Investment Forum

for Food Security

in Asia and the Pacific :
Lao PDR Case
Ministry of Agriculture and Forestry, Lao PDR
Asian Development Bank
Manila, Philippines <<>> 7-9 July 2010
Land-linked
advantages
 The Situation
 Laos has achieved basic self-sufficiency in Year 2000 (350
kgs/cap/yr) but productivity is still low and deficiency is
chronic in the Uplands ( 2/3 of Laos )… However from a
nutritional standpoint very much deficient …
 At the national level, approximately 270,000 or 37% of children
under 5 (CU5) remain underweight and over the past ten years,
this rate has not declined. Chronic malnutrition remains the
biggest problem with nearly 300,000 or 40% of CU5 stunted.
There is a sharp increase in stunting and underweight between
6 and 24 months.
 Food security and diversification : 23% of the population is
undernourished. The most significant constraint to the
availability of food in Laos is the low level of domestic
production of food items. The low level production is mainly the
result of low levels of productivity and high risks in the
agricultural sector.
 ANR Sector : Future Outlook
Plan VII : 2011-2015 – ANR sector will perform over 4% of
annual growth (overal GDP growth > 8%)
1- Food security and rice reserve put at 350 kgs/cap/yr for
rice and 50-60 kg/cap/ yr for protein… foresee excess up to
1 million tons min…no more significant rice and food
deficit in Laos in 2015…rice reserve 60 to 120.000 tons and
rice seed reserve over 10.000 tons…( now working on a
rice reserve of 30.000 tons )
2- Promote value chains, incl. in uplands ( take advantage of
New Asean Charter & Economic-Social Pillars; Regional
Economic Integration; Dynamic East Asia Economy esp.
about PP&PP…) – reach rural poor areas…increase income
3- New employment opportunities for the upland and remote
rural poor – no more Shifting Cultivation
4- Forest cover up to 65% : REDD+ & climate change
 Challenges and
opportunities to achieving
food security
 Multiple path exist for achieving food security
 High diversity of existing rural
land use systems Agroforestry

 Aim for family-based food

security
 Aim for community-based food
security
 National food security derived
from an integrated food supply Shifting 
chain analysis cultivation

 Analysis => awareness of

strengths and opportunities
 Analysis => investments to
overcome weaknesses and
threats
 Food security is more than rice :
increased commodity & trade = Mixed   
farming
increased income & safety nets
 Enabling Environment for Sector
Development, Cooperation & Agribusiness
1-Endowment in Natural Resources ( land, water resources -
forests ) – Clean environment : Government policies for Food
Security, Clean Agriculture & Commercialization of
Biodiversity…Strength !
2-Part of Asean..Asean + 3.. Dynamic Regional Economic
Integration.. Different forms of economic cooperation :
Provide Impetus to cooperation, investment & Agribusiness
3-Well established Round Table Meeting Processes : 8 Working
Groups..Harmonization in cooperation & investments…
4-Legal support and Investment Incentives : Emerging Lao
Private Agri-Businesses & Increased FDI in Agri-businesses :
Success Stories
5-Land-linked & Increased Connectivity…Respond to regional
food & commodity needs…
 Existing opportunities
 Regional (GMS) comparative advantage factors:
 Ability to produce natural and organic products…
 Land available for smallholder farmers and intensive / plantation-style
mega-projects
 Availability of NTFPs and other niche products for niche markets (natural
& domesticated species, indigeneous species). Lao PDR has more than
3000 Varieties of rice !
 Lao commodities are in high demand in regional markets:
 Field crops: maize, cassava, peanuts, soybeans, sesame, etc.
 Tree crops: rubber, Eucalyptus, teak, agar wood, etc.
 Horticulture crops: coffee, tea, vegetables, fruit
 Industrial crops: Jatropha, sugar cane
 Specialty crops: NTFPs
 Livestock: cattle for meat; buffalo for hides; pigs / chickens as natural /
wild products.
 ASEAN development gap:
 CLMV vs. advanced ASEAN (Brunei, Indonesia, Malaysia, Philippines,
Singapore, Thailand) – allow for complementarities…
Regional
Economic
Integration :
Opportunity for the
Lao PDR :
Turn land-linked
transport corridors into
economic corridors :
increase in land-based
investments Rice

(concessions, contract Rubber

farming.. ) to produce &

Vegetables
supply food & ANR
goods to the Region & Maize
9
World NTFP
 Partnerships for
Food Security and
ANR sector development
 Imperatives of Regional Integration
1- Continued investments : PIP, ODA but focus on FDI… need new
policies, regulations and incentives , e.g. land lease policies like
leasing irrigated agriculture land, nucleus estates…
2- Institute new cross border links, building a new Asean Economic &
Social Community – transport corridors & economic
corridors…increased connectivity & integration
3- Collective effort in preventing or mitigating on new risks – support
to SPS
4- Sustain Technology Development through increased intra-Asean;
Asean Plus Three & Cooperation with all DPs…lessons learned from
the past : varietal improvement, supply chain dvpt, cattle dvpt, NTFPs
dvpt…( PP & PP )
5- Effective engagement with small holders and larger holders – need to
realize Decrees on Associations & Cooperatives…to promote SMEs
& producers to private businesses partnerships ( key to poverty
eradication)
Future Needs for Public Investment and
Foreign Direct Investment in Agriculture

 Financial investments required to support the

7th NSEDP ( 2011-2015 ) :
 Public investment: 10%
 Community-based / micro-finance: 10%
 ODA: 20%
 FDI: 60%
 Approximately 1 Billion USD needed in
agriculture and forestry sector for the coming
5 years
12
 Public and private investments needs to
be synergized for successful regional and
global integration

 WTO membership = all ASEAN vs. non-WTO = Lao

PDR
 Lao agriculture and forestry need to upgrade its
capacity to meet :
 GAP standards
 SPS standards
 Organic Agriculture standards
 Fair trade standards
 Livestock health standards, etc..
 Path to Food Security
Existing opportunities for Partnerships
and Surplus
in Food and Commodity
Value Chains – for growth, food security
and poverty eradication
 Lao Smallholder agriculture is in transition
Food security based systems

natural forest
housing animal grazing
Low land RICE (1 Up land rice field field
crop/y)
water

Food security based integrated with

commercial agriculture

Upland
rice
Crop Animal Natural
Agro-- forestry Horticulture Rotation grazing Forestr
Low land RICE housing
(veg. fruit tree) y
(2 crop / y)
water
15
 Agri-business : North
 Organic tea to China
 Rubber to China
 Maize to China, Thailand,
Viet Nam
 Soybeans to Thailand
 White sesame to Thailand
 NTFPs to China, Japan,
Korea
Beginning of supply
chains – mostly
unprocessed products or
early stage of processing
- Cross-border trade - major
incentive…
 Agri-business : Central
 Maize to Thailand
 Sugar Cane – complete supply
chains shaping…
 Sweet corn to Europe
 Vegetables to Europe
 Peanuts to Thailand
 Cassava to Thailand
 Black glutinous rice to Europe,
some organic
Agri-business : South –
SME supply chains
 Okra to Japan – supply chain
 Coffee to Hongkong, Europe,
Thailand – supply chain
 Cabbages to Thailand,
Viet Nam
 Bananas to Thailand,
Viet Nam
 Cotton indigo products to
Japan
 Peanuts to Thailand,
Viet Nam
 Cassava to Viet Nam
 Rubber to Viet Nam – supply
chain
 Soybeans to Thailand,
Viet Nam

Success stories
 Coffee
 Dao Heuang (Champasak)
 Sinouk (Champasak)
 Lao Mountain Coffee
 Outspan Coffee (Singapore)
 Vegetables
 Lao Agro Industry (Vientiane  Tree plantations
Province)
 Mme. Inpeng (Champasak)
 Taniyama-Siam (Sekong)
 Textiles
La’ha (cotton indigo)
(Savannakhet)
 Lao Sericulture (Mulberries)
(Xieng Khouang)
 Benzoin
 Agroforex (France) in Huaphan
The Cast of Characters :
 Sugar cane
 Mitr Lao (Thailand) in Savannakhet
 Savan (Thailand) inSavannakhet
 Jatropha
 Kolao (Korea) in Vientiane
Province
 Oji (Japan) in Borikhamxay,
khammouane)
 Birla (India) in Savannakhet
 Sun Paper (China) Savannakhet
 Cassava
 Yetao (China) in Savannakhet
 Henan (China) inSavannnakhet
 Tenghui (China)in Savannakhet
 Hu Phu (Viet Nam) in Salavan
Emerging & Growing Supply
Chains …
 P-P & P-P ( tighten Value chains)
 Public & Public: Government to Government
 MOU: Lao Government and Partner Government

 Public & Private: Government to private company:

 MOU: Lao Government and Private company

 Private & Producers : Private company to producers

(Contract farming)
Example : Case of rice or any commodity production in a
given Province.
 Partner Govt : varieties & breeds; technology; capacity building
 Partner country Private Sector : capital; market; certification
 Lao Govt & Private Sector complement : land lease; policy &
other investment incentives; TA; capital & internal market;
liaising & business support…
 Food and Plain of Jars,
Xieng
commodity Khouang
production through
PP & PPs
 Attract QUALITY FDI
 Bring in & Apply advanced farm
management to areas of high Nam Than
value production: e.g., Irrigation,
Xayabouri
 Irrigation command areas
 Nucleus plantations
 Agro-ecosystems unique to
the GMS
 Geographic areas endowed
with modern infrastructure
 Create agro-industrial clusters
Boloven
s
Plateaux
P-P & P-P Case Study:
North Tonhe In Sebangfai
 Management contract Plain, Khammouane
for 1 or more irrigated Province
areas
 Minimum size = 5,000 ha
 Experienced producer
groups are in place :
skilled labor but need
upscale on skills
 Contract farming are
with producers or
producer groups
 Case Study:
Taniyama-Siam, Thateng
P-P & P-P District, Sekong Province
 Barren land available as Okra:
a land concession Sekong
to Japan
 30 year renewable lease in 72
 30 ha – 1,000 ha hours
 Operate as a nucleus
estate
 Contract farming outreach
program with local farmers
 Lease land from farmers
 Use farmers as workers
while transferring
technology – increase
income & food security…
 Investment Potential in Lao PDR in ANR Sector

Rubber tree,
Vientiane
Sugar cane
Pro Savanakhet and Rice
Pro

Maize
Vientiane
Capital

Livestock, Rice
and Industry
Mekong Fish
indigenuos,
Champasak
Pro Cofee and
Vegetable…
 Agriculture and Forestry Land
in perspective
Agriculture and Forestry Land area for promotion
and attraction investment:
Total land area: 2.36 mil ha
1) Agriculture land: 1.8 mil ha, incl.:
- Field crops land: 0.78 mil ha
- Fruit tree crops land: 0.78 mil ha
- Pasture land: 0.23 mil ha
2) Industrial trees plantation: 0.56 mil
ha
3) Barren land : 7 million ha ( North, East )
Conclusions
 Food security remains in Lao PDR an important challenge and Lao
PDR
 Greater investment in food and agriculture as well as in natural
resource management is fundamental to meeting the MDGs, in
particular the goals concerning poverty, hunger, and health.
 Food security can only be achieved in Lao PDR if a broad range of
stakeholders are partnering and aligning to a common objective.
 NGOs need to be more present, working efficiently at community
level, and increasing local authorities capacities
 FDI and Domestic investment can play an important role in boosting
agricultural production, “importing” food safety standards, ..
 Increase focus on food security in environmental impact
assessments (EIA) for investments in agro-based industries and
plantations, bio-fuel industries, mining, hydro-power and others
 Lao PDR need to enhance its responses to regional challenges (e.g.
AIFS, SPP-FS)
 Lao PDR National strategy needs to be further articulated with the
regional food security strategy
Lao Agriculture is Open
to Cooperation & Investment
Thank you