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

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High diversity of existing rural land use systems Aim for family-based food security Aim for community-based food security National food security derived from an integrated food supply Shifting  cultivation chain analysis
Analysis => awareness of strengths and opportunities  Analysis => investments to overcome weaknesses and threats

Multiple path exist for achieving food security

Food security is more than rice : increased commodity & trade = increased income & safety nets

Mixed    farming

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 (concessions, contract farming.. ) to produce & supply food & ANR goods to the Region & World

Rice Rubber Vegetables Maize NTFP


Partnerships for Food Security and ANR sector development

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)

Imperatives of Regional Integration

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

Public and private investments needs to be synergized for successful regional and global integration
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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..

Value Chains – for growth, food security and poverty eradication

Path to Food Security Existing opportunities for Partnerships and Surplus Commodity in Food and

Lao Smallholder agriculture is in transition
Food security based systems

Low land RICE (1 crop/y) water


Up land rice field

animal grazing field

natural forest

Food security based integrated with commercial agriculture
Upland rice

Low land RICE (2 crop / y) water


Agro-- forestry (veg. fruit tree)


Crop Rotation

Animal grazing

Natural Forestr y


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

The Cast of Characters :

Sugar cane
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Dao Heuang (Champasak)  Sinouk (Champasak)  Lao Mountain Coffee  Outspan Coffee (Singapore)

Mitr Lao (Thailand) in Savannakhet Savan (Thailand) inSavannakhet Kolao (Korea) in Vientiane Province


La’ha (cotton indigo)  Cassava (Savannakhet)  Yetao (China) in Savannakhet  Lao Sericulture (Mulberries)  Henan (China) inSavannnakhet (Xieng Khouang)  Tenghui (China)in Savannakhet  Hu Phu (Viet Nam) in Salavan  Benzoin Emerging & Growing Supply  Agroforex (France) in Huaphan


Lao Agro Industry (Vientiane  Tree plantations Province)  Oji (Japan) in Borikhamxay, khammouane)  Mme. Inpeng (Champasak)  Birla (India) in Savannakhet  Taniyama-Siam (Sekong)  Sun Paper (China) Savannakhet

Chains …

Public & Public: Government to Government  MOU: Lao Government and Partner Government Public & Private: Government to private company:  MOU: Lao Government and Private company

P-P & P-P ( tighten Value chains)

Private & Producers : Private company to producers (Contract farming) Example : Case of rice or any commodity production in a given Province.
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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 commodity production through PP & PPs
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Plain of Jars, Xieng Khouang

Attract QUALITY FDI Bring in & Apply advanced farm Nam Than management to areas of high Irrigation, value production: e.g., 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

Management contract for 1 or more irrigated areas
 Minimum

Case Study: North Tonhe In Sebangfai Plain, Khammouane Province

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

P-P & P-P

Case Study: Taniyama-Siam, Thateng District, Sekong Province
Okra: Sekong to Japan in 72 hours

Barren land available as a land concession
     

30 year renewable lease 30 ha – 1,000 ha 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

Vientiane Pro

Savanakhet Pro

Rubber tree, Sugar cane and Rice

Vientiane Capital

Livestock, Rice and Industry
Champasak Pro

Mekong Fish indigenuos, Cofee and Vegetable…

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 )

Agriculture and Forestry Land in perspective

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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