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2. Program 2: Commodity production and Farmer Organizations
2.1.
Situation analysis
36. Seasonal or annual crops and permanent crops account for only a minor part of the total agricultural output (9 and 8 percent respectively), highlighting the predominant role of rice and subsistence farming in the agricultural economy. Agricultural productivity is low due to inefficient practices, low input use, and little farm mechanization. The low intensity and low productivity of agriculture is attributed to several factors, namely:
• Rural household risk aversion livelihood strategies; • Limited number of input suppliers;
• The lack of information concerning input use due to the absence of viable extension;
• Inadequate working capital and access to credit and other financial services; and,
• Limited access to markets due to physical barriers created by poor roads, high transport costs, poor logistics, and a marketing system where a limited number of traders tend to dominate market transactions constraining downstream movement to the next links in the marketing chain.
37. The current rapid expansion of contract farming and plantation- and concession- based agricultural development in Lao PDR is, with the exception of coffee, largely foreign-driven: mainly by investors from neighbouring countries, but also including investors from Japan, Korea, and Europe. Although the lowland areas have been the principal target of investment to date, expansion into upland areas, such as the Bolovens Plateaux in Champasack Province and the Plain of Jars in Xieng Khouang Province, also is increasing.3
38. In addition, changes in dietary patterns of regional consumers resulting from increased incomes and urbanization, is causing demand for meat products to grow 3.5 to 4.0 percent annually, which will lead to expanded livestock production in the region. Increased cross-border livestock trade requires greater control of transboundary animal diseases (TADs) and invasive species. This will be accompanied by higher prices for feed grains, energy, and labour costs that will require producers to improve productivity and competitiveness.
39. In international agri-food trade, consumers, retailers, processors, and exporters are demanding higher levels of food safety requirements, resulting in the formulation of food safety measures by importing countries and creation of private food safety standards. Since consumers in many food importing and developed countries are purchasing greater volumes of processed food, they are increasingly demanding quality assurance, traceability, transparency, and accountability of food supplies. Trade in food and agricultural products increasingly reflect food safety measures such as GLOBAL-GAP and ASEAN-GAP, which assure traceability from 'farm to fork' or producer to consumer. Global trade also is increasingly dependent on logistics linked to information and communications technology (ICT). In addition, ethical consumerism is rising, where people purchase healthier, greener, and more social- friendly products that require certification and labelling.
40. Lao Rural women play vital roles as farmers and agro-processors, raisers of small
3
This trend brings opportunities, but also new challenges, see: World Bank (2010 b “In the light of the deficiencies“ „investments“ .„failed to live up to expectations and“ „left local people worse off than they would have been without the investments.” p 51); see also Dwyer, M. (2007), Kenney-Lazar, M. (2010), IISD (2008), BBC (2010)
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livestock, harvesters of NTFPs, producers of handicrafts and of other non-farm products and as traders. Modernization of agricultural production, processing and marketing bares the risk of marginalizing rural women, since it is related to more capital and knowledge intensive modes of production. Access to capital / credit and to market information, however, are areas in which Lao women remain to be disadvantaged. Strong and pro-active action will therefore be undertaken by MAF to ensure women’s participating in market-oriented commodity production on an even footing with men.
41. Despite a number of challenges, the volume and value of food, agricultural and forestry products being exported from Lao PDR are expected to continue to increase over the short, medium, and long-term, with international and notably regional markets becoming more important. Governments in the region have joined together to organize political-economic, trade, and development groupings to facilitate regionalization mechanisms that capitalize on cross-border comparative advantage and mobilize synergies, while aiming to narrow the development gap among states and reduce poverty and socio-economic disparities in the region. The ASEAN Free Trade Area (AFTA) that became effective in January 2010 allows trade among most ASEAN countries at a zero tax rate.4 Given the customary political and economic sensitivity to unhindered flows of food and agricultural products across sub-regional national borders, non-tariff barriers to trade (NTB) may emerge and be imposed more rigorously. NTBs could include SPS measures, new technical requirements, labelling, standards, and testing.
2.2.
Key areas to be addressed
42. Within the framework of the Agricultural Development Strategy 2020 (ADS), the following commodity production issues are addressed by the present Agricultural Master Plan 2015 (AMP):
- MAF will build Public-Private Partnerships (PPP) with farmer organizations and private enterprises as well as with interested governments to leverage funds with agribusiness and private enterprises, communities, and interested governments, to promote more intensive production and the value-added processing of products at the local level. PPPs, particularly with large-scale enterprises and foreign direct investment in mega-projects, will aim to im- prove the effectiveness of irrigation systems. Farmer organizations are seen as key partners in the strengthening of smallholder farmer capacity for irri- gated agricultural production.
- In cooperation with the MOIC, MAF will support more efficient cross-border, regional and global value chains through dialogue with small, medium, and large-scale agribusiness and farmer organizations. MAF will support the up- grading of market infrastructure, modernization of trade procedures, and im- provement of logistics for cross-border and regional trade.
- MAF will mobilize human and capital resources to improve the quality and competitiveness of agri-food products. Promotion, dissemination, and adop- tion of GAP at the field level will be a high priority linked to expansion of agri- cultural markets beyond neighbouring countries; with GAP harmonized at the regional level and with major trading partners. Regional cooperation is nec- essary to harmonize sanitary and phytosanitary (SPS) measures. Public- private partnerships will be developed to accelerate accreditation of individual Lao professionals and qualified Lao organizations to provide certification of food and agricultural products for export.
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43. Policy framework: MAF will set the policy framework for line agencies to facilitate