161005_CFAVC Core Sub-Projects Report (Rice and Vegetable value chain in Lao PDR)

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TA8897-REG: Climate Friendly Agribusiness Value Chain Sector Project (CFAVC)

APPENDIX 14: Survey of rice and vegetable activity in Khammouane, Savannakhet, Saravane,

Champasak, and Vientiane provinces.

Project Preparatory Technical Assistance (PPTA)

ADB TA8897-REG: Climate Friendly Agribusiness Value Chain Sector Project (CFAVC)

Written by:

Phetsoulaphonh Choulatida, Deputy Team Leader / Agribusiness Value Chain Specialist Santisouk Soukhasith, Rural Infrastructure Specialist/Civil Engineer

Phonesavanh Keoasa, Agro-processing Specialist

October 2016

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ACKNOWLEDGEMENTS

This report was written by Mr. Phetsoulaphonh N. Choulatida, the Deputy Team Leader / Agribusiness Value Chain Specialist. Some parts of this report compiled from Lao translation of the original reports from Mr. Santisouk Soukhasith, Rural Infrastructure Specialist/Civil Engineer, and Mr. Phonesavanh Keoasa, Agro-processing Specialist. It is the outcome of 28 days (first trip was 1-3 June 2016, second trip was 12-19 June 2016, third trip was 17 June-2 July 2016, and last trip was 15-25 September 2016) of administering feasibility study in six provinces of Vientiane province, Khammouane, Savannakhet, Saravane, Champasak, and Sekong, Lao PDR especially rice and vegetables producer and processing groups which cover in the pilot projects where ADB funded. The mission is a part of interim period mission to conduct focal group discussion with rice and vegetables producers, vegetables import-export companies, bio-fertilizer factories, rice mills, and local authorities in order to identify detailed sub-projects and ensure that the outcome from this study will be applicable by all stakeholders who are currently working on rice and vegetables commodity chain. I myself wish to acknowledge the assistances provided by PPTA team, Mr. Vinoth Vansy (ADB national project coordinator) and his subordinates in the provinces and districts that assisted community’s dialogue and field visits, Mr. Khamthanh Khamdeng (Head of Department of Planning and Cooperation), Mr. Sengthong Phouangkhamvang (Deputy head of Department of Agriculture Extension and Cooperatives), Mr. Sisavath Vanthanou (Deputy head of standard and certification section), and also I am very thankful to Sir. Duncan Burnett (Team Leader in Lao PDR) from Landell Mills Development Consultants co., ltd for high valuable suggestions and strongly supports my study mission. The authors personally give an overwhelming thanks to EA, Technical committees, provincial and district authorities, private sectors, and communities to provide nice discussion during my studies. October 10, 2016

Deputy Team Leader / Agribusiness Value Chain Specialist ADB TA8897-Reg: Climate-Friendly Agribusiness Value Chains Sector Project Lao PDR P.O.Box: Vientiane Capital, Tel: +856(0)21 285170-71 Fax: +856(0)21 285172 Mobile: +856(0)20 5564 1055, 23878899 Email: [email protected] ; [email protected]

mailto:[email protected]

mailto:[email protected]

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TABLE OF CONTENTS

Acronyms and abbreviations page I. Executive summary……………………………………………………………………….………………………………....... 6 II. Introduction…………………………………………………………………………………….………………………...……… 6 III. Methodology……………………………………………………………………………………..……………………………… 7 IV. Key analysis and findings from this study…………………………………..……………………………………… 8 1. Khammouane province (rice commodity)………………………………………………………………………….. 8 1.1. Irrigation improvement ……………………………………………………………………………………………….…. 8 1.2. Access road to the production area….…………………………………………………………………………….. 12 1.3. Value chain actor…………………………………………………………………………………………………………….. 15 1.3.1. State rice seed center (Xebangfai)……………………………………………………………………………….. 15 1.3.2. Farmers’ facilities ……………………………………………………………………………………………………..... 16 1.3.2.1. Bio fertilizer production group ……………………………..………………………………………….………. 16 1.3.2.2. Rice seed production group………………………………………………….………..………................... 17 1.3.2.3. Commercial rice production group……………………………………………………..….………………... 18 1.3.2.3. Household agro-processing group…………………………………………………..……….................. 19 1.3.3. Rice mill enhancement…………………………….…………………………………………………………………… 20 1.3.4. The feasibility study of a six year upgraded rice mill (case of Vanida rice mill)…………….. 21 2. Savannakhet province (rice commodity)…………………………………………………..……………………….. 28 2.1. Irrigation improvement ……………………………………………………………………………………………….…. 28 2.2. Access road to the production area….…………………………………………………………………………….. 29 2.3. Value chain actor…………………………………………………………………………………………………………….. 29 2.3.1. State rice seed center (Thasano)………………………………………………………………………………….. 29 2.3.2. Farmers’ facilities ……………………………………………………………………………………………………..... 30 2.3.2.1. Bio fertilizer production group ……………………………..………………………………………….………. 30 2.3.2.2. Rice seed production group………………………………………………….………..………................... 31 2.3.2.3. Commercial rice production group……………………………………………………..….………………... 31 2.3.2.3. Household agro-processing group…………………………………………………..……….................. 32 2.3.3. Rice mill enhancement…………………………….…………………………………………………………………… 33 3. Saravane province (rice commodity)………………………..…….………………………………………………….. 34 3.1. Irrigation improvement ……………………………………………………………………………………………….…. 34 3.2. Access road to the production area….…………………………………………………………………………….. 36 3.3. Value chain actor…………………………………………………………………………………………………………….. 37 3.3.1. State rice seed center (Nongdeng)……………………………………………………………………………….. 37 3.3.2. Farmers’ facilities ……………………………………………………………………………………………………..... 37 3.3.2.1. Bio fertilizer production group ……………………………..………………………………………….………. 37 3.3.2.2. Rice seed production group………………………………………………….………..………................... 37 3.3.2.3. Commercial rice production group……………………………………………………..….………………... 38 3.3.2.3. Household agro-processing group…………………………………………………..……….................. 39 3.3.3. Rice mill enhancement…………………………….…………………………………………………………………… 40 4. Champasak province (vegetable commodity)………………….…………………………………………………. 41 4.1. Irrigation improvement ……………………………………………………………………………………………….…. 41 4.2. Access road to the production area….…………………………………………………………………………….. 42 4.3. Value chain actor…………………………………………………………………………………………………………….. 44 4.3.1. Farmers’ facilities ……………………………………………………………………………………………………..... 44 4.3.2.1. Bio fertilizer production group ……………………………..………………………………………….………. 45 4.3.2.2. Vegetable seed production group…………………………………………………..………................... 45

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4.3.2.3. Commercial vegetable production group……………………………………….…..….………………... 45 4.3.2.4. Vegetables processing in Champasak province………………………………………………………….. 46 4.3.2.4.2. Household agro-processing group…………………………………………………..………................ 50 4.3.2. The feasibility study of a six year upgraded vegetables collection and marketing infrastructure (case of Thongset vegetables hub)…………………………………………………………………

60

5. Vientiane province (vegetable commodity)………………….……………………………………………………. 60 5.1. Irrigation improvement ……………………………………………………………………………………………….…. 60 5.2. Access road to the production area….…………………………………………………………………………….. 60 5.3. Value chain actor…………………………………………………………………………………………………………….. 60 5.3.1. Farmers’ facilities ……………………………………………………………………………………………………..... 60 5.3.2.1. Bio fertilizer production group ……………………………..………………………………………….………. 60 5.3.2.2. Vegetable seed production group…………………………………………………..………................... 65 5.3.2.3. Commercial vegetable production group……………………………………….…..….………………... 65 5.3.2.4.2. Household agro-processing group…………………………………………………..………................ 66 Annex……………………………………………………………………………………………………………………………………… 68 Reference……………………………………………………………………………………………………………………………….. 84

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ACRONYMS AND ABBREVIATIONS

ADB Asian Development Bank AISP Agriculture Infrastructure Sector Project CFAVC Climate-Friendly Agribusiness Value Chains Sector project EA Executive Agency EM Effective Micro-organism EMRIP The Enhancing Milled Rice Production EWEC East West Economic Corridor project DAFO District Agriculture and Forestry Office DOA Department Of Agriculture FDI Foreign Development Index GAP Good Agriculture Practice GMS Great Mekong Sub-region HH Household IDP Indochina Development Partners Group IFAD International Fund for Agricultural Development JICA Japan International Cooperation Agency LKIP Lao Kip Currency MAF Ministry of Agriculture and Forestry MDG Millennium Development Goal MOU Memorandum Of Understanding NAFRI National Agriculture and Forestry Research Institute NGPES National Growth and Poverty Eradication Strategy OA Organic Agriculture ODA Official Development Assistance OOG Office Of Governor PAFO Provincial Agriculture and Forestry Office PN Phon Ngam (name of rice seed variety) PPP Potential for Public Private Partnerships PPTA Project Preparatory Technical Assistance SNRMPEP Sustainable Natural Resource Management and Productivity Enhance Project TDK Tha Dok Kham (name of rice seed variety) TSN Tha Sa No (name of rice seed variety) USD Currency of United State of America

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I. EXECUTIVE SUMMARY This report provides an analysis and evaluation of the current and prospective scenario of core sub-projects for rice and vegetable value chains how CFAVC project leading to implementation. There are five provinces of Vientiane province, Khammouane, Savannakhet, Saravane, and Champasak had conducted the studies on irrigation rehabilitation for rice and pond creation for vegetable design and costing for each particular sub-projects. Road access to the production areas were proposed by stakeholder with design and cost calculation has done by PPTA team. For two core sub-project on rice mill upgrading and vegetable hub improvement look detailed assessment, profitability, liquidity and financial stability for future selection by EA and implementation team. The methods of analysis include trend, horizontal and vertical analyses, challenging, and opportunities to have a good synergy for the benefit of smallholder famers. Other calculations include rates of return on Shareholders’ Equity and Total Assets and earnings per share to name a sakeholder. All calculations can be found in the provincial section part. Results of data analyzed show that all elements of real needs and CFAVC project intervention. In particular, comparative performance is poor in the areas of profit margins, liquidity, internal and external control, and inventory management. The report finds the scenario of the core sub-projects in the current position seems to be positive. The major areas of weakness require further investment and helpful action by management. Recommendations discussed include:

Rehabilitating irrigation canals for rice and create pond for vegetables

Improving existing farm road

Upgrading rice mill for a better acceptance by domestic and international markets

Improving vegetable hub and replicate the model to other potential places The report also investigates the fact that the analysis conducted has limitations. Some of the limitations include: forecasting figures are not provided nature and type of core sub-projects is not known nor the current economic conditions data limitations as not enough information is provided or enough detail i.e. monthly details not known results are based on past performances not present.

II. INTRODUCTION

This preliminary feasibility study has intended to collect information for Technical committee to inform its recommendations, in particular to increase numbers’ understanding of how Climate-Friendly Agribusiness Value Chains Sector project (CFAVC) design is fitted and will implement aligning government’s goal and local communities’ need. The analyzed data can be evidence, and other resources are primarily uniquely available in the country of Lao PDR to support CFAVC project. This report gives a provision of an opportunity to explore a proof concept of the technical committee and EA. In particular the feasibility introduces more rigorous approaches. In regard to the analysis and findings what we found in this study, stakeholder all share one common challenge: how to best move rice and vegetable product from the farm to the marketplace along the chain actors from farmers, seed producer, bio-fertilizer farm producer, mechanical service provider, rice miller/vegetable hub, collector/trader, and the domestic and international market as final consumer. This is especially crucial for small and midsize actors (farmers, rice miller, and vegetable hub operator/cooperatives) who may not have enough capital to own their own trucks, their own refrigeration units, or their own warehouse space. They might not have the resources to develop sophisticated distribution routes, build effective marketing campaigns or network with regional buyers

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and customers.” It is generally accepted that small and mid-sized actors (family farmers, rice millers, vegetable hub cooperatives) are at a distinct disadvantage when selling to larger markets. They are often excluded from mainstream market channels because conventional distributors and retailers look to achieve lower, more competitively priced products through high volume purchases and to avoid the transaction costs associated with purchasing from many different small suppliers. The smaller farmers, rice millers, and vegetable hub cooperatives may also be financially unable to maintain infrastructure like green house, farm mechanical facilities, rice milling equipment, washing and packing facilities and cold storage facilities, which are necessary for larger volume sales. And in many cases by accepting a lower return on their investments and labor than larger competitors. The often higher gross revenues yielded by direct vs. wholesale marketing channels do not necessarily translate into higher profits for the stakeholder (farmer, rice miller, and vegetable hub operator). There is a distinct need in the region to develop larger markets for local produce and to find new and better ways for stakeholder involved to differentiate and verify their products as locally grown. Working with farmers on one end of the rice and vegetable chain, the rice miller and vegetable hub cooperative/operator have played a crucial role in support commercial farmer growing the local rice and vegetable movement throughout the provinces. Existing commercial rice and vegetable farm groups also have a wealth of experience developing initiative, which was an early, innovative effort to aggregate and distribute the quality and quantity of rice and vegetable products of small farmers to meet the demand by domestic and regional markets.

III. METHODOLOGY The five provinces of Vientiane province, Khammouane, Savannakhet, Saravane, and Champasak, in Lao PDR were selected as the sites of study conducted by team of consultants and local government service officers. In particular, the sites’ selection was based primarily on the plenty of Lao people growing rice and vegetables for market purpose. On the other hand, these sites are already included into MAF’s strategy by 2030 stated that 10 provinces will focus on rice, and some of them are vegetables. The study’s goal was to determine the feasibility of CFVAC project is creating an entry point of rice and vegetable value chains for implementation phase. The feasibility study was conducted over the detailed core sub-project intervention. To begin the process, stakeholder oriented, and a community stakeholder meeting was held. This was followed by a series of farmer meetings held locally in each of the five provinces. Subsequently, the research drew on the connections and information gathered from these stakeholder meetings and employed multiple forms of inquiry, including: publicly available data from agricultural sector, a survey of rice miller and vegetable hub operator to learn what was already being done and how they perceive a prospective, a survey of rice and vegetable commercial production groups to assess the need for various prospective functions and to determine the availability of product, a survey of local institutions about the rice seed demand for locally grown rice and vegetable. For this study we primarily focused on the rice mill upgrading and vegetable hub cooperative/operator with additional survey on irrigation infrastructure improvement and farm road access to be repaired. For spotlight discussions on rice mill upgrading and vegetable hub improvement show in each part by province section, and for irrigation survey and farm road access conducted only in Khammouane and Champasak province to be representative data of other location since time is limited for PPTA team to do the study. This feasibility study gives detailed of core sub-projects, which will incorporate the findings and recommendations from this report.

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VI. KEY ANALYSIS AND FINDINGS FROM THIS STUDY 1. Khammouane Province (Rice Commodity)

1.1. Irrigation improvement:

The local government of Khammouane province aims to promote modern farming in Nongbok district

for commercial rice production. The Chanthavong rice mill engages to lead this modern farming for 500

hectares with 11 villages. Currently 170 hectares of rice field were completed land leveling. There are

two pumps with 75 KW of horse power irrigate for whole area. The priority to improve irrigation for rice

production, the PAFO proposes two irrigations as shown below.

Table 1. Prioritized irrigation canals need to improve from soil canals to concrete/bricks canals

No. Irrigation scheme in

Nongbok project No. of village

Irrigated area ( ha ) No. of household

Total cost (USD) Rainy season Dry season

1 Thamuang-2 canal 3 500 500 294 187,500

2 Xokbo canal 2 400 400 153 150,000

Total 5 900 900 437 337,500

Note: the initial design survey and cost are available at Irrigation section, Khammouane-PAFO.

Figure 1- irrigation canals map in Thamuang village, Nongbok district, Khammouane province

Existing Earth Canal to be Upgrade to Brick canal

Existing Earth Canal to be Upgrade to Concrete canal

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Figure 2- Initiative design to upgrade the Thamuang-2 irrigation earth canal to concrete canal

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Table2. Cost estimate for 1 km

Item Description Unit Quantity Unit cost ($)

Amount ($)

Remark

1 Common Excavation cu.m 0.00 1.36 0.00

2 Back fill both side of wall cu.m 960.00 8.30 7968.00

3 Lean concrete cu.m 60.00 96.60 5796.00

4 Reinforce concrete of canal Base slab

cu.m 100.00 385.04 38504.00

5 Brick wall and Paste in side of canal

sq.m 150.00 385.04 57756.00

6 Reinforce concrete of column and tie beam

cu.m 1.61 385.04 619.14

Total: 110643.14 $/Km

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Figure 3- Initiative design to upgrade the Thamuang-2 irrigation earth canal to brick canal

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Table3. Cost estimate for 1 km


Amount ($)

Remark

1 Common Excavation cu.m 170.00 1.36 231.20

2 Back fill both side of wall cu.m 400.00 8.3 3320.00

3 Lean concrete cu.m 55.00 96.60 5313.00

4 Reinforce concrete of canal Base slab

cu.m 90.00 385.04 34653.60

5 Brick wall and Paste in side of canal

sq.m 1371.86 24.68 33857.50

6 Reinforce concrete of column and tie beam

cu.m 5.63 385.04 2167.78

Total: 79543.08 $/Km

1.2. Access road to the production area:

The existing communal road needs to be improved in order to serve rice and crop production for market

in round year. The PAFO proposed 10 Km from Dan village to Sadue village in Nongbok district,

Khammouane province. Estimation of daily using the road is 98 trucks, 112 hand-tractors, 150

motorbikes, 80 bicycles and 77 men walking. The cost of investment is 50,000 USD. This road will be

served for five villages along Mekong river bank such as Dan, Dongphangphao, Thamuang, Phonsao-Ae,

and Sadue village.

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Table4. Infrastructure (farm road) need to improve

infrastructure Length (km) No. of village No. of HH Cost (USD)

Road improvement 10 5 475 50,000

Total 10 5 475 50,000 Source: Survey 2016

Figure 4- Road improvement map in Thamuang village, Nongbok district, Khammouane province

Figure 5- Maintenance gravel access road (Length = 7490m, width = 5.00 m)

Existing Gravel Access Road to be Maintenance

Existing Earth Access Road to be Upgrade to Gravel Access road

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Table5. Cost estimate


Amount ($)

Remark

1 Scarify and recompact existing road 15 cm depth

sq.m 37450.00 0.47 17601.50

2 Embankment fill cu.m 6741.00 6.43 43344.63

3 Sub base and base course, incl. new material (CBR> 25% min)

cu.m 5992.00 11.20 67110.40

4 Reinforced Concrete C25 mpa for inlet outlet structure

cu.m 55.89 300.52 16796.06

5 Installation of culverts Dia.800mm

sq.m 90.00 184.51 16605.90

6 Guide post at culvert location cu.m 30.00 20.36 610.80

Total: 162069.29 $

21638.09 $/km

Figure 6- Upgrade Earth to Gravel access road (Length = 5830 m, Width = 5.00 m)

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Amount ($)

Remark

1 Clearing and Grubbing sq.m 23320.00 0.26 6063.20



cu.m 4664.00 11.20 52236.80


cu.m 44.71 300.52 13436.85


sq.m 72.00 184.51 13284.72


Total: 211841..06 $

36336.37 $/km

1.3. Value chain actors:

1.3.1. State Rice Seed Center (Xebangfai rice seed center)

The Xebangfai rice seed center officially known as “Xebangfai Agricultural Research and Development

Center” aims to produce sufficient purity seeds to Khammouane rice farmers by incorporating to 10

villages (seed producers) to produce F2 seeds namely TDK8 (glutinous rice), TDK11 (glutinous rice), XBF1

(glutinous rice), XBF2 (non-glutinous rice), and XBF3 (non-glutinous rice). The annual rice seed

production is 270 tons, meaning that 20 tons produced by Xebangfai center and 250 tons produced by

farmers. The Xebangfai center will provide F2 rice seed to 10 seed producers to do F3 seed

multiplication and sell back to the Xebangfai rice center in good price 3,500 kip/kg (the usual price of

paddy is 1,900-2,200 kip/kg) to do screening and sorting for the best quality before distributing to other

farmers growing. In case of 10 seed producers have facilities to do sorting and screening the purity of

seeds they can directly sell to farmers or millers as long as market availability. The Koutchap village sold

at 4,000 kip/kg according to interview Mr. Bounchanh Khemmalath the farmer leader of rice seed

producer group. The seed multiplication training course offered to 10 seed producers by Xebangfai

center staff, the curriculum covers from soil improvement, land preparation, seedling, fertilizer

application, transplanting, water management, pest control, harvesting, and post-harvest (including

machinery and equipment maintenance).

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Table7. the facility and equipment required by Xebangfai state rice seed center

Type of Center Rice seed multiplication plots

at village level facility required by state rice

seed center Cost estimation

Xebangfai Agricultural

Research and Development

Center

Navangthong village (Official) Navang-Yai (Official) Koutchap village (Official) Natai village (Official) Teung village (Official) Dongmakba village (Official) Namuang village (Official) Muangsum village (Official) Pak-eitou village (Official) Hatkhamhieng village (Official)

Dryer (20 ton) X 1 unit Modern seed sorter X 1 unit Canal improvement (300 m) Equipment storage (20m X30m) Fence installtion (20 hectares)

60,000 USD/unit 150,000 USD/unit 30,000 USD 60,000 USD 15,000 USD

Total Cost 325,000 USD Source: Survey 2016

In order to meet the annual F3 rice seed demand, the Xebangfai center plays the crucial role to

implement MAF strategy by increasing 10% of actual production in both quality and quantity of seeds.

Mr. Nongkhan Sengsoulin, head of Xebangfai center reported to PPTA team that he needs to improve

the infrastructure of the center as major priority due to some equipment and facilities are broken and

missing, it needs to be upgraded and purchased if the province aims to export rice. There are few things

that required by Xebangfai center (find table 7).

1.3.2. Farmers’ facilities

1.3.2.1. Bio-fertilizer production group

The PPTA team visited three villages of Kout-Chap, Donkiew, and Natai group whom currently produce

bio-fertilizer for domestic markets. These three villages were supported by ADB/WGA/TA8163/LOA.MAF

since October 2014 until June 2016. Mainly their product is using for “Healthy soil” and their product

can apply with GAP/Organic vegetables and rice. The equipment that project provided to these group

there are: pelletizer, mixer machine, kilns (5 kilns), and crusher/grinder machine. For the source of the

raw materials used and their prices per product in 1 ton, there are 350 kg of rice husks (collect from rice

mills to conversion into bio-char), 350 kg of manure (cattle & buffalo), 250 kg of clay soil under lake and

pond, 30 kg of rice bran purchase, and 20 kg of lime purchase. The capacity of each is 100 tons per year;

they sell to own markets and some of fertilizer used by their rice farm. The project provided training and

schedule for taking the samples to test in the laboratory. The projects also facilitated for registration and

proceed to the certification and the groups just contributed the basic documents referring to project

required. Many year of equipment used, the spare part is limited to find locally, and some facility is

unworkable. Therefore, these groups would propose to have new one replacing (see table 8 below).

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Table8. the facility required by Bio-fertilizer producers in Nongbok district, Khammouane province

Type of farmer Farmer group Farm facility required Cost estimation

Bio-fertilizer production

Kout-Chab village (Official) Donkiew village (Official) Natai village (Official)

Rice husk burner X 3 unit Compost mixer machine X 1 Soil Mixer Machine X 1 unit

600 USD/ 3 units 500 USD/unit 400 USD/unit


1.3.2.2. Rice seed production group

During the study taken in August 2016, three rice seed production group were visited namely Kout-Chap

village, Navangthong village, and Natai village. These three villages have been supported by Small Holder

Development Project, there are 10 householders volunteer to be group member per each village. The

project provided in kind in total amount of 154,000,000 Lao Kip (USD 19,250) list of those facilities are:

transplanting machine, sorter, trashing machine, two flat-bed dryers, bag sewing equipment, 100 kg of

weight, two paddy moisture testers, seed sprayers, small land leveling facility, and weeds cuter. Plus

contribution of farmers is 78,000,000 Lao Kip (USD 9,750) to build house for farmer center, land

construction, and electricity installation for all equipment (interview Mr. Vilaivanh Phanthakhod as

acting farmer leader in Kout-Chap village).

These villages produce rice marketable seed based on market demand such as TDK8, Thai Hommali 105,

and RD 15, the annual production is 50 tons / each village. Besides that rice seed producer also provide

mechanical services to other farmers on land preparation, transplanting, harvesting and trashing.

Currently the some equipment cannot perform very well, no spare parts, and broken that it’s effecting

to declined seed production in coming years. The rice seed farmers were asking some equipment to

continue recent work and involve in value chain as active actor. Therefore, the list required is proposed

in the table 9 below.

Table9. the facility required by rice seed producer groups in Nongbok district, Khammouane province

Type of farmer Rice seed producers Farm facility required Cost estimation

Rice seed production

(also provide

services to other commercial rice farmer groups)

Navangthong village (Official) Navang-Yai (Official) Koutchap village (Official) Natai village (Official) Teung village (Official) Dongmakba village (Official) Namuang village (Official) Muangsum village (Official) Pak-eitou village (Official) Hatkhamhieng village (Official)

Dryer 5-10 ton Moisture tester Temperature tester Bag sewing machine Small Rice harvesting Machine Thrasher machine 4 F Power 14 HP Tractor KUBOTA L3608SP,1647cc,36 Rice transplanting Machine KUBOTA SPW-48c Rice seed trays X 2,000 unit

10,000 USD 500 USD 300 USD 200 USD 5,000 USD 8,000 USD 20,000 USD 6,500 USD 1,320 USD

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Combined harvester KUBOTA DC-70 Rice storage 60 X 1 unit Seed spraying Machine X 1 Rice polisher X 1 unit

31,500 USD 20,000 USD 350 USD 4,500 USD


1.3.2.3. Commercial rice production group

Referring to agreement of the Minister regarding agriculture production groups No. 2984/MAF, issued on 25 September 2014: the agreement stipulates the principles, regulations, and conditions concerning the establishment and progress of agriculture production groups in or der to promote and strengthen small-scale farmers’ production meanwhile preparing them to be members of agriculture cooperatives.

The khammouane authotity realizes economic growth from rice sector, four districts have formed as commercial rice producer group (find table 10) that aim to sell paddy to rice mill groups that registered with the provincial trade chamber under provincial department of industry and commerce. The rice value chain requires the group of farmer links to the group of rice mill in order to create cooperatives. The problem is that MAF created decree no.136/NA on cooperative under enterprise law no.11/NA dated 09 November 2005; it aims to group small holder farmer to do business on agriculture, but it contradicts to the Ministry of Industry and Commerce (MoIC) decree on Entrepreneurs association to provide services and trading due to the combination of rice mill and rice farmer into single umbrella (rice association), it really needs to improve the decree, sine both decree written separately, the joint policy improvement is crucial part of this ADB TA8897 project (Mr. Viset Khotsouvanh, head of product promotion and development division, MoIC).

These commercial rice farmer groups have created under the MAF’s agreement of the Minister regarding agriculture production groups No. 2984/MAF, issued on 25 September 2014, the agreement itself defines the agricultural farmers forming as group, the registration, management committees, eligible members, monitoring, and it is enforced through the Department of Agriculture Extension and Cooperatives (DAEC) of the Ministry of Agriculture and Forestry (MAF). The DAEC comprises a Registrar at central level and a province registrar in each province of the country of Lao PDR.

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Table10. List of commercial rice production groups in Khammouane province

Source: Small Holder Development Project 2012 and updated by PPTA team 2016

1.3.2.3. Household agro-processing group

Rice chip is predominant production in Thakek district including Nongbok district, the raw material is

from second and third grade of rice or half broken rice. Mrs. Deng lives in Nabo village gave information

to PPTA team, each 100 kg of milled rice could produce 120-180 kg of rice chip in one day. Meaning that

she bought 420,000 Lao kip (USD 53) per 100 kg and produce rice chips, she is able to earn money

1,500,000 Lao Kip (USD 188). Her family is running on this small business, not for other thing else, it is

just playing as actor to add value to rice sector in Khammouane province. Simple facilities show in the

table 11 below.

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Table11. Small scale food processing groups in Khammouane province


Rice chip production in

Thakek (small scale)

Nabo village Chomthong village Chomcheng village Santisouk village

Milled rice grinder X 1 unit Flour mixer X 1 unit Large pot X 4 units Packaging machine X 1 unit

3,000 USD/unit 2,700 USD/unit 400 USD/ 4 units 2,000 USD/unit


1.3.3. Rice mill enhancement

The situation of rice mill in Khammouane is classified as medium and small scale rice mill, just mill the as

normal rice but cannot polish grain for special favorable standard as regional market needed. In 2009,

Khammouane Development Rice Mill Group was established and beginning phase consists of 17 rice

mills to be membership and today remaining only 15 rice mills showing in table 8 below. This rice mill

group role is to promote the commercial rice farmer production in Khammouane province with applying

3+2 contract farming, rice mill provides capital (seed, fertilizer, pesticide, and land preparation),

extension services (farmer group formulation, and farmer capacity building) and market (buy back

guarantee and price warranty), meanwhile farmer is labor and land. Recently 111 farmer groups with

more than 2,000 hectares in four districts of Thakek, Nongbok, Xebangfai, and Xaybouly (Savannakhet)

have been selling paddies to this rice mill group. New seed varieties supply regularly to farmers to

ensure single variety and quality to market. Moreover, rice quality improvement is not enough; rice mill

equipment upgrading is very crucial factor to be improved in parallel. At that time, rice was unable to

export due to low grade. This rice mill group realizes the importance and decision made by investing 4

billion kip (USD 500,000) to upgrade slightly full service rice mill such as installing color sorter and

polisher. Consequently this group was able to export 780 tons of milled rice to EU market in 2014; but

after that lot, this rice mill group unable to export to EU for second lot due to Lao rice is low standard. In

order to meet international standard, firstly this group aims to get GMP standard by the end of the year

2016. (interview Mr. Phetsamone as chair of Khammouane Development Rice Mill Group).

To upgrade rice mill equipment is related to knowledge and learning acquisition of owner, not just who

want to upgrade but poor knowledge on mechanical aspect leading to failure end the end.

For the large scale rice mill in this group, the capacity is 1,7 tons per hour, if these six rice mills

wish to export quality of milled rice they need to upgrade 4 sets of color sorter and 3 sets of rice

polisher that can meet the Chinese and Thai standard (see annex 1 and 2). The milling recovery

is 55%, if upgrade the equipment will increase both quality and quantity by 10%.

Medium scale of this group consists of six rice mills, the capacity is 1 ton per hour and milling

recovery is 45%, if upgrade the equipment will increase both quality and quantity by 10%.

Small scale of rice mill consists of three rice mills, the capacity is 0,5 ton per hour and milling

recovery is 35%. These rice mills cannot upgrade as high as large and medium rice mills above,

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they just upgrade based on knowledge and supply milled rice to large and medium rice mills to

do color sorting and polishing.

Table12. list of equipment for diffirent categories of rice mill to be upgraded in Khammouane

Capacity Rice mill category Upgrading equipment Cost estimation

Large scale (15 Tons/day up)

Mr. Chanthavong Rice Mill Ms. Vanida Rice Mill Mr. Soulivan Rice Mill Mr. Chantha Rice Mill Mr. Bounmy Rice Mill Mr. Phetsamon Rice Mill

1. Dryer (25 tons) X 1 set 2. Pre-cleaner (3t/h) 3. Paddy separator (3t/h) 4. Paddy husker (3t/h) 5. Adrasive whitener X 3 unit 6. Rice polisher X 2 unit 7. Rotary shifter X 1 set 8. Rice grader X 3 set 9. Color sorter (320 channels) X 3 set 10. Weight + sawing machine 11. truck weight scale (weighbridge) 12. Rice storage (30m X 40 m)

65,000 USD/set 10,000 USD/unit 9,000 USD/unit 15,000 USD/unit 12,000 USD/unit 12,000 USD/unit 7,500 USD/set 9,000 USD/set 45,000 USD/set 12,000 USD 125,000 USD/set 240,000 USD

Total cost 705,500 USD

Medium scale (8-10 Tons/day)

Mr. Phanthala Rice Mill Mr. Soi Rice Mill Ms. Khammany Rice Mill Ms. Seth Rice Mill Ms. Vasana Rice Mill Mr. Soukkaseum Rice Mill

1. Pre-cleaner (1t/h) X 1 set 2. Paddy husker (1t/h) X 1 set 3. Adrasive whitener X 2 unit 4. Rice grader X 1 set 5. Husk aspirator X 1 set 6. Rotary shifter (1t/h) X 1 unit

3,000 USD/set 4,000 USD/set 5,000 USD/unit 9,000 USD/set 2,000 USD/set 3,000 USD/unit


Small scale (2-5 Tons/day)

Ms. Laithong Rice Mill Ms. Bang Rice Mill Ms. Lamphoun Rice Mill

1. Horizontal stone husker X 3 set 2. Rotary shifter X 1 set 3. Rice grader 1 set

12,000 USD/set 1,000 USD 4,000 USD

Total cost 41,000 USD Source: survey 2016.

Upgrading equipment helps to increase quality, quantity, energy safe, and low labor cost. If need to

meet international and regional standard, this rice mill group have to follow as mentioned in table 12 in

different categories of rice mill.

1.3.4. The Feasibility Study of a Six Year Upgraded Rice Mill (Case of Vanida Rice Mill)

During the technical committee meeting held on 29 August 2016, the Vanida rice mill in Khammouane

province was proposed by technical committee for selecting case study classified as medium rice mill.

a). Overview of the Vanida Rice Mill:

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The Vanida rice mill has been promoting rice farmers in four target districts of Nongbok, Xebangfai, Thakek, and Xaybouli in total land area of 2,000 hectares (763 hectares of irrigated rice farming) and milled paddies in its own rice miller.

To increase the quantity and quality to be milled and for domestic and international trading purposes, the Vanida rice mill engaged also on buying field wet paddies and dried it with the use of its own drier of either its solar concrete pavement and or mechanical grain drier.

Some other assets and income involved directly or indirectly were not included in the shown income statement and its balance sheet 2015 which is hereto attached. The financial aspect shown is mainly for this rice mill.

TDK8, TDK11, and Hommali rice varieties have been promoting for commercial rice. The Vanida rice mill equipment is slightly two-stage compact technology but if compare to

Thailand, this rice mill is single-pass technology.

b). Financial aspect of the Vanida Rice Mill:

The Vanida rice mill has started establishment on the year 1995, but real operation was in the year of 2000 with initial assets of approximately USD 12,500.00 and that includes the land and building.

When this rice mill has reached to its 15th year of operation and that was year 2015, the rice mill has an estimated asset of USD 187,500.00 (See Balance Sheet as of December 31, 2015).

The information being disclosed by this paper are Balance Sheet as of December 31, 2015; Rice Mill Statement of Cash Flows and Rice Mill Income Statement involved on financial of Rice Mill only on its capacity to mill.

Activities and the bases of financial aspect existing in the rice mill are attached. The rice mill feasibility study gives information about the upgrading equipment of the rice mill and assumptions of the project which were been gathered from the reliable sources.

Project Cost: USD 705,500.00`see table 12 above

Objective/s:

To meet domestic and export market demand with GMP standard requirement To ensure the Whitish White Polished Rice. To compete with other traders on trading the whitish white polished rice locally and abroad.

Target accomplishment of the project is 120 calendar days that involve machinery procurement and installation.

c). the Vanida Rice Mill Profile:

The Vanida rice mill falls under commercial category that is on milling and trading. The name of the rice mill is Vanida Rice Mill. The rice mill established 15 years ago as an ordinary miller and engages under single

proprietorship. The rice mill bears under renewed business permit number: 4409/ERO.KM issued last July 22,

2016.

https://gabrinezgemina0.wordpress.com/2015/03/09/statement-of-cash-flows/

https://gabrinezgemina0.wordpress.com/2015/03/09/statement-of-cash-flows/

https://gabrinezgemina0.wordpress.com/2016/01/24/rice-mill-income-statement-2014/

https://gabrinezgemina0.wordpress.com/2016/01/24/rice-mill-income-statement-2014/

https://gabrinezgemina0.wordpress.com/2015/03/03/index-1/

https://gabrinezgemina0.wordpress.com/2015/03/03/index-1/

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The total asset of the rice mill is approximately USD 187,500.00. (See Balance Sheet as of December 31, 2015).

The rice mill is engaging in milling “rice”. Engaging also on buying wet field harvested paddies and drying it with the use of both sunshine pavement and vertical mechanical drier.

Some other activities and assets involved directly and or indirectly to the rice mill such as paddies storage, rice warehouse, trucks, mechanical drier, drying pavement and some others were not included.

Working capital of this project proposal is USD 187,500.00 as shown in Vanida Rice Mill’s Balance Sheet as of December 31, 2015.

d). Business Activities:

Milling rice from the rice mill’ proceeds of rice producer groups in four target districts and packing with own logo for local market.

Milling rice from rice miller group and packing with Thai logo for EU market. Milling rice from the customers’ farm for their consumption and for selling their farm proceeds

in terms of milled rice by retail or traders in the locality. Milling rice from the firms’ purchased rice as “Buy and Sell” and trades it to some provinces

of Savannakhet, Bolokhamxay, and Vientiane capital.

e). Management / Administrative Aspect.

Organizational structure was set up with 15 managerial staff as permanent status.

Create an employment for 50 workers as daily requirement.

The owner/proprietor stand as the manager/supervisor of the rice mill with 2 permanent workers which stand as the miller operator and the other one is the operators’ helper. Part time workers were sometimes hired when needed especially during harvest season. The number of days per week depends on the supply and demand of the product.

The workers are compensated in a part-time rate of real task, quantity milling, and paddies loading and unloading in approximately 20 USD/day.

f). Technical Aspect of the Vanida Rice Mill:

The rice mill is situated along the national southern road KM 13, Laophokham village, Thakek district, Khammouane province, Lao PDR with an area of rice mill land size is 3 hectares, within 150 square meter of rice mill machinery installation.

Products will be transported from 15 Farmer groups in 21 villages with the area of rice production 2,000 hectares. The rice field in dry season is 763 ha in 4 Districts via access roads to the rice mill site which is around 100 km, and 30 km from rice mill to the market places in Thakek district as capital city.

The rice mill has its own water source, and the power supply is from the provincial branch of Electric du Laos Company limited.

Skilled laborers will be hired within the locality.

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Table13. Vanida rice mill’s balance sheet in 2015

Current Assets: 2010 2011 2012 2013 2014 2015

Cash (see income statement) 305,588.30 316,654.50 377,422.70 384,111.40 702,011.80 733,087.50

Accounts receiveable - - - - - -

Merchandise inventory - - - - - -

Total current assets 305,588.30 316,654.50 377,422.70 384,111.40 702,011.80 733,087.50

Fix Assets:

Milling machinery - - - 100,000.00 - -

Rubber polisher 21,000.00 - - - - -

Ruber huller (rewinded) installed on 2012 - - 30,000.00 - - -

Sunshine concrete pavement for paddies drying - - - 10,000.00 - -

Building 127,446.00 138,334.00 138,633.00 138,772.00 245,188.00 219,926.00

Total fix assets 148,446.00 138,334.00 168,633.00 248,772.00 245,188.00 219,926.00

Current liabilities

Accounts payable - - - - - -

Total current liabilities - - - - - -

Capital

Capital 81,019.30 101,001.50 130,904.70 (8,345.60) 313,138.80 356,431.12

Net income 229,465.30 239,335.50 299,537.70 240,426.40 558,326.80 576,357.12

Total capital 148,446.00 138,334.00 168,633.00 248,772.00 245,188.00 219,926.00

Balance Sheet (USD)

Balance sheet (December 31, 2015)

VANIDA RICE MILL

(with comparative figure for the year 2013 and 2014)

Source: survey 2016

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Table14. Vanida rice mill’s income statement in 2015

2010 2011 2012 2013 2014 2015

Income:

Milling amount of owned rice produced 305,588.30 316,654.50 339,680.43 345,700.26 561,609.44 586,470.00

Milling amount from rice miller group - - 37,742.27 38,411.14 140,402.36 146,617.50

Total Revenue: 305,588.30 316,654.50 377,422.70 384,111.40 702,011.80 733,087.50

Cost of production

Milling cost (electicity) 2,700.00 2,700.00 2,700.00 4,000.00 4,000.00 4,800.00

Some engine maintenance 6,689.00 7,885.00 8,451.00 12,577.45 12,577.45 13,815.13

Total cost of production 9,389.00 10,585.00 11,151.00 16,577.45 16,577.45 18,615.13

Gross Profit: 296,199.30 306,069.50 366,271.70 367,533.95 685,434.35 714,472.37

Operating expenses 8,976.00 8,976.00 8,976.00 18,711.80 18,711.80 20,426.50

Operator wages 16,988.00 16,988.00 16,988.00 37,744.00 37,744.00 40,325.00

Helper wages 5,677.00 5,677.00 5,677.00 7,013.75 7,013.75 7,013.75

Supervision fee 560.00 560.00 560.00 850.00 850.00 850.00

Miscelaneous expenses 34,533.00 34,533.00 34,533.00 62,788.00 62,788.00 69,500.00

Total operating expenses 66,734.00 66,734.00 66,734.00 127,107.55 127,107.55 138,115.25

Net income 229,465.30 239,335.50 299,537.70 240,426.40 558,326.80 576,357.12

VANIDA RICE MILL

Income Statement (year ended December 31, 2015)

Income Statement (USD)


Source: survey 2016

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Table15. Vanida rice mill’s statement of cash flows in 2015

2010 2011 2012 2013 2014 2015

Cash flows from operating activities:

Net income 229,465.30 239,335.50 299,537.70 240,426.40 558,326.80 576,357.12

Depreciation expense 9,782.00 9,782.00 9,782.00 14,355.00 14,355.00 16,250.00

Accounts receiveable - - - - - -

Merchandise inventory - - - - - -

Net cash provided by operating activities 219,683.30 229,553.50 289,755.70 226,071.40 543,971.80 560,107.12

Cash flows from investing activities:

Rubber polisher 21,000.00

Rewinded rubber hullers 30,000.00

Net cash flows from financing activities 21,000.00 229,553.50 30,000.00 226,071.40 543,971.80 560,107.12

Increase (decrease) in cash 198,683.30 229,553.50 259,755.70 226,071.40 543,971.80 560,107.12

Cash balance in the beginning - - - - - -

Cash balance in the end 198,683.30 229,553.50 259,755.70 226,071.40 543,971.80 560,107.12

VANIDA RICE MILL

Statement of Cash Flows (year ended December 31, 2015)

Statement of Cash Flows (USD)


Source: survey 2016

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g). Production Processes of the Rice Mill Project:

1. The Vanida rice mill is milling rice from the commercial rice production groups and rice miller group as trading.

2. This rice will be subjected for milling with a moisture content of 14%. 3. Existing Equipment are Milling Machinery, Rubber Polisher, Rubber huller (rewinded) installed

on 2012 and Building. 4. An equivalent of glutinous rice (TDK) 50 kg of milled rice has been paid of USD 46.25 or USD

0.925 / kg of milled rice. And for Non-glutinous rice (Lao jasmine rice) 50 kg of milled rice has been paid of USD 60.00 or USD 1.2 / kg of milled rice.

5. Average annual volume as of 2015 of milled rice for existing market is 10,394 bags (6,331 bags for glutinous rice, and 4,803 bags for non-glutinous rice).

6. Production cost is USD 18,615.13 7. The Vanida rice mill has milled rice or extending its services four districts of Thakek, Nongbok,

Xebangfai, and Xaybouly (Savannakhet). It does milled rice owned by costumers engaging on trading to be delivered by its rice mill not only within the Khammouane province, but also to some provinces of Savannakhet, Bolokhamxay, and Vientiane capital.

8. Production capacity of the rice mill is 120 bags of milled rice per day. 9. Existing equipment of the rice mill are Rice Storage Room, Milling Machinery (Dryer with, Pre-

cleaner, Paddy separator, Paddy husker, Abrasive whitener, Rice polisher, Rotary shifter, Rice grader, Color sorter, Weight + sawing machine), Truck weight scale, and industrial building. Some other equipment or machineries involved directly or indirectly to the rice mill were not in the project proposal such as cargo trucks and solar pavements.

10. The main products of this rice mill are milling rice of its own products from the lowland rice farm of farmer groups, and rice miller group for trading.

11. Empty and brand new sacks purposely for 50 kg/bag, 25 kg/bag, 10 kg/bag, 5 kg/bag, and 1 kg/bag of milled rice can be purchased from Vientiane capital.

12. In every 100 kg of milled rice, there has an estimated 38 kg of waste material generated. 13. Waste materials are in the form of rice hulls. 14. There are 2 kinds of rice hulls generated, fine and roughed hulls. 15. Fine hulls is usually utilized as hog consumptions and usually the supply is high on demand and

out of the market while the roughed hulls were usually stocked on a pit until decomposed for the use of rice mill’ organic materials on farmer group’s irrigated rice field and some other purposes such as energy source for mechanical dryer.

16. Lack of technical capabilities and machine for whitish white Rice Milled. 17. As the years goes on of operation, rice polisher of the said rice mill is now very obsolete and

can’t compete anymore the modern rice polisher operated in the ASEAN countries. 18. No hardware assistance yet obtained from government institutions. 19. Proposed technology by acquisition & upgrading of Rice White Polisher. 20. Needed equipment specifications must the machine is versatile for milling rice of all degrees of

whiteness with negligible broken. Higher yield of rice, easy replacement and longer life of abrasive wheels and compact design are the highlights of the machine in table 12 above.

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2. Savannakhet Province (Rice Commodity)


According to discussion with PAFO, the province expresses that it really needs to build agro-irrigation

scheme, it’s not just repair or improve some parts of the scheme, but at the end full functioning will

never serve at all. Therefore, the priority of the province is targeting irrigation scheme in Xaybouli

district; in order to improve agro-irrigation in Phouhuazaowa, there are three villages benefiting from

this project namely Kang village, Dangsavanh village, and Hathkhamdy village. The irrigated are is 2,160

hectares. The total cost is approximately 810,000 USD. Another one is Somsa-aat irrigation covering

three villages of Somsa-aat, Nahuathong, and Naxiengkhan with estimate cost of 150,000 USD (if budget

is still available).

Table16. Prioritized irrigation canals need to improve from soil canals to concrete/bricks canals


Xaubouli project No. of village



1 Phouhuazaowa canal 8 2,160 2,160 842 810,000

2 Somsa-At canal 3 400 400 255 150,000

Total 11 2,560 2,560 1,097 960,000

Note: the initial design survey and cost are available at Irrigation section, Savannakhet-PAFO.

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Figure 7- Phouhuazaowa irrigation project map


The access road should be connected to above irrigation, the length of road along to irrigation and serve

three villages of Kang, Dangsavanh, and Hatkhamdy village is around 57 KM, the cost of investment is

285,000 USD. Estimation of daily using the road is 250 trucks, 130 hand-tractors, 177 motorbikes, 85

bicycles and 150 men walking.

Table 17. Infrastructure (farm road) need to improve in Savannakhet

infrastructure Length (km) No. of village No. of HH Cost (USD)


Total 57 3 319 285,000 Source: survey 2016.


2.3.1. State Rice Seed Center (Thasano rice seed center)

The Savannakhet province grows rice in 200,000 hectares to export to China in amount of 20,000 tons

per year. Therefore, how to manage rice value chain properly and share benefit equally to all actors in

value chain are biggest challenges for Lao rice sector in the long run period. The rice seed production is a

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crucial part of quality of rice to be exported; it requires value chain partners to submit ahead a seed

demand to Thasano rice seed center, otherwise farmers and rice millers will complain that no availability

of seed in Lao PDR (mentined by Dr. Phouthdalay the head of Thasano rice seed center). The facilities

are missing in this rice seed center are modernized rice seed dryer, and seed sorter if the center does

not have these, it seems to be hard to produce 6,000 tons per year of seed. This center has good

networking with six seed producer groups at village level, the farmers help for F3 seed multiplication

and send back to center for purity and quality certification before distributing to other commercial rice

farmer groups and rice mills. The list of marketable rice seed are TDK1, TDK8, RD6, Homsavanh, TSN7,

TSN8, and TSN9.

Table 18. the facility and equipment required by Thasano state rice seed center

Type of Center Rice seed demonstration

plots at village level facility required by state rice


Thasano Rice Research Center

Somsa-At village (Official) Muangkhai village (Official) Visaysong village (Official) Kongpathoumvan village (Official) Pongna village (Official) Panomxay village (Official)

Modern seed dryer (25t) X 1 unit Modern seed sorter X 1 unit

60,000 USD 380,000 USD

Total Cost 440,000 USD Source: survey 2016.

Importantly, TDK1 could not grow very well in the higher 30 Cͦ of temperature; TSN7,8,9 carefully

growing in the cold weather will result to low yield; RD6 is Thai seed variety; and Homsavanh (non-

glutinous rice) only grow very well in the rainy season.



The PPTA team discussed with two villages of Somsa-At village in Saybouly district and Phai village in

Champhone district as model village did successfully produced 310,765 tons per year of compose/bio-

fertilizers. Since these villages have obtained technical knowledge from previous ADB and smallholder

development project (Annual PAFO report, 2015). After project phased out, the sustainable approach is

replicating among communities and this is great milestone that this ADB TA8897 project has to take a

consideration on existing groups for strengthening the value chain of rice in Savannakhet.

Table 19. Facilities required by bio-fertilizer farmer groups


Bio-fertilizer production

Somsa-at village (Saybouly) Phai village (Champhone)

Rice husk burner X 3 unit Compost mixer machine X 1 Soil Mixer Machine X 1 unit

600 USD/3 units 500 USD/unit 400 USD/unit


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There are six seed producer groups have sun-contract with the Thasano Rice Seed Center, F2 seeds

multiplication done at the Center and village level responsible for F3 seed multiplication. The training

package on rice seed are provided regularly by the center staff, and some essential equipment provided

by various project namely ADB, Smallholder development project, and EU from phase to phase. The

capacity of each village is 50 Tons per year of seeds and sold back to The Thasano Rice Seed Center to

certify seed. And some villages have dryer and sorter equipment and do own processing and sell directly

to farmers and village rice mills with affordable price 4,000 Lao Kip per kilogram.

Table 20. Facilities required by rice seed farmer groups

Type of farmer Rice seed farmer group Farm facility required Cost estimation


(also provide

services to commercial rice

farmers)

Somsa-At village (Official) Muangkhai village (Official) Visaysong village (Official) Kongpathoumvan village (Official) Pongna village (Official) Panomxay village (Official)

Dryer 5-10 ton Moisture tester Temperature tester Bag sewing machine Small Rice harvesting Machine Thrasher machine 4 F Power 14 HP Tractor KUBOTA L3608SP,1647cc,36 Rice transplanting Machine KUBOTA SPW-48c Rice seed trays X 2,000 unit Combined harvester KUBOTA DC-70 Rice storage 60 X 1 unit Seed spraying Machine X 1 Rice polisher X 1 unit

10,000 USD 500 USD 300 USD 200 USD 5,000 USD 8,000 USD 20,000 USD 6,500 USD 1,320 USD 31,500 USD 20,000 USD 350 USD 4,500 USD



The farmer group establishment is followed to agreement of the Minister regarding agriculture

production groups No. 2984/MAF, issued on 25 September 2014. Those potential farmers can be

selected during the project implementation are shown in the table 21.

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Table 21. List of commercial rice production groups in Savannakhet province

Source: Small Holder Development Project 2012 and updated by PPTA team 2016


There is no any predominant in Savannakhet province.

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Rice mills in Savannakhet province consists of 1,143 rice mills where wet paddies collected and mill for

good quality of milled rice by four commercial rice mills (IDP rice mill located in Nasop. IDP rice mill

located in Khuadam, Siewlinda rice mill and Kasethlao rice mill to buy wet paddies from farmers, small

rice mills, and collectors aiming export milled rice to China market (15,000 tons/year) and European

market (1,445 tons/year). The rice mill category cab be difined based on milling capacity following

Large scale: it’s really modernized rice mill owned by foreigners and Lao investors

Medium scale: it’s usually owned by Lao people

Small scale: it’s also owned by Lao people

Table 22. list of equipment for diffirent categories of rice mill to be upgraded in Savannakhet



IDP Modern Rice Mill Siewlinda Rice Mill Lao World Rice Mill Kasethlao Rice Mill

Financial support Regularly paddies supply Cooperation with medium and small rice mill

Total cost


Mr. Ponma Rice Mill Ms. Yuli Rice Mill Mr. Souksamai Rice Mill Mr. Khounhuan Rice Mill Mr. Seuth Rice Mill Mr. Kham Rice Mill





Mr. Vixay Rice Mill Mr. Thuan Rice Mill Mr. Nouphet Rice Mill Mr. Daothavy Rice Mill


12,000 USD/set 1,000 USD 4,000 USD

Total cost 41,000 USD Source: survey 2016.

This ADB TA8897 project should not try to support those largest rice mills like: IDP, Siewlinda, Lao World,

and Kaserhlao, because of these rice mills have capability to buy bulk paddies from three sources

namely farmers, collectors, and small rice mills. Some of them buy only milled rice and process as final

product to export to regional and international markets since they have modernized equipment in place.

Nowadays, the province has been trying to establish rice association and it’s aiming to sell to one door

service if other investors want to buy rice have to follow bidding process.

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3. Saravane Province (Rice Commodity)


By discussion with DDG of PAFO in Saravane and head of irrigation section, the Nongdeng irrigation

scheme is serious priority to be improved. The secondary and tertiary on-farm irrigation canals of L4 and

L5 (find the figure no.8.2), in this irrigation area consists of 7 water user groups were officially

established by local government in 15 villages that benefit to 518 households.

Table 23. Prioritized irrigation canals need to improve from soil canals to concrete/bricks canals

No. Irrigation scheme in Nongdeng project

No. of village



1 L4: 2nd and 3rd canal 7 200 200 282 75,000

2 L5: 2nd and 3rd canal 8 300 300 310 112,500

Total 15 500 500 518 187,500

Note: the original design survey and cost are available at Irrigation section, Saravane-PAFO.

Figure 8- Layout of Nongdeng irrigation rehabilitation project map

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Figure 8.1- Layout of Nongdeng irrigation rehabilitation project map

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Figure 8.2- Layout of canals and road to be improved map


The road will be improved under CFAVC project, only one road connects to the Nongdeng irrigation

scheme above. The MC-1 shows in the layout of Nongdeng irrigation rehabilitation project in Saravane

province. Meaning that, 8 Km of length will improve along MC-1 main concrete canal.

Table 24. Infrastructure (farm road) need to improve in Saravane

Infrastructure (MC-1 road) Length (km) No. of village No. of HH Cost (USD)


Total 8 15 518 40,000

The cost of investment is 40,000 USD. Estimation of daily using the road is 120 trucks, 110 hand-tractors,

65 motorbikes, 35 bicycles and 97 men walking.

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3.3.1. State Rice Seed Center (Nongdeng rice seed center)

The Nongdeng Rice Seed Center has official name called “Nongdeng Agricultural Research Center” the

land area of this center is 35 hectares, therein 20 hectares of rice farm, 9 hectares of forage, 2 hectares

of pig raising farm, and 2 hectares of fish pond. The center cooperates to the Napok Rice Research

Center, Livestock Research Center, Fishery Research Center in Vientiane capital, and Vietnamese

project. During five years, the center is able to produce 140,130 tons of F2 rice seeds, 418,755 tons of F3

rice seeds, distributed to farmers 380,685 tons, and 238,200 tons of stockpiles (in case of emergency for

drought and flooding). The center has sub-contract with 10 seed producer groups at village level, 30

tons of rice seeds can be produced by each village.

Table 25. the facility and equipment required by Nongdeng state rice seed center

Type of Center Rice seed demonstration

plots at village level facility required by state rice


Nongdeng Agricultural

Research Center

Khamthong village (Official) Donmuang village (Official) Nongkhulu village (Official) Tanpiew village (Official) Nongsai village (Official) Natium village (Official) Phao village (Official) Beungxay village (Official) Muang village (Official) Paksuak village (Official)

Fence installtion (20 hectares) Canal improvement (??? m) Modern seed dryer X 1 unit Modern seed sorter X 1 unit Automatic seeding machine KUBOTA SR-K800TH (500-800 trays/hour) Rice seed trays X 5,000 trays

680,000 USD 784,000 USD 380,000 USD 380,000 USD 5,000 USD 7,500 USD

Total Cost 2,236,500 USD Source: survey 2016.

The center has very low capacity to produce rice seed (35-40 tons per year) since there is poor facilities

and it needs to purchase as shown in table 25.



There is no any farmer produce bio-fertilizer in Saravane province.


There are 10 seed producer groups have sun-contract with the Nongdeng Rice Seed Center, F2 seeds

multiplication.

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Table 26. Facilities required by rice seed farmer groups

Type of farmer Rice seed farmer group Farm facility required Cost estimation


(also provide

services to commercial rice

farmers)

Khamthong village (Official) Donmuang village (Official) Nongkhulu village (Official) Tanpiew village (Official) Nongsai village (Official) Natium village (Official) Phao village (Official) Beungxay village (Official) Muang village (Official) Paksuak village (Official)

Dryer 5-10 ton Moisture tester Temperature tester Bag sewing machine Small Rice harvesting Machine Thrasher machine 4 F Power 14 HP Tractor KUBOTA L3608SP,1647cc,36 Rice transplanting Machine KUBOTA SPW-48c Rice seed trays X 2,000 unit Combined harvester KUBOTA DC-70 Rice storage 60 X 1 unit Seed spraying Machine X 1 Rice polisher X 1 unit

10,000 USD 500 USD 300 USD 200 USD 5,000 USD 8,000 USD 20,000 USD 6,500 USD 1,320 USD 31,500 USD 20,000 USD 350 USD 4,500 USD






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Table 27. list of commercial rice production groups in Saravane province

Source: survey 2016.


There is no any predominant in Saravane province.

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The province has classified two large rice mills represented by Bounma rice mill located in Thamphouang

village, Lakhonpheng district, and Mr. Chou rice mill. For the medium rice mill has six rice mills

represented by head of group the Xieng Non Pho Chalearn rice mill located in NathanKo or Ko village,

Saravane district, and Kan-Ha rice mill located in Houay kok noi village, Vapie district. And there are

seven small rice mills. The annual commercial rice production is 183,547 tons (30 hectares of land area,

meaning that 25,000 hectares of rainfed rice and 5,000 hectares of irrigated rice).

Table 28. list of equipment for diffirent categories of rice mill to be upgraded in Saravane



Mr. Bounma Rice Mill3 Mr. Chou Rice Mill4

1. Dryer (25 tons) X 1 set 2. Pre-cleaner (3t/h) 3. Paddy separator (3t/h) 4. Paddy husker (3t/h) 5. Adrasive whitener X 3 unit 6. Rice polisher X 2 unit 7. Rotary shifter X 1 set 8. Rice grader X 3 set 9. Color sorter (320 channels) X 3 set 10. Weight + sawing machine 11. truck weight scale (weighbridge) 12. Rice storage (30m X 40 m)

65,000 USD/set 10,000 USD/unit 9,000 USD/unit 15,000 USD/unit 12,000 USD/unit 12,000 USD/unit 7,500 USD/set 9,000 USD/set 45,000 USD/set 12,000 USD 125,000 USD/set 240,000 USD



Mr. Bounkham Rice Mill1 Mr. Keobuaban Rice Mill1 Mr. Kanha Rice Mill2 Mr. Thongphanh Rice Mill3 Mr. Pachak Rice Mill3 Mr. Soukkhamsai Rice Mill4





Mr. Tuay Rice Mill1 Mr. Kongkeo Rice Mill2 Mr. Bounthavy Rice Mill2 Ms. Khonesavanh Rice Mill3 Mr. Ti Rice Mill4 Mr. Dong Rice Mill4 Mr. Kham Rice Mill4


12,000 USD/set 1,000 USD 4,000 USD


1 Rice mill located in Saravane district 2 Rice mill located in Vapi district 3 Rice mill located in Lakhonpheng district 4 Rice mill located in Khongxedon district

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Note: IDP rice mill, Seng-Arthith rice mill, and Pavina rice mill in Champasak province come and buy from

medium and small rice mill in Saravane province.

4. Champasak Province (Vegetables Commodity)


The Champasak province has 12 reservoirs, and 4,197 Indian water pumps with 16 horse powers. The 262 water users ‘groups are formed and fee collection is 100,000 kip per ha that it’s reasonable for irrigated rice farmers, the irrigated are is 17,546 ha for dry season and 20,915 ha for rainy season. By discussion with PAFO in this province, irrigation project for vegetable will be created a new pond for individual and cluster purposes. Therefore, the PPTA team surveyed only there are three villages of THongset, Nongsoung, and Kongtoun for representatives of vegetable production group in Champasak (Pakxong, LaoNgam, and Thateng district) and Vientiane province.

Table 29. Prioritized irrigation needs to create water collection ponds


Pakxong project No. of village



1 50 Water collection ponds 3 100 100 226 295,800

Total 3 100 100 226 295,800

Note: the initial design survey and cost are not available at Irrigation section, Champasak-PAFO.

Figure 9- Layout of water collection pond creation

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Amount ($)

Remark

1 Earth excavation cu.m 1765.33 2.03 3583.62

2 LDPE sheet (0.3 mm thick) sq.m 510.44 2.96 1510.90

3 LDPE lining sq.m 510.44 1.61 821.81

Total: 5916.33 Per 1 pond


The Champasak province aims to increase the farm production by added value to improve road

access at beginning of road no.1 starts from Nongbungkeo village through Phoukhaothong, Nongte,

Nonsavang, Nongkall, Haouayxan, and ending at Xetapong village; it’s around 7 km of distance. And

road no.2 starts from Kongtoun to Houayhinkhao, and ending at Seikhot village, it around 7 km of

distance. There are 10 villages benefit from these road improvements.

Table 31. Infrastructure (existing farm road) need to improve in Champasak

Infrastructure (access road) Length (km) No. of village No. of HH Cost (USD)

Road no.1 improvement 7,5 7 811 162,286

Road no.2 improvement 7,5 3 357 162,286

Total 15 10 1,168 324,571

The cost of investment is 27,500 USD. Estimation of daily using the road is 171 trucks, 200 hand-

tractors, 88 motorbikes, 119 bicycles and 282 men walking.

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Figure 10- Maintenance gravel access road no.1 (Length = 7490m, width = 5.00 m)

Figure 11- Maintenance gravel access road no.2 (Length = 7490m, width = 5.00 m)

Existing gravel access road to be improved (maintenance)

Existing Gravel Access Road to be Maintenance

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Figure 12- Maintenance gravel access road (Length = 7490m, width = 5.00 m)



Amount ($)

Remark

1 Scarify and recompact existing road 15 cm depth

sq.m 37450.00 0.47 17601.50



cu.m 5992.00 11.20 67110.40


cu.m 55.89 300.52 16796.06


sq.m 90.00 184.51 16605.90


Total: 162069.29 $

21638.09 $/km

4.3. Value Chain Actors:


Boloven plateau is a highland in the south of Lao PDR consists of Pakxong district (Champasak), Thateng (Sekong), and LaoNgam (Saravane). It is rich and suitable for growing horticulture crops. Not surprisingly, these three districts are at the centre of Lao PDR’s cabbage production. Cabbages are sold through local traders both to the capital Vientiane and for export to Thailand where Bangkok is the main consumption centre. The Boloven farmers can produce more than relatively low-value cabbage. With the growing demand for non-native and safe food in South East Asia and elsewhere and with increasing tourism in the area, opportunities for other, higher value crops, are growing. The altitude of Pakxong (> 1,000 meters) and the rest of the Boloven provide a cool climate. Adequate rainfall allows year round production. This gives the area a comparative advantage over the hot, and often dry, lowlands surrounding it. A range of cool climate and subtropical crops can be produced for three potential

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markets: the local hotel and restaurant tourist-oriented market, the Thai market with Bangkok as main centre of consumption, and the overseas Asian ethnic markets in Europe and the Middle East.

But although the potential is there, it is not always easy for the local farmers to translate this into a profitable business. The obstacles and challenges range from unfamiliarity with the new crops and with the international standards and specifications of the demanding buyers. There are also complicated export procedures to deal with, new harvesting and packaging methods and the need to finance on-farm investment such as plastic canopies, net houses, pump sets and irrigation equipment. The growing and post-harvest practices for the often specialty new crops such as coriander, Italian basil and rocket salad, are very different and more demanding than for the bulky cabbage which they are used to growing. And while cabbage can always be sold to multiple itinerant middlemen although sometimes at a loss, these new crops must be grown under contract to make sure that there is a buyer who usually also must provide certain inputs such as seed, and growing specifications.

Recently, the vegetables post-harvest technology in Bolovan has three practices such as: household processing (small scale), fresh vegetables pre-post-harvesting (large scale), and dried vegetables processing (large scale).


There is no any farmer commercially produce bio-fertilizer in Champasak province. The farmers only

produce for home garden use purpose.

4.3.2.2. Vegetables seed production group

There is no any commercial vegetables seed farmer production group. Most of seeds imported from

Thailand, Japan, and China who are main seed suppliers in South East Asia countries. Since Paxong

Boloven plateau is large cabbage produce in Lao PDR and export to Bangkok, Thailand. Currently the

Chia Tai Company produces specific seeds for Lao Vegetables farmers in Paxong Boloven plateau such

as: Champasak1 seeds (rainy season) and Champasak2 seeds (dry season), these seeds are cabbage and

Chinese kale. The most vegetable types that vegetables farmers have been growing there are: cabbage,

Chinese flowering cabbage, Chinese kale, long yard been, chili, eggplant, and tomato. The annual cost of

vegetable seeds spent is 562 USD per hectare.

4.3.2.3. Commercial vegetables production group




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Table 33. list of commercial vegetables production groups in Champasak province


The Pakxong and Bachiengchaleunsouk districts mainly focus on coffee plantation and vegetables

production. The vegetables create stable income to farmers 20 million USD/year (interview Mr.

Viengxay Sipaphone, deputy head of PAFO in Chapasak province). This value chain has been employing

contract farming with 21 provinces of Thailand to export cabbage, Chinese kale, tomato, long-yard bean,

chilli, pumpkin, lemon, etc. One of key chain actor, reported by Mrs. Inpaeng Samuntee as the president

of Pakxong Development Export-Import Co.,ltd known as huge collector buys vegetables from 840

vegetables producers in Pakxong district in Lao PDR and export to Ubonraxhathani market in Thailand.

Currently she asks 50 ha of land concession near Wangtao Lao-Thai border for vegetables shifting

market where vegetables hub will be employed (cool chains and refrigerated trucks).

4.3.2.4. Vegetables processing in Champasak province

4.3.2.4.1. Industrial vegetables processing for export market

4.3.2.4.1.1. Fresh vegetables hub

4.3.2.4.1.1.1. Commercial vegetable producer in Pakxong district

Table 34. the farm facility required by fresh vegetables farmer groups


Commercial fresh vegetables

production in

Houayset village (Official) Katoud village (Official) Kongtoun village (Official)

Green house X 60 unit Depth electric pump + installation Water tank (2,500 liters)

1,500 USD/unit 15,000 USD/unit 500 USD/unit

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Pakxong, Thateng* and LaoNgam**

(large scale)

Lycheung village (Official) Nongsoung villages (Official) Thongkatay village Thongkalong village Lakkhao village* Kongta-Youn village* Hua-Xedon village* Phoukham village** Houayseng village** Nongtom village** Pork hem village** Daxianoi village** Len village**

Storage building (10m X 20m) Vegetables pre-processing unit (cold room, grading, washing, and packing) Refrigerated truck

40,000 USD/unit 50,000 USD/unit 31,000 USD/unit

Total Cost 128,000 USD

4.3.2.4.1.1.2. Vegetables shifting place

During the study, the PAFO officer, PPTA team, Provincial Commerce, and Environment Officer visited

the currently market place for vegetables commodity shifting place in the Lao-Thai border known as the

Vangtao – Chongmek international border check point. Ms. Inpeng SAMUNTEE the president of Pakxong

Development Export-Import Co., LTD and Mr. Montree CHOMSAMUT the president consultant in

agricultural economics were interviewed. This commercial fresh vegetables value chain has been

employing contract farming with 21 provinces of Thailand to export cabbage, Chinese kale, tomato,

long-yard bean, chilli, pumpkin, lemon, banana, etc. One of key chain actor, reported by Ms. Inpeng

Samuntee known as huge collector buys vegetables from 840 vegetables producers in Pakxong, Thateng,

and LaoNgam district in Lao PDR and export to Ubonraxhathani market in Thailand. Currently she asks

50 ha of land concession near Wangtao Lao-Thai border for fresh vegetables shifting place called

“Champasak Agriculture Market Center” where vegetables hub will be employed two cold rooms and

few refrigerated trucks in Laos side (detail can find figure 13-layout vegetables shifting place map). This

market place will ensure an acceptance for international hygiene standard; it costs 25 million USD of

infrastructure investment.

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Figure 13- Layout of Vegetables shifting place map

Legend:

⓪⑪ : Bio-waste and recycle for renew energy source (biogas) ①②③④ : Vegetables storage ⑤⑥ : Cold room ⑦⑧⑨⑩ : Vegetables storage ⑫⑬⑭⑮ : Canteen ⑯⑰⑱⑲ : Guest house ⑳ : Money exchange : Entrance and exit gate : Office : Logistic point 15 Nos. : Bike parking area 16 Nos. : Car parking area 17 Nos. : Truck parking area

23

21

24

22

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4.3.2.4.1.2. Dried vegetables hub

Dried vegetables production for export to Taiwan in China, it starts operating in 2015 by the First Foods

Sole Co., Ltd, this company located in Thongkatay village, Pakxong district, Champasak province, Lao

PDR. Mr. Liao Chin-Hua as chairman, and Mr. Onkeo Bunthavongxinh as committee (ex-head of PAFO-

Champasak) are the key contact persons. Currently there are six villages grow fresh vegetables and

supply to this company 1,000 – 2,000 tons per year to process as dried vegetables for export. The

company provides technical training on particular crops; vegetables seeds and fertilizers also give to

farmers, farmers will take care on land preparation, farm infrastructure, and follow crop cultivation

agenda provided by company. The production capacity of this company is 700 tons per day, chemical

residue will be firstly inspected at the farm before entering to company and secondly inspection can be

done once again before packaging. The heat steam dryer uses for first stage of food processing, it

follows by cold team dryer sets at - 41 Cͦ to make foods dry properly and hygienic produce.

Figure 14- Layout of dried vegetables processing steps in the First Foods Sole Co., Ltd

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Table 35. the farm facility in required by dried vegetable farmer groups


Commercial dried vegetables

production in Pakxong

(large scale)

Lak11 village Lak48 village Lak49 village Lak50 village Nonsavang village Nongchanh village

10 Green houses Depth electric pump + installation Water tank (2,500 liters) Storage building (10m X 20m)

15,000 USD 15,000 USD/unit 500 USD/unit 40,000 USD/unit

Total Cost 70,500 USD

4.3.2.4.2. Household agro-processing group

Table 36. the farm facility in Boloven plateau (Pakxong, Thateng, and LaoNgam)


Mak-mao fruit Wine production

in LaoNgam (small scale)

Dong village** Horkong village** LaoNong village** Haysok village** Thongko village**

Bottle enclosure machine X 1 unit Bottles pasteurized dryer X 1 unit Bottle grasses X 1,000 bottles Large pot X 2 units Fruit grinder X 2 units Water distilling machine X 1 unit Vine measurement meter X 1 unit Wine Filter X 2 units Gas stove X 1 unit Vine stainless container (2,000 liters) X 1 unit

1,000 USD/unit 4,000 USD/unit 800 USD 160 USD/unit 120 USD/unit 150 USD/unit 100 USD/unit 500 USD/unit 300 USD/unit 300 USD/unit

Passion fruit juice production

in LaoNgam (small scale)

Nongkae village** Phok-Ngay village**

Bottle enclosure machine X 1 unit Bottles pasteurized dryer X 1 unit Bottle grasses X 1,000 bottles Fruit grinder X 2 units Water distilling machine X 1 unit Sugar measured meter X 1 unit Gas stove X 1 unit Stainless container (2,000 liters) X 1 unit Refrigerator X 1 unit 100 Kg scale X 1 unit 50 Kg scale X 1 unit 15 Kg scale X 1 unit

1,000 USD/unit 4,000 USD/unit 800 USD 120 USD/unit 150 USD/unit 100 USD/unit 300 USD/unit 300 USD/unit 500 USD/unit 100 USD/unit 80 USD/unit 40 USD/unit

**Mr. Khamsavath Phanthavilay, head of green earth center (VFI), contact no. +856 (020) 55041042

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4.3.2. The Feasibility Study of a Six Year Upgraded Vegetables Collection and Marketing Infrastructure (Case of Thongset vegetables hub)

During the technical committee meeting held on 29 August 2016, the Thongset vegetable hub in

Champasak province was proposed by technical committee for selecting case study classified as Lao

owned enterprise and cooperative that local government aims to support for modern farmer group.

4.3.2.1 Overview of the Thongset vegetable hub

Company name: Vegetable Cooperative Enterprise in Pakxong Owner: Mr. Mone as farmer leader Contact no.: 020 97866997, Thongset village, Pakxong district, Champasak province, Lao PDR Location: 15˚12’59”; 106˚ 18’ 8”

Vegetable Cooperative Enterprise in Pakxong Location: this Thongset vegetable hub is located in Thongset village, Pakxong district, Champasak

province.

Name: Krom Palit Peut Pak (Group to Supply Vegetable Crops)

Area: 33 ha; 24 families

Facilities: 40 Green Houses and sub-surface irrigation and cold chain (cold room at site, refrigerated

truck come from Thailand to pick up packaged vegetables

Produce: High quality organic

Business Model: Vegetable Hub and Spokes. Hub is located in Thailand, spokes are in Laos. Farmers

produce on contract to Hub. Hub picks up vegetables from cooperative and sells to retail outlets in

Thailand (Marco, Lotus and Big C) Mean price paid to farmers for cabbage is 7,000 Kip/kg (30 Baht) .

Retail Price in Thailand is 65 Baht/kg. Retail price to farm gate ratio is 2:1.7. Compare this with the price

paid to farmers for non-organic lower quality cabbage (1,500 Kip/Kg- price ratio, organic to non-organic

4.7:1)

Value Chain Linkages and Comparative Advantage: Pakxong district is situated in the Bolovens highlands in the south of Laos. The land in Paksong is rich and suitable for growing horticulture crops. Not surprisingly, Pakxong district is at the centre of Lao PDR’s cabbage production. Cabbages are sold through local traders both to the capital Vientiane and for export to Thailand where Bangkok is the main consumption centre.

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But Boloven farmers can produce more than relatively low-value cabbage. With the growing demand for non-native and safe food in South East Asia and elsewhere and with increasing tourism in the area, opportunities for other, higher value crops, are growing. The altitude of Pakxong (> 1,000 meters) and the rest of the Boloven provides a cool climate. Adequate rainfall which allows year round production. This gives the area a comparative advantage over the hot, and often dry, lowlands surrounding it. A range of cool climate and subtropical crops can be produced for three potential markets: the local hotel and restaurant tourist-oriented market, the Thai market with Bangkok as main centre of consumption, and the overseas Asian ethnic markets in Europe and the Middle East.

But although the potential is there, it is not always easy for the local farmers to translate this into a profitable business. The obstacles and challenges range from unfamiliarity with the new crops and with the international standards and specifications of the demanding buyers. There are also complicated export procedures to deal with, new harvesting and packaging methods and the need to finance on-farm investment such as plastic canopies, net houses, pump sets and irrigation equipment. The growing and post-harvest practices for the often speciality new crops such as coriander, Italian basil and rocket salad, are very different and more demanding than for the bulky cabbage which they are used to growing. And while cabbage can always be sold to multiple itinerant middlemen although sometimes at a loss, these new crops must be grown under contract to make sure that there is a buyer who usually also must provide certain inputs such as seed, and growing specifications.

A FAO-operated and CFC-funded project is helping farmers to deal with these challenges. “We want to establish a direct link between Lao farmers and buyers in Thailand of higher-value produce. Framers should be fairly treated in this cross-border trade, while improving their productivity and income. The project aims to connect the Boloven vegetables producers to international markets but in the meantime it has become clear that there are also some opportunities to supply local restaurants serving Italian and French cuisine.

The project initially targeted 40 farmers in Pakxong district who used to produce low-value cabbage. The project provided them with training on land preparation, seeding techniques and pest and disease management (with support from FAO-IPM Programme and Australian Volunteer International Development Programme) to grow clean and Good Agriculture Practice (GAP) certified cabbage, iceberg lettuce, coriander, rocket salad and a number of other crops. Plastic sheet for canopies was made available so that farmers could produce delicate crops such as lettuces and coriander also during the rainy season.

FAO introduced several potential buyers from Thai companies to the farmers and facilitated the establishment of written contracts to create a responsible and mutually fair relationship between the farmers and the buyers. In close collaboration with national and provincial authorities, a two year agreement was signed with a Thai company with extensive experience on exporting certified produce and a strong sense of corporate social responsibility.

In 2012, there was a survey in the five provinces in Boloven where cabbage farmers are located. This showed that most of them sell their cabbage at farm gate. They almost fully rely on middle-men and grow without contract. The use of contracts helped to ensure for the buyer a regular supply of good quality produce and for the farmers an assured market, a stable price and thus a stable income.

Some of the vegetables reach the tables of Europe and the Middle East. The buyer in Thailand re-exports to the EU and the Middle East. A total of 1,500 kg of coriander was exported in the four months from

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May to August 2014, valued at 15 million LAK, for re-export to Europe. Other crops that will be exported are chili, sugar pea, mint, tomato, eggplant, yard long bean and asparagus. Currently exports take place once fortnightly by refrigerated pick-up truck with a capacity of 800 kg. When production volumes pick up the frequency will be increased.

The project has so far benefited 40 farmers, allowing them to have a higher and more stable income than when they grew only cabbage. The FAO-CFC project funded a small packing house that is being completed and that can be used by any current or future buyers. It will help to streamline the logistic process and allow the establishment of a supply chain directly from Pakxong to Bangkok airport without the produce having to pass through a Thai packing house. This will further help Lao farmers to become more competitive thanks to reduced post-harvest losses, reduced transport and logistic costs and improved quality and it will help to attract more buyers and exporters to Pakxong and neighboring districts.

Cost of production : For one green house (one season: (770,000 Kip)

Revenue: One green house (one season=2,030,000 Kip)

Net Profit: One green house (one season= 2,030,000 kip – 770,000 kip = 1,260,000 kip /green house)

Total net profit: 3 seasons= 1,260,000 kip x 3= 3,780,000 kip

Total profit for cooperative: 40 green houses x 3,780,000 kip = 151,000,000 Kip ($ 18,667 for one year)

Management: Managed by cooperative with quality control provided by Thai technician who makes

rounds at site

Training and extension: Thai Hub buyer has roving technician who supervises quality among framer

groups in Thailand and Laos.

Extension and Training: Thai HUB training DAFO/Paksong; DAFO/Paksong trained farmers

Investment: Start-up support from ODOP (FAO)- seeds and fertilizer in first year-after second year,

seeds only

Crops: cabbage, tomato, chili, cucumber, long bean, egg plant, strawberry, lettuce, kale

Investment in green houses, cold chain and irrigation: Paid by cooperative household members

(4,000,000,000 kip, $50,000)

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Figure 15. Thongset vegetable production activities and infrastructure

Cooperative Leader with Cabbages Flowering Horticulture

Under root Irrigation Strawberries under Plastic

Chili under Plastic Other Variety of Chili

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Sub-surface irrigation Cold Store

Figure 16. Location of Thongset vegetable hub

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4.3.2.2 Functions of the Vegetables Collection and Value Addition Cluster (vegetable hub)

The function of Thongset vegetable hub known as “Fresh produce packaging house in Thongset village”

to reduce post-harvest loss from the farm gate and store vegetables longer since daily export quota is

limited for some of the day when farmers’ production is go peak may affect to low price. The Thongset

vegetable hub is managed by association, 33 members will benefit from this technology.

4.3.2.3 Start-Up Requirements for a Vegetables Collection and Value Addition Cluster (vegetable hub)

a). Equipment:

Table 37. Fresh produce packaging house in Thongset village, Pakxong district, Champasak province

NO. List of equipment Quantity Availability

Cost (USD) Yes No

1 Land Area ( 1 hectare) 1 X 30,000.00

2 Building (10 m X 13.5 m) capacity 1 X 12,000.00

3 Washing machine 1 X 2,000.00

4 Grading machine 1 X 3,000.00

5 Sorting manually - - - -

6 Cold room (5m X 4m X 4.5 m) capacity 10 tons 1 X 20,000.00

7 Air condition X 500.00

8 Refrigerated truck, capacity 3 tons 1 X 30,000.00

9 Refrigerated system incl. installation 1 X 15,000.00

10 Truck 1 X 15,000.00

11 Electric power source incl. installation 1 X 1,000.00

Total 128,500.00

b). Management:

Managed by cooperative with quality control provided by Thai technician who makes rounds at site

c). Training and Capacity Building:

The role of Thai vegetable hub is providing the training package to DAFO staff and vegetable farmer

leaders in Paksong district; the DAFO staff in Paksong will train farmers in target area to supply produce

to Thai hub in the border (Wangtao-Chongmek international check point), Thai Hub buyer has roving

technician who supervises quality among framer groups in Thailand and Laos.

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d). Certification:

The Pakxong vegetable producer group certified as GAP by Department of Agriculture (DOA) and the aim

of CFAVC project targets Organic Agriculture certification by duration of project implementation phase.

DOA experiences Participatory Guarantee System (PGS) approach that very simple method to farmers

recording actual works in the field. The cost of certification is approximately 6,000 USD per year.

e). Marketing:

Most of Pakxong farmers sell their cabbage at farm gate. They almost fully rely on middle-men and grow without contract, but the registered farmer as commercial vegetable production group signed contract with Thai hub with three times of higher price. The use of contracts helped to ensure for the buyer a regular supply of good quality produce and for the farmers an assured market, a stable price and thus a stable income.

Some of the vegetables reach the tables of Europe and the Middle East. The buyer in Thailand re-exports

to the EU and the Middle East. A total of 1,500 kg of coriander was exported in the four months from

May to August 2014, valued at 15 million LAK, for re-export to Europe. Other crops that will be exported

are chili, sugar pea, mint, tomato, eggplant, yard long bean and asparagus. Currently exports take place

once fortnightly by refrigerated pick-up truck with a capacity of 800 kg. When production volumes pick

up the frequency will be increased.

4.3.2.4 Possible Models of a Vegetables Collection and Value Addition Cluster (vegetable hub)

This sub-project will support and build the capacity of smallholder producers through private sector

(known as Vegetable Cooperative Enterprise in Pakxong) as driven actor of vegetable value chain. The

proposed business model below shows clear roles of each actor. The vegetable producer groups will

focus on the quality of the production, and private sector invests in processing facility (Vegetable

Centre) in order to reduce spoilage which it affects to reduce greenhouse gas (GHG) emissions and

improve smallholder producer benefits from vegetable production in Lao PDR by introducing low

emission production and productivity practices for instance, slurry from biogas digesters will be used as

source of fertilizers into vegetable gardens.

The ordinary and organic vegetable value chains will be supported through chain actors’ performance

such as market information services, logistics, standard, quality perception, and quality control (GAP,

SPS, and Organic certification service), transport, financial services, and technical assistance. As

vegetable production in Lao PDR is known as natural produce, the system will be improved by applying

the postharvest technology; and other innovative, efficient and environmentally sustainable production

and postharvest systems, such as input supplies, production, collection, wholesaling, and retailing.

Through the sub-project component, there will be introduction of proper postharvest management

technologies to increase percentage of value added through productivity enhancement and loss

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recovery. Since vegetable produce has to be transported over significant distances and climactic regions,

encountering different environments affects the quality of the produce; an integrated cold chain is an

essential component to develop an effective and balanced supply chain. The Integrated Cold Chain

Model is a farm-to-retail model that links production to the retail end of the supply chain, i.e. purchasing

produce at farm-gate and distributing produce through the value addition to the retailers.

Figure 17- Proposed Model of Vegetables Collection and Value Addition Cluster

Source: Dr. Steven Shepley and Mr. Phetsoulaphonh Choulatida (March, 2016).

Boloven plateau (it’s covering of Pakxong, LaoNgam, and Thateng district) is at high altitude with cool

weather. The geography favors the quality maintenance of vegetable produce in on farm storage.

Therefore, there is need and/or no need to invest in cold chain storage rooms at this location. But

refrigerated transportation is needed due to long distances from farm to retail markets or supermarkets

and exports to neighboring countries such as Thailand.

Vientiane province is in the lowlands, where the weather is hot and humid and cold storage is an

essential part of the cold chain link. At the proposed vegetable center, the focus will be to link the

center with refrigerated transportation to retail and export locations.

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Figure 18- Fresh produce packaging house design in Thongset village

Source: Survey 2016

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5. Vientiane Province (Vegetables Commodity)


Vientiane province has a total irrigation of 970 schemes, the total irrigated are is 52,596 ha; therein 14,467 ha is able to supply water for dry season. There are 7 categories of irrigation type. 99 weirs, 43 Indian pumps, 19 reservoirs, 11 water gates, 149 soil weirs, 51 gabion-weirs, and 590 traditional weirs. The water users ‘groups are formed and fee collection is 30,000 kip per ha that it’s reasonable for irrigated rice farmers.

Table 38. Irrigation to be repaired for crop production

No. Irrigation scheme No. of village



1 Nam Chim 03 300 150 127 562,000

2 Nam Xouang 2 CP 07 600 550 260 454,000

Total 10 900 700 387 1,016,000

Note: this cost is excluded for design and survey.

During the focal group discussion, there are two schemes proposed into the plan that need to be improved the existing schemes, and rehabilitate canals or improve soil canals to concrete canals that propose in the table 3. Mr. Lom Phanvongsa the deputy head of irrigation section said, Nam Chim and Nam Xouang 2 CP are very crucial schemes to expand irrigated area and increase twice rice and vegetables production for 387 households.


Local government does not identify yet



The propose is same as Pakxong vegetable farmer group.


The use of bio-fertilizers is necessary even with the costs because it improves the soil properties (soil

structure, pH …) and increases the rice yield, Mr. Kongkham has better rice yield by 0 fertilizer

application but in reality he grazed his 100 cattle on his rice field in dry season that is automatically

applying cattle dung in rice field. For BOF F1 and F4 application the yield was similar; overall the 3 BOF

(F1, F2 andF4) application on rice production was not big different in terms of yield, but it is significantly

increases comparing to baseline T1. The market price of paddy rice is 2,500 kip/kg that means 2,500,000

kip/ton.

61 | P a g e


There are two family bio-fertilizer factories in Vientiane province that use to be supported by ADB

TA8833 and even if project phased out, these two factories are still running (according to field visit in

June 2016 by PPTA team).

5.3.2.1.1. Kongkham Bio-char Organic Fertilizer (Family Enterprise)

Km52 Enterprise Profile:

The enterprise located at km52, Lak Ha Sip Song village, Phonhong district, Vientiane province. Mr. Kongkham is owner of rice mill, cattle farm, rice field, pig farm, alcohol enterprise and retail shop. The enterprise associates with a rice mill that is faced with an increasing environmental pollution issue from the growing stockpile of unused rice husk to produce bio-char.

The enterprise has linkages to pig and cattle operations where organic manures will be used and some

animal manure will be used in a new technology bio digester with slurry management systems linked to

the soil amendment operation. An additional bio-digester will be made available to farm households

that agree to supply slurry to the bio-fertilizer operation – if the slurry is provided a CAPEX subsidy

linked to the safe disposal of slurry it would be possible in future up-scaling. The combination of

compost, dried dung, bio-char and possibly bio-slurry will be mixed, composted together and where

relevant pelletized.

Funding limit for the product promotion: Although the field demonstration campaign is the successful

operation, it lacks the continual support from the marketing team in term of the customer feedback and

the technical support. In fact, the demonstration campaign is done only one time per target area. The

team does not follow the action the year after due to the limit of funding.

The Kongkham BOF enterprise has granted a business license from Department of Industry and

Commerce in Vientiane Province since 27 May 2015 with 50,000,000 kip of capital registration (100%

domestic investment). For the formula registration, Department of Agriculture Land Amelioration and

Management (DALAM), MAF issued an official paper no.0543/DALAM date 11 June 2015 and certified

the new BOF formula two (1.3-3.1-1.3) produced by the enterprise, which is currently in the initial

operation stage.

Table 39. The BOF formulation (Formula 2) adopted by Kongkham enterprise

Ingredients N P K MC (%) Total Kongkham’s Formula 2 Fresh weight

Bio-char(Rice husk/Corn cob /Rice straw, dry manure)

N=1.5 P=3 K=0.5

Rice husks bio char 0 0.12 0.96 5 30 0.0 0.0 0.3 16

Cattle manure 1.6 0.2 3.3 16.4 5 0.1 0.0 0.2 3

Pig manure 2.2 1.8 1.4 15 0.3 0.5 0.2 13

Bat dung 0.9 13.6 1.2 15 0.1 2.0 0.2 8

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Slurry pig 3.1 2.3 1.0 76 10 0.8 0.6 0.2 54

Rice bran 1 1

Limestone powder (Ca(OH)2 )

2 2

EM 60 cc 60 cc

Wood Vinegar 60 cc 60 cc

Soil clay(Termite mound)

0.1 0.2 2.2 10 0.0 0.0 0.2 10

Total 29.1 100 1.3 3.1 1.3

100

5.76

100

The product field demonstration program will utilize the technical inputs from the DAFO plant

production and livestock staff assigned to the two clusters and the village level volunteers. As part of

their involvement the Pilot will provide awareness, training and capacity building that will include

courses in biomass, bio-char, bio-slurry, carbon‐nitrogen ratios, and bio-fertilizers etc. Course work

would also address farm demonstration planning and implementation to ensure a structured and

recordable field demonstration program can be completed. Cluster staff would work with farmers and

the product development team to ensure agronomic inputs into the planning of product demonstration

plots. These plots will include different formulations and product mixes. ADB TA 7833 staff would

provide additional technical support during the planning of the field demonstration plots.

Farmer demo plots will be implemented using farmer practice with the input supplied by the pilot. It is

envisaged that these plots would have access to the cluster staff, however the level of input would be

less intensive.

The demonstrations will include both vegetable production and rice production systems. Any inclusion

of NPK nutrients will be based on crop nutrient demand requirements and the costs of the formulations

relative to expected benefits.

The up-scaling opportunity from the pilot involves business development grants where the mill and

livestock farmers could access funds for more efficient and permanent bio-char production, and soil

amendment production technologies. The rice mill would include the new products within its supplier

support network – including farm input supplies where it would be sold and used as part of an ongoing

farm management decision.

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5.3.2.1.2. Meksavanh Bio-char Organic Fertilizer (Family Enterprise)

Km68 Enterprise Profile:

The enterprise located at Km68, Vangmon village, Phonhong district, Vientiane province. Mrs. Souliya VALINTHO (she is daughter of Mr. Meksavanh) is owner of cattle farm and rice field. The Meksavanh BOF enterprise is a large farming operation with 5 ha of rice field and 34 cattle. Close to the operation area there are number of smaller rice mills with rice husks stockpiles.

The purpose of the pilot is to produce bio-char from rice husks at the mills and to formulate local bio

fertilizers and soil amendment products. The intent is for the products to be demonstrated on the

enterprises own land with additional vegetable demonstrations undertaken by farmers in the SAKA

cluster. Within the clusters new composite biogas digester technology will be installed ‐ both with the

enterprises and with adjacent farmers that agree to supply and manage their slurry within the soil

amendment enterprise.

The Meksavanh BOF enterprise has granted a business license from Department of Industry and

Commerce in Vientiane Province since 27 May 2015 with 50,000,000 kip of capital registration (100%

domestic investment). For the formula registration, Department of Agriculture Land Amelioration and

Management (DALAM), MAF issued an official paper no.0543/DALAM date 11 June 2015 and certified

the new BOF formula one (1.3-1.9-1.92) produced by the enterprise, which is currently in the initial

operation stage.

Table 40. The BOF formulation (Formula 1) adopted by Meksavanh enterprise

Ingredients N P K MC (%) Total Meksavanh’s Formula 1 Fresh weight

Bio-char(Rice husk/Corn cob /Rice straw, dry manure)

N=1.5 P=3 K=0.5

Bio char 0 0.12 0.94 5 25 0.00 0.03 0.24 17

Cattle manures 1.58 0.17 3.77 16.4 23 0.36 0.04 0.87 17

Poultry dung (farm)

2.42 6.29 2.11 7.3 25 0.61 1.57 0.53 28

Slurry pig 3.12 2.34 0.97 76 10 0.31 0.23 1.10 26

Limestone powder (Ca(OH)2 )

2 10

Rice bran 1 1

EM 60 cc 60 cc

Wood Vinegar 60 cc 60 cc

Clay soil (Termite mound)

0.11 0.18 1.28 20.2 15 0.02 0.03 0.19 15

Total 31.3 100 1.30 1.90 1.92

100

5.12

100

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For vegetables production, the bio-char and BOF application on 27 vegetable plots (27 families) of

different varieties that have been experimented in 4 cycles/rounds: 2 cycles in dry season and 2 cycles in

rainy season. The demonstration consisted of 5 treatments and 3 replications. The subplots were: T1

(usual farmer practices used as a baseline to compare the effectiveness of BOF), T2 with Bio-char (30%

rice husk+30% manure + 30% clay soil+ 10% straw/bamboo/chicken dung via kiln pyrolysis process), T3

with BOF formula 1 (F1), T4 with BOF F2. The yield of different types of vegetables and the soil

properties and soil structure have been significantly improved. BOF laboratory test and its

demonstration results have been submitted to DALAM /MAF periodically after each cropping cycle.

In Round 1 the BOF formula 1 application on Chinese cabbage gave better production than others, but in

Round 2 the BOF formula 2 shows better production yield, except Vinai and Tounkham. It is important

also crop rotation after the first cropping cycle is needed for better yield. The table also shows that

better planting lettuce after Chinese cabbage than other crops (same variety), except Sivong in Noy

village. The Chinese cabbage after Chinese cabbage plantation is shown the same production in Sandy

loam soil (Vinai in Navone village) and in Silt Loam soil (Champathong in Navone village).

The Table also shows the soil structure, which plays an important role in vegetable production. The

lettuce production in Sandy loam (SL) soil production in Round 2 after Chinese cabbage is better than

the lettuce production in sandy Clay soil.

Table 41. Average Vegetables Production (kg/m2)

Village Soil

structure Vegetables

types T1: control

(farmer practices) T2: Bio char (10 tons/ha)

T3: Formula1 (10 tons/ha)

T4: Formula2 (10 tons/ha)

Km52 Loam Chinese cabbage 0.83 0.89 0.94 1.26

Km52 Loam Chinese kale 0.84 1.00 1.13 1.28

Km52 Loam Morning glory 0.83 0.88 0.96 1.08

Km52 Loam Chinese kale 1.00 1.17 1.29 1.38

Km52 Sandy loam Chinese cabbage 0.81 1.00 1.10 1.28

Km52 Sandy loam Chinese cabbage 0.97 0.96 1.12 1.31

Km52 Sandy loam Lettuce 0.86 0.94 1.04 1.13

Km52 Sandy loam Morning glory 1.17 1.25 1.42 1.54

Km52 Silt loam Chinese cabbage 0.86 1.07 1.16 1.38

Km52 Silt loam Coriander 0.58 0.70 0.81 0.88

Km52 Silt loam Lettuce 0.82 0.92 1.00 1.13

Km52 Silt loam Lettuce 1.29 1.33 1.46 1.54

Saka Sandy loam Chinese cabbage 0.86 0.88 0.92 1.12

Saka Sandy loam Chinese kale 0.81 0.82 0.90 0.94

Saka Sandy loam Morning glory 1.78 1.89 2.00 1.78




Saka Sandy loam Morning glory 0.70 0.92 1.03 1.20



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Saka Sandy loam Coriander 0.41 0.47 0.56 0.67

Saka Sandy loam Lettuce 1.50 1.42 1.54 1.46





Saka Sandy loam Lettuce 1.33 1.75 2.08 2.33

Saka Clay loam Chinese cabbage 0.92 1.08 1.27 1.44

Saka Clay loam Onion 0.67 0.72 0.78 0.88

Saka Clay loam Morning glory 0.70 0.89 0.98 1.06

Saka Clay loam Coriander 0.83 1.06 1.17 1.50



Average 1.08 1.20 1.33 1.50

% increased 11.11 23.15 38.89

Source: ADB TA8873 final report, June 2015.

5.3.2.2. Vegetables seed production group

There is no commercial vegetables seed farmer production group.

5.3.2.3. Commercial vegetables production group

The farmer group establishment is followed to agreement of the Minister regarding agriculture production groups No. 2984/MAF, issued on 25 September 2014. Those potential farmers can be selected during the project implementation are shown in the table 27. The vegetables production, the promotion of commercial crop production is focused on marketable commodities such as: baby corn, egg plants, long bean, lettuce, cabbage, tomato, hot chili, cucumber, banana, water melon, and leafy vegetables produce for domestic and export markets in a total amount of billion kip per year (PAFO report, 2015). During the field visit, there are 7 out of 59 villages in Phon-Hong district growing vegetables for domestic and export markets, those villages are: Phon-Ngam (organic), Lak52 (organic), Ekxang (GAP), Nalao (GAP), Saka (Organic/GAP), Navon (Organic), Noy (Organic). There are three main local collectors known as women traders bought vegetables from farmers and sold to Vientiane capital markets.

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Table 42. list of commercial vegetables production groups in Vientiane province


In thoulakhom district, Poungphao village is an excellent vegetables farmer group that used to be support by the Small Holder Project. 10 out of 46 household shows well organized marketing group by linking vegetables to organic market in Vientiane capital (three times per week) that support by JICA. Currently the JICA build organic super market in Km8 to help farmers market moving on. According interview Mr. Khamson farmer leader report that 4 ha of land was given by village of Poungphao to demonstrate organic vegetable production, 126 green houses built, approximately 6-14 green houses per one household responsible for growing whole round year vegetables (no rice farming at all). They started since 2010 and earned income of 200 million kip (25,000 USD) and this year of 2015, in the amount of 75 tons sold out and this group earned income of 800 million kip (100,000 USD). All household have own trucks and deal vegetables value chain from production until marketing.


There are some household processing banana and dried chili in Kasy district, Vientiane province. The

PPTA team had risen up the case for the bananas processing group in Pakmie village, Sanakham district,

Vientiane province.

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Figure 19. Case of fruit processing group in Sanakham district, Vientiane province

Women fruits processing show room Home made exhibition in food festival 2015

The agriculture production group in Pakmie village, Sanakham district has established on June 04, 2012

under assistance of the Small Holder Project. There were 15 household registered as a female fruits

processing group and 73 females benefited from this activity. The initial capital was 2,500,000 Lao kip.

The project supported for training, study tour, group management, accounting system, fruits processing

technology transferred, packaging, and cooperatives formulation. The equipment provided by project in

amount of 205,720,000 Lao kip. Until now, this group is functioning five major products namely bananas

dried with cheese, fried taros, fried sweet potatoes, tamarind jam, and pineapple jam. The group has

been generating monthly income in amount of 12,872,000 Lao kip (reported by Mrs. Chantao Tanming,

female group leader, Pakmie village, Sanakham district, Vientiane province). She gave an additional

expression that this group uses 1,269 Kg of raw materials, plus initial capital of 22,077,800 Lao Kip,

consequently income returns to group is 28,845,000 Lao Kip per month, this female group is really

happy to have extra employment and income for helping family that increase family income to 60%.

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Annex1: Rice Export Standard applied by Xuan-Ye (LAO) Sole Co., Ltd in Savannakhet province, Lao PDR

1 2 3

Testing of degree of remaining cortices compared with standard samples

Total percentage /

%≤5.0 10.0 15.0

Percentage of small

broken kernel / %≤0.5 1.0 1.5

4.0

Total percentage / % 0.3

Rice bran power / % 0.2

Minerials / %

Barnyard millet in

husk (number / kg)5.0

Paddy kernels

(number/kg)6.0

GB 1354-2009 National Standard of China on Glutinous Rice

Percentage of unsound kernel /%

Taste evalued value ≥

Amylose content (dry basis) / % ≤

3.0

75

2.0

Milled long-grain glutinous rice

Broken kernels

Milling degree

Grade

Variety

Table shows the quality indicators for high quality rice

Moiseture /% ≤

Yellow-colored kernel /% ≤

Other kind rice kernel /% ≤

Color and odour No abnormal color and dour

14.5

1.0

5.0

3.0

0.02

0.15

0.25

Maximum

limit of foreign

matters

4.0

Note: table above shows the requirement of quality, milling degree, broken kernel, fine broken kernel,

unsound-kernel and foreign matters.

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Annex 2: Rice Export Standard applied by Xuan-Ye (LAO) Sole Co., Ltd in Savannakhet province, Lao PDR

Total

(including

broken not

passing

though

Sleve no.7

and C1)

Broken not

reaching

the min.

specificati

on and not

pass sleve

no.7

Small

broken

C1

WHITE RICE:(Grain per

1 kg)

100% Grade A ≥ 60.00 ≤ 4.00 0 0 0 0 3.00 0 1.50 0 0 5.20 5 Extra Well Milled

100% Grade B ≥ 60.00 ≤ 4.50 ≤ 0.50 ≤ 0.10 0 0.20 6.00 0.25 1.50 0.20 3.25 5.20 7 Extra Well Milled

100% Grade C ≥ 60.00 ≤ 5.00 ≤ 0.50 ≤ 0.10 0 0.20 6.00 0.25 1.50 0.20 3.25 5.20 7 Extra Well Milled

5% ≥ 60.00 ≤ 7.00 ≤ 0.50 ≤ 0.10 2.00 0.50 6.00 0.25 1.50 0.30 2.15 4.60 10 Well Milled

10% ≥ 55.00 ≤ 12.00 ≤ 0.70 ≤ 0.30 2.00 1.00 7.00 0.50 1.50 0.40 2.15 4.30 15 Well Milled

15% ≥ 55.00 ≤ 17.00 ≤ 2.00 ≤ 0.50 5.00 1.00 7.00 1.00 2.00 0.40 1.96 4.00 15 Reasonably Well Milled

CARGO RICE:(% per 100

gms)

100% Grade A ≥ 80.00 ≤ 4.00 0 0 1.00 0.50 3.00 0.50 1.50 3.00 0 5.40 0.50 0

100% Grade B ≥ 80.00 ≤ 4.50 0 0 1.50 0.75 6.00 0.75 1.50 5.00 0 5.40 1.00 0

100% Grade C ≥ 80.00 ≤ 5.00 0 0 2.00 0.75 6.00 0.75 1.50 5.00 0 5.40 1.00 0

5% ≥ 75.00 ≤ 7.00 0 0 2.00 1.00 6.00 1.00 1.50 6.00 0 4.70 1.00 0

10% ≥ 70.00 ≤ 12.00 0 0 2.00 1.00 7.00 1.00 1.50 7.00 0 4.40 2.00 0

15% ≥ 65.00 ≤ 17.00 0 0 5.00 1.00 7.00 1.50 2.50 8.00 0 4.10 2.00 0

Size of

broken

max

(mm.)

Whole kernelGrades

Standard for Thai Hommali Rice

Paddy Milling degree

Grain composition (%)

Brokens and Small Brokens C1

Rice and matter that may be presented, not exceeding (%)

Red

and/or

undermil

led

kernels

Yellow

kernels

Chalky

kernels

Damaged

kernels

White

glutinous

rice

Underdevelo

pped

immature

kernels,

other seeds

and foreign

matters

Size of

broken

min

(mm.)

Reference: notification of Ministry of Commerce on October 31, 2001

1. Purity of Thai Hom Mali Rice (Thai Hom Mali Rice according to this standard is from KAO HOM

MALI 105 variety and RD 15 variety only) not less than 92%

2. Moisture content shall not exceeding 14%

3. General characteristic is long grain, white color and naturally low chalky

4. Free from live insects

5. Size of kernels are as follows:

o Average length of whole kernel without broken part shall be not less than 7.0 mm

o The rate of average length against average width of the whole kernel without broken

part shall be not less than 3.2 mm

6. Chemical properties are as follows:

o Amylose content shall be not less than 13% and not exceeding 18% at the moisture

content of 14%

o Alkali spreading value shall be at level 6-7

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Annex 3: List of rice mill equipment

ຕະແກງອານາໄມເຂົົ້າເປອືກ ລະບບົສ ົ້ນ Vibrating pre-cleaner ລ ຸ້ນ DSA-404-A and WIN-1500 mark II ປີ2015 ກ າລ ງຜະລິດ 3-5 ໂຕນ/ຊົົ່ວໂມງ ຕະໜ່າງຊ ົ້ນເທິງ 4x20 ມມ ຕະໜ່າງຊ ົ້ນລ ຸ່ມ 1.5x20 ມມ ມີ 3 ທາງອອກ ມ ເຕີ MITSUBISHI 3HP/2.3 kw/4P/380V/0.5 Hz

ເຄືົ່ອງກະເທາະເຂົົ້າເປອືກ /Paddy husker

ລ ຸ້ນ DSA-404A ແລະ WIN-1500 mark II ປີ 2015 ກ າລ ງຜະລິດ 3-5 ໂຕນເຂົົ້າເປືອກ/ຊົົ່ວໂມງ ເຄືົ່ອງກະເທາະລະບົບອ ດໂຕມະຕິກ ກຣວຍແບບໃໝຸ່ ແລະ ມີຮູດູດຝ ຸ່ນ ມ ເຕີ MITSUBISHI 10HP/7.5 kw/4P/380V/50 Hz

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ຕູຸ້ສຝີ ດລະບບົລມົໝູນວຽນ/Husk aspirator ຕູຸ້ສີຝ ດ 2 ທາງອອກ/ສະກຣູກະຈ່າຍເຂົົ້າດ້ວຍມ ເຕີ 8.5 HP ມ ເຕີ MITSUBISHI 5HP/3.8kw/4P/380V/50 Hz

ເຄືົ່ອງກະເທາະລ າລຽງ ຄວາມສງູ 9 ແມ ດ Bucket elevator ລ ຸ້ນ EV-6-H9W8MI ຫົວກະເທາາະພ້ອມ ມ ເຕີ 1HP/0.8kw/4P/380V/50 Hz ຊ່ອງກະເທາະບ່າ 8’’ ລວມ 3 ຊ່ອງ (ໜ້າຕ່າງ 1) ຊ່ອງລະ 2.44 ແມ ດ ຕີນກະເພາະ/ລູກສ ກ HDPE ຂະໜາດ 6”/ສາຍພານຢາງ 3 ຊ ົ້ນ

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ຕະແກງຫ ົ່ຽມຄ ດຮ າຫຍາບ ແລະ ເຂົົ້າປຸ່ຽນເມ ດນອ້ຍ/ Rotary sifter ລູຸ້ນ ROT-408-2 ອ ດຕາໄຫລຜ່ານ 2-3 ໂຕນເຂົົ້າເປືອກ/ຊົົ່ວໂມງ ມີ 2 ທາງອອກ/ຊ ົ້ນຕະແກງໂຄງໄມຸ້ເນືົ້ອແຂງ ມ ເຕີ MITSUBISHI 3HP/2.3kw/4P/380V/50 Hz, ເຄືົ່ອງຕະແກງໂຍກປີກແມງກະເບືົ້ອຄ ດແຍກເຂົົ້າເປືອກ-ເຂົົ້າກ້ອງ ລ ຸ້ນ TS-60-20-1 ອ ດຕາໄຫລຜ່ານ 2-3.5 ໂຕນເຂົົ້າກ້ອງ+ເຂົົ້າເປືອກຂາເຂົົ້າ/ຊົົ່ວໂມງ, ລະບົບອ ດໂຕມະຕິກ ມ ເຕີ MITSUBISHI 5HP/3.8kw/4P/380V/50 Hz

ເຄືົ່ອງຄ ດກວດ/ແຍກຫນີ Destoner ລ ຸ້ນ DS-902 ອ ດຕາໄຫລຜ່ານ 3-4 ໂຕນເຂົົ້າກ້ອງຂາເຂົົ້າ/ຊົົ່ວໂມງ ຕະແກງຄ ດແຍກ 2 ຖວດ/ພ ດລົໃຝນຕົວເຄືົ່ອງ ມ ເຕີ 2HP/1.5kw/4P/380V/50 Hz

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ເຄືົ່ົ່ອງຂ ດມ ນເຂົົ້າສານ/Rice polisher ລູຸ້ນDK-40 ອ ດຕາໄຫລຜ່ານ 2.5-3.5 ໂຕນເຂົົ້າຂາວ/ຊົົ່ວໂມງ ມ ເຕີ 60HP/45kw/4P/380V/50 Hz

ຖັງແມ່ເຫ ັ ກກາວ/ permanent magnet ລ ຸ້ນ MAG-60

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ເຄືົ່ອງຄ ດເຂົົ້າຂາວ\/ D-RICE\ ລູຸ້ນ D-RICE-32 ອ ດຕາໄຫລຜ່ານ 2-2.5 ໂຕນເຂົົ້າກ້ອງຂາເຂົົ້າ/ຊົົ່ວໂມງ. ມ ເຕີ 50HP/38kw/4P/380V/50 Hz

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Annex 4: List of commercial rice farmer equipment

Tractor/ລດົໄຖນາ

Hands tractor/ລດົຍາງຕາມ

Rice transplanting machine/ລດົດ ານາ

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Small land leveling equipment/ເຄືົ່ອງປ ບໜາ້ດ ບ

larger paddy field preparation/ການຂະຫຍາຍເນືົ້ອທີົ່ນາໄຮໃຫຍ ່

Larger paddy field leveling/ ການປ ບໜ້າດນິນາໄຮຸ່ໃຫຍ ່

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Larger paddy field using seed

sprayer/ການນ າໃຊຸ້ເຄືົ່ອງພົົ່ນເມ ດພ ນໃນເນືົ້ອທີົ່ນາໄຮຸ່ໃຫຍ ່

Seed planter/ຢອດເມ ດເພ ດ

Rice seed sprayer/ເຄືົ່ອງພົົ່ນເມ ດພ ນເຂົົ້າ

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Larger paddy field using rice

transplanting machine/ການນ າໃຊຸ້ເຄືົ່ອງຈ ກດ ານາ

Hand havesting motor/ຈ ກກຽ່ວເຂົົ້າແບບຕ ດຫຍາ້

Small harvesting Machine /ຈ ກກຽ່ວເຂົົ້າຂະໜາດນ້ອຍ

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Thrasher machine/ເຄືົ່ອງຈ ກຟາດເຂົົ້າ

Rice harvest machine/ລດົກຽ່ວເຂົົ້າ

Rice Dryer/ເຄືົ່ອງອບົເຂົົ້າ

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Annex 5: List of vegetables equipment and hub

ເຕົາອົບພ ດລົມທີົ່ໃຊຸ້ອາຍຮອ້ນ Heat steam dryer

ເຄືົ່ອງຈ ກອົບອາຍເຢ ນ Cold steam dryer

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ຜະລິດຕະພ ນ Vegetables processed product

ຜະລິດຕະພ ນຕົົ້ນຕ Major produce

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ຮູບແບບການຜະລິດ (ຜ ກອົບແຫຸ້ງ) Dried vegetables processing

ຜະລິດຕະພ ນທີົ່ຈະອົບແຫຸ້ງ Dried vegetables produce

ເຄືົ່ອງຕາກກ້ວຍ ເພືົ່ອເຮ ດກ້ວຍອົບເນີຍ Banana Cheese dryer

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ເຄືົ່ອງກວນໝາກຂາມ ແລະເຄືົ່ອງຊອຍກ້ວຍ Tamarind jam machinery and banana sliced machine

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Reference

ADB, 2015. ADB 3024-LAO AISP Annual Progress Report 2015

ADB TA7833, 2013. Mission completion report on Bio-Fertilizer case study in Lao PDR

CAFF, July 2011. Establishing an Aggregation & Marketing Center for California’s North Coast. A USDA

RURAL DEVELOPMENT FEASIBILITY STUDY. A project of the Community Alliance with

Family Farmers (CAFF) with support from the USDA Rural Business Enterprise Grant

Program

Lao PDR, 2015. National Growth and Poverty Eradication Strategy (NGPES)

MAF, 2014. Agriculture Statistic Year book 2014

MAF, 2015. Agriculture Development Strategy to 2025 and Vision to the year 2030

MAF, 2015. The Public Private Community Partnership Mechanism (PPCP)

Richard Veit, June 2009. Assessing the Viability of Collection Centres for Fruit and Vegetables in Fiji: A

Value Chain Approach

SMEDA, May 2005. Pre-feasibility study on parboiled rice plant. Small and Medium Enterprise

Development Authority Government of Pakistan. www.smeda.org.pk

http://www.smeda.org.pk/

Documents

161005_CFAVC Core Sub-Projects Report (Rice and Vegetable value chain in Lao PDR)