefficiencies are shouldered by the taxpayers and also developed dependency among the farmers.