Country Report: Lao PDR

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    Policy on Rice

    Self-Sufficiency in Laos

    Department of Agriculture, MAF

    Mr.

    Khamtanh

    Thadavong

    , DDG of DOA

    Mr.

    Somvang

    Phanthavong

    , DD of Planning &

    International Cooperation Division, DOA

    Paper Prepared for The 2

    nd

    ASEAN Rice Trade

    Forum

    Yogyakarta, 4

    -

    5 June 2013

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    Introduction Lao PDR is predominantly a rural agriculture-based

    country, 85% of its population live in rural areas.

    Cultivated land covers about 1.2 million ha (5%), rice

    occupies 60%-70% of the total crop area.

    Population is about 6.51 million (2012)

    Agriculture contributes 26.7% to GDP (2011-2012)

    GDP per capita: US$ 1,349 (2011-2012)

    Rice production since 2001 reached 2.1 million tons of

    paddy. Rice is also the staple food crop in Lao PDR, as in

    most of the region.

    Other commercial crops: coffee, corn, cassava, rubber,tobacco, jobs tears, vegetables, sugarcane and legume

    crops

    Strategic directions of country: Increased productivity,

    sustainability, modernization, safety and clean products

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    Rice Production

    Areas

    in Lao PDR

    Mostly in 7

    big plains=540,540

    ha14 small

    plains =23,487 ha

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    Year Area

    Harvested(ha)

    Yield

    (Ton/ha)

    Production

    (Tons, paddy)

    Comparison

    (%)

    2006 796,575 3.00 2,663,700 +3.7

    2007 781,243 3.47 2,710,050 +1.7

    2008 825,349 3.55 2,927,140 +8.02009 872,896 3.60 3,144,800 +7.4

    2010

    20112012

    855,114

    817,250933,767

    3.59

    3.753.74

    3,070,640

    3,065,7603,489,210

    -2.36

    -0.15+13.8

    2013

    (Target)

    960,000 3.96 3,800,000 +8.9

    Rice Production 2006-2012

    and Target for 2013

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    Item 2009 2010 2011 2012

    Paddy production (t) 3,144,800 3,070,640 3,065,760 3,489,210

    Population 6,165,709 6,230,270 6,361,100 6,514,000

    Paddy output less seeds

    (about 3%) tons

    3,050,456 2,978,520 2,973,782 3,384,534

    Net Availability:After loss & wastage

    (about13%)+other uses

    (2%)

    2,592,888 2,531,742 2,527,715 2,876,854

    Conversion into rice

    (62%) tons

    1,607,591 1,569,680 1,567,183 1,783,650

    Per capita net

    availability (kg)

    261 252 246 274

    Total requirement/year 1,294,799 1,308,357 1,335,831 1,367,940

    Surplus/Deficit (+or -)

    (milled rice)

    +312,792 +261,323 +231,352 +415,710

    Total requirement and estimated net availabilityof rice for consumption, 2009-2012

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    Harvested Area and Total Production 2006-2010

    -500,000

    1,000,000

    1,500,000

    2,000,000

    2,500,000

    3,000,000

    3,500,000

    2006 2007 2008 2009 2010

    796,600 781,245 825,350 872,205 865,165

    2,663,700 2,710,0002,928,100

    3,144,800 3,070,000

    Harvested Area Total Production

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    Irrigation program in the whole country

    Total Irrigation projects: 1,550

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    Rice production: 2.1 million tons of paddy

    since 2000-2001

    10

    (300,000)

    (200,000)

    (100,000)

    -

    100,000

    200,000

    300,000

    400,000

    1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

    Surplus of raw milled rice (tons)

    surplus

    insufficiency

    FAO 2011

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    0

    5

    10

    15

    20

    25

    2005 2006 2007 2008 2009 2010

    Exports of Glutinous Rice to Vietnam and Thailand

    2005-2010 (1000 tons)

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    Government Policies and the Rice Sector

    Three main key policy reference documents provide a strategic

    framework for the rice sector:

    1. The political report of the 8th Central Committee to the 9th Party Congress in

    2011 recognized the importance of agriculture and forestry as a fundamental

    sector of the national economy and called for a fundamental transformation of

    the rice industry in Laos to modernize it, and make it more productive and

    market-oriented.

    2. The 7th national socio-economic development plan (2011-2015) seeks to

    achieve sustainable economic growth and to reduce poverty.

    3. The agricultural development strategy (ADS: 2010-2020) and the associated

    agricultural master plan (AMP) have as its primary goal the attainment of food

    security by 2015 in order to meet the necessary calorie intake requirements,

    especially in remote rice-deficit areas.

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    Rice Sector Target by 2015

    MAF has developed the following targets for the ricesector in 2015: Increase of total paddy rice production to 4.2 million

    mt from 3.7 million mt in 2010

    Increase of planted area to 1.04 million ha from

    870,000 ha in 2010 Export of 600,000 mt of good quality, non-glutinous

    rice mostly to countries in the ASEAN region and alsoto the international market

    Increase of non-glutinous rice production to 30% from10% in 2010

    Reduce food insecurity and malnutrition by one-halfthrough increased availability, access to and utilizationof rice and other foods

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    A Map of the Policy Goals, Objectives,

    Instruments and Responsibilities in the Lao PDR

    1/ MoIC Ministry of Industry and Commerce; DTD Domestic Trade Department; IED Import-Export Department; PICD Planning and International

    Cooperation Department; MLSW Ministry of Labour and Social Welfare; PG Provincial Government

    2/ Strategic Rice Reserve has three components with different institutional responsibilities: (i) rice reserve (including subsidized credit to millers in

    exchange for keeping minimum stocks) under MoIC DTD, (ii) seed reserves under MAF responsibility and (iii) rice distribution as part of safety nets underMLSW.

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    Trade policy measures andnational rice reserves

    Bilateral trade agreements and regional trade relations(between Laos Vietnam and neighbouring countries,

    including formal trade agreements, export quotas, and

    border trade.

    Trade bans at the provincial and national levels where

    rice production is not sufficient for consumption and

    during periods of natural calamities and economic crisis.

    Rice reserve policy includes three components: (1)National Rice Reserve under the responsibility of MoIC,

    (2) Seed Reserves (MAF), and (3) emergency rice

    distribution programme (MLSW).

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    Rice Sector Performance

    Rice has been a top priority for the Government of the

    Lao PDR since the First NSEDP (1981-1985).

    Rice is not only associated with cultural traditions in the

    Lao PDR, but has also been of prime political

    importance throughout the countrys history.

    Lao rice production started to increase significantly in

    the 1990s, which occurred along with the expansion of

    irrigated areas and increase in yields mainly due to the

    scaling up the use of improved varieties. The production increase was driven by both

    improvement in yields and expansion in rice growing

    areas, in clearly distinct phases.

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    0

    200

    400

    600

    800

    1,000

    1,200

    0

    500

    1,000

    1,500

    2,000

    2,500

    3,000

    3,500

    1961

    1962

    1963

    1964

    1965

    1966

    1967

    1968

    1969

    1970

    1971

    1972

    1973

    1974

    1975

    1976

    1977

    1978

    1979

    1980

    1981

    1982

    1983

    1984

    1985

    1986

    1987

    1988

    1989

    1990

    1991

    1992

    1993

    1994

    1995

    1996

    1997

    1998

    1999

    2000

    2001

    2002

    2003

    2004

    2005

    2006

    2007

    2008

    2009

    2010

    Harvested area ('000 ha) -right hand axis Paddy output ('000 tons)

    Expansion of dry season rice

    through irrigation investmentArea in thousand haOutput in thousand tons

    mid 90s - release and

    distribution of improvedLao g lutinous varieties

    early 80s - loosening of

    price controls

    Cooperative movement

    Historical evolution of Laos rice production

    and harvested area, 1961-2011

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    Laos historical per capita rice consumption

    according to FAOSTAT(1961-2007), kg/person

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    Per Capita Rice Consumption(kg raw milled rice), based on Lao

    Expenditures and ConsumptionSurvey (LECS)

    LECS 3(2002/2003) LECS 4(2007/2008) % change

    Lao PDR 145.2 179.1 +23

    Urban 139.8 130.1 -7

    Rural 147.1 199.0 +35

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    Expected rice consumption per

    capita by 2015 and 2020 (kg)2007/2008 2015 2020

    Lao PDR(whole country)

    179.1 168 162

    Urban 130.1 125 122

    Rural 199.0 192 187

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    Emerging Challenges

    The country does not have a comprehensive rice policy that cuts

    across different government institutions, which sometimes have

    conflicting policy/political objectives on taxes, prices, credit,

    markets, trade, etc.

    Policies on promoting rice production and rice market and trade

    seem to be separate.

    Growing competition between rice and other crops (coffee,

    rubber, bananas, maize and cassava) has caused the shift of rice

    growers to other crops, reducing areas planted to rice for

    household food consumption. The proportion of rice farming to households decreased from

    77% (1998/99) to 71% (2010/11) (Agriculture Census, 2010-11).

    Climate change

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    Emerging Challenges (contd)

    Labor shortages and resulting increase of costs of farm labor due

    to the ongoing shift of farm labor to non-farm sectors.

    Current (trade policy) focuses on keeping domestic rice price low

    (non-incentive), which may not be optimal in a situation of

    increasing rice surpluses.

    Increasing job opportunities (non-agriculture sector).

    Modern processing/milling and postharvest facilities are not

    developed, with very limited investments, resulting in the low

    quality of milled rice.

    Investments on extension service are limited.

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    Options for ImprovingRice Sector Policies

    Facilitate Trade in Paddy and Rice: Create a transparent trade (export) environment for

    both white rice and paddy, with clear and easily

    monitored rules at the borders.

    Substitute all bans at central and provincial levels

    with an indexed variable export tax.

    Establish a clear coordination of arrangements

    between MOIC and MAF to determine particulartrade policy decisions.

    Establish better information base on production,

    consumption, and trade flows.

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    Options for ImprovingRice Sector Policies (contd)

    Allow formal and informal exports of paddy: Laos borders two large rice exporting countries, Vietnam and

    Thailand, with highly competitive milling and transport

    infrastructures. The main constraint for export of Lao milled rice is the high

    cost of milled rice relative to quality, but cheaper production

    costs of paddy than its competitors (Vietnam and Thailand).

    Thai and Vietnamese traders are interested in importing cheapglutinous rice from Laos that they mill in their countries.

    Overcoming milling constraints would require significant

    private sector (both domestic and foreign) investments inmedium- and large-scale modern mills.

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    Strengthen Emergency Rice Seed and Food Reserves:

    Emergency rice seed and paddy reserves for populationsaffected by natural disasters and target food aid groups

    It is suggested that a reserve of 30,000 to 60,000 tons may be

    able to meet the food security needs of such groups. Improve the efficiency and effectiveness of public investments

    (need more balance between extension andirrigation/infrastructure):

    Improve the efficiency of budgetary allocations toagriculture, need to balance approach between investmentsin (1) extension, technology development and transfer (goodseed), postharvest management, credit, development ofnational rice standards, and (2) irrigation.

    Options for ImprovingRice Sector Policies (contd)

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    Establish the foundation for the development of the rice seedsector key to achieving production targets/productivitygrowth:

    Identify options for improved planning and coordination of

    the work between DOA, NAFRI and NAFES Review and rationalize the seed production stations

    Identify options for private sector involvement

    Establish National Seed Board (NSB)

    Allocate annual funding for core seed production (Basic Seed,R1 and R2) at about 300-350 tons by 2015

    Encourage and support the development of the private seeddistribution system and piloting of privatization or state-owned enterprise of some seed stations

    Options for ImprovingRice Sector Policies (contd)

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    Rocket festival in Laos

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    Thank you for your kind attention

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