based producer and marketing organizations in rural areas. Such organizational development is a process that will take time and will require careful facilitation. Rural- based farmer organizations are expected to evolve, from “learning groups” or “clubs” to 'informal producer groups' to more formalized “pre-cooperatives'' and eventually to legally recognized full “cooperatives'' and “associations”, with capacity- building happening all along the way. With the measures of the Master Plan, MAF will support the creation of strong and independent organizations of smallholder farmers among others by appropriate measures of value chain governance so that farmer organizations and local SME can retain a fair share of the value added. In a facilitating role, MAF will support to the initiation of producer groups and their legal formalization, and proved training and assistance in the self-determined formulation of production cluster and value chain upgrading strategies (medium to long term) and annual work plans, including identification of market niches, local and regional branding and quality certification, monitoring and corrective action follow-up. The key principles used to strengthen farmer groups can be highlighted as follows:
Key principles for smallholder farmer organizations
• Self-determined and clearly defined rules for voluntary membership (defining rights, benefits and obligations of individual members), cost- covering membership fees, services proved to members, internal sanctions, geographical boundaries, external relations to other actors of the value chain and for the acquisition of external support
• The right of members to devise their own rules is respected by external authorities. Individuals affected by these rules can participate in modifying the rules.
• Self-determined formulation of value chain upgrading strategies (medium to long term) and annual work plans, including identification of market niches, local and regional branding and quality certification, monitoring and corrective action follow-up.
• The implementation of upgrading strategies is the responsibility of the farmer organization. However, external support will be provided by technical and management training, market information, product and certification standards, etc.
• A system for self-monitoring members’ behaviour, the performance of the group and the performance of the value chain in general has been established.
• Group members have access to low-cost conflict-resolution mechanisms.
• Internal governance activities of the groups referring to, e.g. fraud, specifications, monitoring and sanctioning, conflict resolution, and other administrative activities are organized inside the group.
• MAF and other authorities will support farmer organizations and all other actors of value chains by appropriate measures of value chain
governance so that farmer organizations and local SME can retain a fair share of the value added.
• In all other aspects, the regulatory role of government is limited to that of an “honest broker”, i.e. facilitation, or stimulating discussion among farmer group members and with other key stakeholders. Authorities will not influence the decision making processes, applying the principles of democracy and transparency
MAF: Agricultural Master Plan 2015
Final Draft, 15th September 2010
- 15 -
2.3.
Objectives, outcome, and targets
44. Objectives:• MAF supports the instantiation and legalization of smallholder farmer organizations and engage in a network of PPPs that will facilitate the integration of smallholder farmers and their organizations into domestic, regional, and global “pro-poor and green value chains”.
• MAF will ensure by appropriate measures of value chain governance that smallholder farmers and local SME can retain a fair share of the value added. • MAF will provide an appropriate regulatory framework, monitoring
instruments and a set of effective sanctions to ensure that commercial agriculture and processing will have no negative impacts on the natural environment, human health or other aspects of national interests. Potential outcome:
Upstream domestic producers and processors, in particular smallholder farmers and rural SME, will benefit over-proportionally by their integration into “pro-poor and green value chains”, while maintaining the long term production potential of their natural resources, in particular their agricultural land.
45. The key sector targets associated with Program 2 are:
Agriculture and forestry sector product exports represent 1/3 of the total Lao PDR exports.
The value of agriculture and forestry exports represents at least 3.0 billion USD. Establishment of smallholder producer groups, cooperatives and associations in
all priority value chains
Mobilization of substantial investments from the private sector
46. The commodity production program aims to increase the agriculture and forestry sec- tor’s share of exports to more than 30 percent of export value (or approximately US$3,000 million by 2015). The targets above will be primarily in response to market- pull from increased demand from domestic consumers, neighbour countries and East Asian regional markets during the period 2011-2015. Targets will be met through agricultural diversification among smallholder farmers and farmer organizations who engage in contract farming with small-, medium-, and large-scale agro-enterprises. 47. Smallholder farmers will be assisted in the creation and operation of voluntary farmer
organizations, which are based on the expressed needs and on the proven value- added for the individual farmer, such as formally legalized producer groups, coopera- tive groups or full cooperatives and commodity associations. To provide both econo- mies of scale and fair terms of trade, these emerging farmer organizations will be supported by technical and management training, credit facilities and other measures in playing a strong role as equal trading partners, linked to regional and global value chains. Farmer organizations, particularly in irrigated areas, and foreign direct investment (FDI) in mega-projects will form PPPs with the Government and ensure that GlobalGAP standards (certified good agricultural practices) are applied for sustainable management of agricultural land, improved rearing techniques for live- stock, and food safety.
48. Through the promotion of large-scale investments, production targets are expected to be exceeded with surpluses making available potentially one million tons for export. However, additional investments in irrigation (link to Program 5), rural market access roads, and other high-cost rural infrastructure (link to Program 6, e.g., markets, trade zones, drying pads, and storage, processing, handling, and cooling facilities)
MAF: Agricultural Master Plan 2015
Final Draft, 15th September 2010
- 16 -
will be linked to “Smart Agriculture”, which will be further developed into an opera- tional concept for the Lao context. The concept is about successfully linking the desired investments of the private sector to a set of social and ecological conditionali- ties to ensure that not only the investors themselves but Lao society and rural small- holders benefit from such investments (see Glossary).
The preliminary concept of “Smart Agriculture” implies the following operational elements, which need to be further discussed and elaborated. Among others, it is suggested that:
• The development and/or rehabilitation of irrigation systems will be determined by the commitment of each community to participate in the development and
rehabilitation of each system. Both specific crops and markets need to be
identified prior to any investment in irrigation improvement. DOI will demonstrate how each investment is will be managed, comply with social and environmental standards and contribute to food security, commodity production, and value- added export of food and agricultural products.
• The foundation and operation of farmer organizations will be only supported when their production is linked to specific pre-identified markets.
• In areas of intensive production of food security linked crops (rice in food deficit areas) and high-value cash crops for export (e.g., Bolovens Plateaux), district agriculture and forestry officials will prepare cropping calendars that will
systematize planting on a rotational basis so as not to flood markets with one crop and causing local prices to fall. Cropping calendars will be adjusted to specific markets.
• Since communities in remote areas often do not have the financial resources to use advanced agricultural techniques and agricultural chemicals, organic agriculture (OA), which requires not using agricultural chemicals, should be introduced on a selective basis; to interested communities; and, where a value chain can be organized to ensure access to markets for organic products. • Contract farming (CF) will be introduced to some existing agricultural land
concessions, where communities and private investors can agree on
arrangements for a systematic and continuous supply of high quality products for processing. These arrangements are subject to Government approval, tied to a set of social and environmental conditions. Their implementation will be closely monitored by Government authorities for compliance with these conditions and with fair terms of trade for all parties.
2.4.
Priority measures and sequence of actions
49. Program 2 (commodity production) is the core element for achieving Goal 2