Partnership Increases Productivity and Profits in the Lao PDR
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June 2014 | Issue 58 Lao PDR | Agriculture/Partnership • The natural resources of the Lao People’s Democratic Republic (Lao PDR), already strained by a weak agriculture and natural resource management framework, faced added pressure from the rise in foreign agriculture investments and unsustainable farming practices. • The Government of the Lao PDR, private sector, and local communities partnered together—with assistance from the Asian Development Bank and the International Fund for Agriculture Development—to protect the country’s natural resources, increase farmer incomes, and enhance agricultural productivity. • The success of these public–private–community partnerships, as initially implemented in 5 pilot sites, has spawned 71 more subprojects, now benefitting 230,000 households in 1,895 villages in 42 districts in the Lao PDR. Partnership Increases Productivity and Profits in the Lao PDR BACKGROUND The Lao People’s Democratic Republic (Lao PDR) is a landlocked country blessed with abundant natural resources. Yet, as of 2012, roughly a third of its 6.5 million populace lives below the international poverty line. 1 Indigenous people comprise a significant portion of those living in upland areas to the north and south of the country. They forge their livelihoods from extremely small-scale farming and livestock production that are highly dependent on forest and water resources. With virtually no access to financing to purchase inputs, no machineries to scale up production, and no market orientation to match demand and supply of produce, these farmers face the daily realities of subsistence farming. The recent years have brought in more threats to their survival. Heavy foreign investments on trades reliant on agriculture and natural resources—such as rubber, sugar, and other agricultural commodities—meant lopsided competition from bigger players. Unsustainable traditional farming practices meant straining further the Lao PDR’s already strained natural resources. The weak institutional and legal framework for sustainable and equitable management of agriculture and natural resources aggravated matters. APPROACH Transforming the Agriculture Sector. In 2009, the Government of the Lao PDR and the Asian Development Bank (ADB) initiated the Sustainable Natural Resource Management and Productivity Enhancement Project (SNRMPEP) to transform the country’s agriculture sector into a more diversified, commercially oriented and environmentally sustainable sector. The project aimed to protect the Lao PDR’s natural resources, enhance the capacity of the state and its provinces to do so, and increase farmer incomes and agricultural productivity. It was implemented in 19 districts—12 of which are very poor and 7 poor—in 5 provinces in the Lao PDR. It covered 1,044 villages with a total household population reaching 56,000. Win-Win Partnership. Public–private–community partnership (PPCP) was the principal strategy adopted by the project to encourage grassroots to set up farmer production groups in the Lao PDR. Its overall goals were to reduce poverty and contribute to economic development. 2 Each partner in the PPCP took its role seriously. The government— comprising entities from the village up to the provincial levels—set up regulations for sustainability and equitable distribution and provided tax breaks to entice the private sector. Key players were the village development committees (VDCs), provincial vice- governors and district governors, the District Agriculture and Forestry Office (DAFO) and its provincial counterpart (PAFO), and other line departments. The private sector—comprising local entrepreneurs—promoted commercialization by building the supply chain from raw materials to final products. Finally, the farmer communities banded together to produce a single product, thereby increasing production efficiencies. Pilot Implementation. The PPCP was piloted in five areas— Attapeu, Champasak, Salavanh, Savanakhet, and Sekong. The project assisted these pilot areas to set up farmer production groups and provided each group with their respective revolving funds, raw materials, technical support, and support for infrastructure development. Each group focused on a single product. The pilot in Attapeu worked on rice and livestock, the pilot in Champasak focused on cashew production, and the pilot in Salavanh cultivated Bong trees. Meanwhile, the farmer groups in Savanakhet and Sekong zeroed in on upland agriculture and rice cultivation, respectively. ___________________ 1 ADB. 2012. Asian Development Bank and the Lao People’s Democratic Republic Fact Sheet. www.adb.org/sites/default/files/pub/2014/LAO.pdf 2 Vansy, Vinoth. 2013. PPCP Model for Poverty Reduction & Commercialization of Agriculture in the Lao PDR. Lao PDR. Photo: SNRMPEP A farmer group in Savanakhet discusses their project under the SNRMPEP. Highlights Knowledge Showcases
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In Lao PDR, farmers banded together into production groups rallying around specific homegrown products. Through the support of ADB, the government, and private sector, their productivity improved and their incomes grew, encouraging more groups in the country to replicate their success.
Transcript of Partnership Increases Productivity and Profits in the Lao PDR
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([email protected])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([email protected])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
