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Decision and Policy Analysis Research Area – DAPA

Advances in market linkages in Laos

Farmers from Laos

The agricultural sector in Laos has changed dramatically over the past decade. A relatively short time ago subsistence-based farming dominated, especially in the uplands, but recently commercial farming has been making in-roads in rural Laos.

These developments have not been uniform across the country. Many of the major cash cropping areas are in the lowlands or in relatively accessible villages in the uplands. Moreover, only the relatively better-off households were able to engage in commercial agriculture as they could afford the initial investments of labour and capital and as well as the risks associated with the unknowns of commercial production. As a result, commercial agriculture is less common in the uplands, especially the less accessible areas, as farmers lack the confidence, experience, and entry points to successfully access markets.

Since 2003, the Ministry of Agriculture (MAF), at the national, provincial, and district levels, has been involved in the implementation of a project on Sustainable Agricultural-market Development in the Uplands of the Lao PDR, better known as the SADU project. The primary focus has been to develop processes, procedures and lessons for improving market chain efficiency that benefit small upland farmers.

SADU is funded by the Swiss Agency for Development and Cooperation (SDC), and is implemented by the International Centre for Tropical Agriculture (CIAT) in a research-for-development partnership with agencies within MAF. Key MAF partners at the national level are the Agriculture and Forestry Policy Research Centre (AFPRC) of the National Agriculture and Forestry Research Institute (NAFRI) and the National Agriculture and Forestry Extension Service (NAFES). The project has operated in three phases and has undertaken a variety of activities to link farmers to markets, build the capacity of agricultural officers within the Provincial and District Agriculture and Forestry Offices and generally develop a better understanding of value chains, how they work, and how they can be made to work better especially for the poor.

The Development Goal of the current phase of SADU, which has operated for three years in Lao PDR, is “To improve livelihoods of marginalized smallholder farming households, especially ethnic minority groups, women and the poor, in upland areas of Northern Laos through increased market chain efficiency”.

SADU has implemented field activities across a number of districts in Xieng Khouang and Luang Prabang Provinces. The project has engaged a broad variety of market chains since 2003 and during the last three year phase has successfully linked over 2,000 upland farming households to various markets including livestock, chicken, coffee, chili and vegetables. Moreover it assisted Provincial governments in piloting new trade-friendly policies and established a network of community-based animal health service providers that function on a commercial basis.

Mr. Nalongsack Xayalath, Senior research Assistant, CIAT
‘SADU advised the Provincial and District authorities to reduce some trade restrictions, resulting in tremendous opportunities for farmers to benefit from trading their produce. In this sense we hold high hopes for the cooperatives that now are being established for example in Khoune district in Xieng Khouang, where 200 women organized themselves around vegetable production and marketing.’

Great attention has been paid to gender equity and involvement of poor and ethnic households. Increases in income at the household level have been as high as five-fold. Half of the beneficiaries are of ethnic origin and 400 are women.

Dr. Liliane Ortega, Deputy Director SDC in Lao PDR
‘For SDC it was important to showcase that rural women are very well able to engage in agricultural markets if the conditions allow them to do so. Other projects or programs should continue supporting rural women, through informal interest groups and formalized farmers associations.’

Success has not gone unnoticed. The Xieng Khouang Provincial Agricultural Office stressed their intention to extend the SADU methodology to the entire province. Moreover, many other development projects already use the SADU approach to facilitate market access for farmers and the methodology is part of the curriculum at the Luang Prabang Agricultural College. Much of the extension of the approaches has been through highly effective Learning Alliances involving government staff, development projects, and INGOs.

“Since we learned about coffee markets and better coffee prices obtained by farmers in Champasak, and with the help from Khoun District Agricultural and Forestry staffs we use this market information and decided to form coffee groups and sell our products collectively. Our profit has increased 4-5 times as compared with profits before. Now we can send our children to school and provide health care to our families. Thanks to the joint efforts. We process the coffee as a group and started selling our coffee under our own brand. This is only the beginning of realizing our dreams.” (coffee farmer and member of the coffee production group in Keow Set village cluster, Khoune District, Xieng Khouang Province) coffee case study

“The provincial authorities created a more convenient business environment for cattle traders by removing the various check points, saving us time and money. Now cattle farmers also benefit because we can pay them better prices, it is a pro-poor intervention!” (cattle trader, Paek District, Xieng Khouang Province) SADU progress in XK_VS_Eng

The farmers and traders participating in the SADU project not only enjoy increasing demand for their products, they also express their concerns about increasing competition by foreign traders, and of Chinese companies producing similar products on a concessional basis and so out-competing Lao farmers for the same markets. If Lao farmers and traders are not supported with access to technical support and investment finance they will not be able to benefit from improved market opportunities and access.

As SADU comes to an end in August 2012, the implementing organisations have organized a national level workshop to extract and share the lessons learned. The workshop was held on the 5th and 6th of July with 80 participants from International, National, Provincial and District level organisations.

The aim of the workshop was to share lessons from the three phases of SADU, implemented over nine years, will include other experiences from the Lao PDR and elsewhere and will develop recommendations for future support to farmers.

The results of the workshop will tie directly into new initiatives like the Think Tank on Agricultural Research for Development hosted at NAFRI, and other projects in the field of commercial agriculture and promoting market access for smallholder farmers.

In his opening speech to the workshop, Associate Professor, Dr. Linkham Douangsavanh, Deputy Director of NAFRI stated that:
‘Commercialisation of the small farming sector in order to improve rural livelihoods, reduce poverty and improve food security, is one of the most important policy strategies of the Ministry of Agriculture and Forestry. For the Agricultural and Forestry Policy Research Centre it was very important to be able to provide the Ministry with evidence based policy advice. SADU was a perfect learning ground and we took many findings back to the ministry in order to improve policies in the benefit of Lao farmers.’

Stay tuned for further results from the workshop including a final report.

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