Laotian way of Grouping Farmers – a pathway out of poverty by Inthadom Akkharath, National Secretariat Specialist, WGA-Lao PDR, and Lourdes Adriano, CASP2 Team Leader

December 22, 2016

Lurking poverty
Lao PDR, a landlocked and lower-middle income economy with a gross national income per capita of $1,730 in 2015, is one of the fastest growing economies in the Asia-Pacific region. Growth domestic product growth averaged 7% over the last decade (World Bank 2016). Poverty in Lao PDR has also declined considerably from 33.5% to 23.2% over this period, lifting half a million people out of poverty (World Bank 2016). However, many people escaping poverty remain close to the poverty line and are still vulnerable especially to external shocks. For instance, approximately half of the poor in 2013 were not poor in 2008 (World Bank 2016).

Agriculture and health shocks are the main factors of household vulnerability, placing them at risk of falling back into poverty. Rural Laotian households are predominantly dependent on agriculture for subsistence and income. Creating jobs, increasing productivity and improving the quality of jobs especially in the agricultural sector provide a pathway for reducing poverty. Therefore, the agriculture sector has a considerable role to play in optimal development. Diversification beyond rice production and improved stability of incomes are needed.

Beyond rice and doing it the smart way
Through the implementation of letters of agreement (LOAs) between the Ministry of Agriculture of Lao PDR and the Asian Development Bank, RETA 8163 implementation of its output 3, which was about the adoption of gender-responsive and climate-friendly agriculture practices, has presented an opportunity to pilot test the production of high valued organic and reduced use of agrochemical in cropping, particularly for fruits and vegetables. After just a year of implementation, several successful models of alternative income sources have been piloted in selected provinces that show potential for up-scaling and out-scaling.
More importantly, models of farmer grouping are evolving that show promise in terms of developing into sizable production clusters (box 1). In turn, these clusters may serve as the catalyst for the commercialization of agriculture as they harness the advantages of scale.

Bamboo shoot PGS − linking 2 countries
In Viengxay district of Houphan Province, several farm households from the villages of Napho, Loun, Fad, and Muad have been introduced to the participatory guarantee systems (PGS). According to IFOAM , “PGS are locally focused quality assurance systems. They certify producers based on active participation of stakeholders and are built on a foundation of trust, social networks, and knowledge exchange.”

These farm households formed the bamboo shoot PGS in 2015 through the concerted efforts of the local governments, Department of Agriculture (DOA), GRET , and IFOAM (which obtained support from RETA 8163). PGS-grouped farmers produced dried bamboo shoots, applying sustainable management practices for the conservation of natural resources. Under the PGS system, the production and processing of high quality dried bamboo shoots were linked to the booming Vietnamese market through the retailer Bac Tom, a flourishing social enterprise in Ha Noi. To date, approximately one ton of dried bamboo shoots have been supplied with strong potential for higher volumes to come. This PGS model linking two countries for the trade of dried of bamboo shoots demonstrates the potential of PGS operating across borders.

PGS for vegetables and the rising local urban markets
The other PGS model supported by RETA 8163 focused on the production of organic vegetables for the domestic market. In Kaisone District, Savanakhet Province, the DOA provided technical support for the production and marketing of organic vegetables using the PGS approach. Farmers organized themselves into 4 groups. Each group served as the nucleus for sharing and monitoring technical practices and marketing of products. The group engaged in production planning and cultivation, cost sharing, accounting and auditing, price setting, delivery and marketing. This increased the stability of supply as well as quality and safety assurance, thus allowing access to stable markets in urban centres and aiding marketing activities.

Women are actively engaged in production, primary processing, transport and marketing of the produce. The market channels they were able to access included high-end restaurants, such as the local ‘White House’ restaurant, hotels, the large commercial market ITECC, and other urban and local markets. As a result of the improved production and marketing, farmers reported income from fruit and vegetable sales in excess of 500,000 kip per week, a considerable sum in the local context.

The farmer groups were recently recognized as effectively operating PGS and was issued PGS certification by the DOA (see the photo).
The farmer groups are planning to up-scale by undertaking postharvest activities, such as packaging and branding of produce, and recycling their bi-products. These would strengthen their position in the market while minimizing their wastes.

Village-based bio-fertilizer enterprise
The third case of successful activities on small-scale farmer organization were the rice and vegetable farmers producing and applying organic fertilizers in Ban Phai Village, Chamhone District and Koutchab and Donekhio villages in Sebangfai District, Khammouan Province. Much like the PGS farmer groups, the producers had formed groups and divided activities for producing bio-fertilizers among themselves. Each farmer was assigned with specific tasks, such as collection of raw materials, production of biochar, and combining of ingredients. The division of labor accelerated the production of bio-fertilizers. These farmer groups have produced bio-fertilizer surpluses amounting to 80 tons by end 2015. Bio-fertilizers were sold (some were given) to other farmers, thus promoting the application of bio-fertilizers among households who were not directly engaged in the project. As in the PGS model, the organization of producers provided such benefits as shared learning, increased production, and production of higher quality vegetables. The potential to diversify income sources and reduced costs of production reduced household vulnerability to external stressors.

Their female group members were engaged in fruit and vegetable cultivation in small plots with greenhouses. This enabled vegetable cultivation year round, where previously cultivation was not possible during the rainy season.

There is considerable potential to continue to develop agriculture in Lao PDR to support low-income rural households through shifting the orientation of farming models from a subsistence focus to market-oriented farmer groups producing higher quality and safety assured vegetables, fruit and bio-fertilizers. Grouping helped farmers to plan production on the basis of general and seasonal market trends in demand resulting in regular income throughout the year. As the LOA experiences in Lao PDR have demonstrated, farmer organizations are win-win business models. They meet the growing domestic and subregional demand of affluent consumers for safer, better quality procured. At the same time, they increase the household incomes of their members and improve their general well-being.

Note: In this story, “$” refers to US dollars.