June 2014 | Issue 58 Lao PDR | Agriculture/Partnership

• ThenaturalresourcesoftheLaoPeople’sDemocraticRepublic(LaoPDR),alreadystrainedbyaweakagricultureandnaturalresourcemanagementframework,facedaddedpressurefromtheriseinforeignagricultureinvestmentsandunsustainablefarmingpractices.

• TheGovernmentoftheLaoPDR,privatesector,andlocalcommunitiespartneredtogether—withassistancefromtheAsianDevelopmentBankandtheInternationalFundforAgricultureDevelopment—toprotectthecountry’snaturalresources,increasefarmerincomes,andenhanceagriculturalproductivity.

• Thesuccessofthesepublic–private–communitypartnerships,asinitiallyimplementedin5pilotsites,hasspawned71moresubprojects,nowbenefitting230,000householdsin1,895villagesin42districtsintheLaoPDR.

Partnership Increases Productivity and Profits in the Lao PDR

BACKGROUND

TheLaoPeople’sDemocraticRepublic(LaoPDR)isalandlockedcountryblessedwithabundantnaturalresources.Yet,asof2012,roughlyathirdofits6.5millionpopulacelivesbelowtheinternationalpovertyline.1

Indigenouspeoplecompriseasignificantportionofthoselivinginuplandareastothenorthandsouthofthecountry.Theyforgetheirlivelihoodsfromextremelysmall-scalefarmingandlivestockproductionthatarehighlydependentonforestandwaterresources.Withvirtuallynoaccesstofinancingtopurchaseinputs,nomachineriestoscaleupproduction,andnomarketorientationtomatchdemandandsupplyofproduce,thesefarmersfacethedailyrealitiesofsubsistencefarming.

Therecentyearshavebroughtinmorethreatstotheirsurvival.Heavyforeigninvestmentsontradesreliantonagricultureandnaturalresources—suchasrubber,sugar,andotheragriculturalcommodities—meantlopsidedcompetitionfrombiggerplayers.UnsustainabletraditionalfarmingpracticesmeantstrainingfurthertheLaoPDR’salreadystrainednaturalresources.Theweakinstitutionalandlegalframeworkforsustainableandequitablemanagementofagricultureandnaturalresourcesaggravatedmatters.APPROACH

Transforming the Agriculture Sector. In2009,theGovernmentoftheLaoPDRandtheAsianDevelopmentBank(ADB)initiatedtheSustainableNaturalResourceManagementandProductivityEnhancementProject(SNRMPEP)totransformthecountry’sagriculturesectorintoamorediversified,commerciallyorientedandenvironmentallysustainablesector.TheprojectaimedtoprotecttheLaoPDR’snaturalresources,enhancethecapacityofthestateanditsprovincestodoso,andincreasefarmerincomesandagriculturalproductivity.Itwasimplementedin19districts—12ofwhichareverypoorand7poor—in5provincesintheLaoPDR.Itcovered1,044villageswithatotalhouseholdpopulationreaching56,000.

Win-Win Partnership.Public–private–communitypartnership(PPCP)wastheprincipalstrategyadoptedbytheprojecttoencouragegrassrootstosetupfarmerproductiongroupsintheLaoPDR.Itsoverallgoalsweretoreducepovertyandcontributetoeconomicdevelopment.2

EachpartnerinthePPCPtookitsroleseriously.Thegovernment—comprisingentitiesfromthevillageuptotheprovinciallevels—setupregulationsforsustainabilityandequitabledistributionand

providedtaxbreakstoenticetheprivatesector.Keyplayerswerethevillagedevelopmentcommittees(VDCs),provincialvice-governorsanddistrictgovernors,theDistrictAgricultureandForestryOffice(DAFO)anditsprovincialcounterpart(PAFO),andotherlinedepartments.

Theprivatesector—comprisinglocalentrepreneurs—promotedcommercializationbybuildingthesupplychainfromrawmaterialstofinalproducts.

Finally,thefarmercommunitiesbandedtogethertoproduceasingleproduct,therebyincreasingproductionefficiencies.

Pilot Implementation. ThePPCPwaspilotedinfiveareas—Attapeu,Champasak,Salavanh,Savanakhet,andSekong.Theprojectassistedthesepilotareastosetupfarmerproductiongroupsandprovidedeachgroupwiththeirrespectiverevolvingfunds,rawmaterials,technicalsupport,andsupportforinfrastructuredevelopment.Eachgroupfocusedonasingleproduct.

ThepilotinAttapeuworkedonriceandlivestock,thepilotinChampasakfocusedoncashewproduction,andthepilotinSalavanhcultivatedBongtrees.Meanwhile,thefarmergroupsinSavanakhetandSekongzeroedinonuplandagricultureandricecultivation,respectively.

___________________1ADB.2012.Asian Development Bank and the Lao People’s Democratic Republic Fact Sheet.www.adb.org/sites/default/files/pub/2014/LAO.pdf2Vansy,Vinoth.2013.PPCP Model for Poverty Reduction & Commercialization of Agriculture in the Lao PDR.LaoPDR.

Photo:SNRMPEPAfarmergroupinSavanakhetdiscussestheirprojectundertheSNRMPEP.

HighlightsKnowledge Showcases

©AsianDevelopmentBank PublicationStockNo.ARM146630-2

KNOWLEDGE CONTRIBUTORS

TheKnowledgeShowcasesSeries,aproductoftheKnowledgeSharingandServicesCenter,highlightsgoodpracticesandinnovativeideasfromADBtechnicalassistanceandotheroperationstopromotefurtherdiscussionandresearch.

www.adb.org/knowledgeshowcaseswww.adbknowledgeshowcases.org

TheAsianDevelopmentBank(ADB)isdedicatedtoreducingpovertyintheAsiaandPacificregion.

Theviewsexpressedinthispublicationarethoseoftheauthor(s)anddonotnecessarilyreflecttheviewsandpoliciesofADBoritsBoardofGovernorsorthegovernmentstheyrepresent.

VinothVansy(snmapep5@gmail.com)isthenationalprojectdirectoroftheSNRMPEP.HeisbasedintheLaoPDR.

Theprivatesectorentitiesagreedtobuybackinadvancesomeofthefarmers’produce.Thegovernmentprovidedtrainingandfacilitatedexposurevisitssothatfarmerscanappreciateandunderstandsustainablefarmingpractices.

The Partnership at Work.InAttapeu,farmersbandedtogetherintosevenproductiongroupstoproduceauniformtypeofrice.Aprivatecompany—SomphonexayAgricultureDevelopmentCompany—agreedtobuytheirproduceat2,500kipperkilogram,andalsoprovidedon-the-jobtrainingcoursestofarmers.Afteronecroppingseason,productivityincreasedfrom2tonsto5tonsperhectare.Netincomefrom1hectareofricereachedmorethan9millionkip,whilefarmerinputcostwasonlyat2.9millionkip.

ThepilotprojectinSavanakhetintroducedcroprotationbyinitiatingpeanutplantingduringdryseasonandriceplantingduringthewetseason.Farmerswerealsotaughtnaturalsoilfertilitymanagement.Asaresult,in2012,incomesperfamilyincreasedfrom2millionkipto13millionkipperhectare.Inaddition,thefarmerssignedanagreementwithlocalcompaniesforpeanuttrading.Duetocroprotation,riceproductivityalsoincreasedfrom2.4tonsto5tonsperhectare.Theotherthreepilotprojectsalsoreportedincreasedincomesfortheparticipatinghouseholds.

Building the Government’s Capability.TopreparethegovernmentforitscriticalroleinthePPCP,theprojectalsodeliveredtrainingcoursestoassistthevillage,district,andprovincialgovernmententitiestoformulateandenactpoliciesforeffectiveagricultureandnaturalresourcesmanagement.Thesecoursesfocusedonlandsuitabilityassessmentandparticipatorylandusemapping,compliancewithADB’ssocialandenvironmentalsafeguardsandsocialandgenderdevelopmentaspects,investmentappraisal,producerassociationsustainability,andpolicydevelopment.

RESULTS

Thesuccessofthepilotprojectsspawned71moresubprojectsthataimedtoreplicatetheirsuccess.Community-basedandnongovernmentorganizations,lineagencies,existingruraldevelopmentprojectsandruralbusinesspersonsengagedinagriculturaldevelopmentansweredthegovernment’scallforsubprojectsthatcanscaleupthepilotprojectsimplemented,andwhichwillfocusonthreecategories—povertyreduction,commercializationofagriculture,andnaturalresourcemanagement.

Replication. In2012,33subprojectsonpovertyreductionwerelaunchedintheprovincesofAttapeu,Champasak,Salavanh,Savanakhet,andSekong.Ittargeted189,000poorandverypoorhouseholds.Thirtysubprojectsonagriculturewereinitiatedin724villages,benefitting76,000households.Another8projectsonsustainablenaturalresourcemanagementwereimplementedin83villagesin2012,whichbenefitted6,000households.All71subprojectscurrentlyengageandbenefit230,000householdsin1,895villagesin42districtsintheLaoPDR.3

Ownership and Partnership.ThepilotprojectsandthesubsequentrolloutofsubprojectsundertheSNRMPEPpromotedthevalueofownershipandpartnershipamongthegrassroots,privatesector,andthegovernment.This,inturn,hasimprovedfarmingandnaturalresourcemanagementpractices,aswellasincomesintheLaoPDR.ThecapacitybuildingactivitiesfortheVDC,PAFO,DAFO,andthevillagesenhancedthegovernment’scapacitytoprotectitsownnaturalresources,andhasenabledthesegroupstodeveloptheirownplansandvisionsforsustainability.Theprojecthasalsoempoweredfarmergroupstobandtogetherasasetofproducerswhichrallyaroundasingleproduct,usingimprovedandsustainablefarmingpractices.Theprojectalsosupportedtheprivatesectorinexpandingitsownsupplybylinkingthemupwiththefarmergroups.

Thewaytheprojecthasenhancedeachofthesesectors'capacityhasallowedthemnotonlytovaluetheirowntasksandbusinesses,buttheirnaturalresourcesaswell.Bybandingtogetherforawin-winpartnership,eachpartnergrewstrongerthroughincreasedcapacities,efficiency,andincomes.

Related Link• ADB.2009.ADB,JapantoHelptheLaoPDRStrengthenNaturalResourcesManagement.Newsrelease.24February.www.adb.org/news/adb-japan-help-lao-pdr-strengthen-natural-resources-management

Photo:SNRMPEPAfarmerraisesnativechickensinSekongProvince.

HidefumiMarashita(hmurashita@adb.org)isawaterresourcespecialistinADB'sSoutheastAsiaDepartment.HeistheprojectofficeroftheSustainableNaturalResourcesManagementandProductivityEnhancementProjectintheLaoPDR.

___________________3GovernmentofLao,PDR,MinistryofAgricultureandForestry,andDepartmentofPlanning.2012.Subproject Launch. www.snrmpep.gov.la/index.php/en/component/content/article/78-subproject/72-sub-project-launch