Strategic Direction
The strategic direction for the ANR sector is to ensure a successful gradual transition from subsistence into commercial smallholder production. This can be achieved by applying innovative technologies for the systematic and continuous production of high-value agri-food products for local value-added agro-processing and for domestic, regional, and world markets. Smallholder farmers will be assisted in the creation and operation of voluntary farmer organizations, which are based on the expressed needs and on the proven value-added for the individual farmer, such as formally legalized producer groups, cooperative groups or full cooperatives and commodity associations. To provide both economies of scale and fair terms of trade, these emerging farmer organizations will be supported in playing a strong role as equal trading partners.
Smallholder farming systems and the economies of rural communities will be upgraded and become more diversified, to increase production for food security and improve rural living standards. Smallholder agricultural production will be market-oriented, linked by farmer organization and contract farming to local traders, agro-processors, and agribusiness enterprises, including land concessions. The aim is to contribute to reducing rural poverty by creating rural employment opportunities, transferring modern technologies to increase productivity, channeling agricultural production inputs and finance, and facilitating linkages to regional and global value chains.
MAF will provide an appropriate regulatory framework, monitoring instruments and a set of effective sanctions to ensure that commercial agriculture and processing will have no negative impacts on the natural environment, human health or other aspects of national interests. In operational terms, the framework will translate into appropriate measures of value chain governance ensuring that smallholder farmers and local small and medium scale enterprises (SME) can retain a fair share of the value added. Additional investments in irrigation, rural market access road, and other high cost rural infrastructure will be linked to a set of society and rural smallholder benefit from such investments.
Major themes
The major themes of the ANR sector strategy included a strong focus on modernizing agricultural production and creating value-added food and agricultural products aimed at reducing rural poverty, maintaining food security, and applying results-based management to the natural resources that are the foundation for sustainable agricultural and development and resiliency to climate change. ANR sector development will contribute to articulating national economic development objectives in terms more closely aligned with the United Nationals Millennium Development Goals and in support of regional programs, specifically the Greater Mekong Sub region and the ASEAN Economic Community.
Area based production
Lowland production will be largely capital intensive, with the application of technologies to improve and maintain the quality of soils and guide the use of agricultural chemicals; use appropriate technology and equipment for mechanized production; and, apply climate change mitigation and adaptation measures. The low land /flatland areas also will be the focus of irrigated agricultural production to produce supplementary dry season rice to ensure food security and high value crops for value-added processing and export to regional and global markets. Entrepreneurial smallholder farmer organizations will be practicing irrigated agriculture in partnerships with agribusiness enterprises; in some locations as mega-projects. Irrigated agriculture projects will be organization bases on Irrigated Agriculture Development Plans (IADPs) prepared by local governments in consultation with communities, and incorporated into district and provincial socioeconomic development plans. The financing of irrigation development and rehabilitation will be in the form of partnerships between communities and interested private investors, with the Government playing a facilitating and coordinating role, while monitoring and evaluating policy implementation.
Up and highland agricultural production in the Northern and Southern regions will first and foremost aim to meet local food security needs. Livestock producers will raise cattle and buffalo both for domestic consumption and export, as well as small livestock and fish to meet local protein needs. Upland agricultural production will be more diversified to provide a greater range of food groups to meet the nutritional needs of local populations.
Contributions of the sector to overall national development
In the next 10 years, the Agriculture and Forestry Sector will continue to play a substantial (although gradually declining) role in achieving the expected overall economic growth. On plausible assumptions of a slower decline in public investment and slightly higher FDI and trade, agricultural value added is likely to grow at 4.2 percent per annum. For this growth rate to be maintained, public investment has to be larger by 3 percent. If fiscal constraints are less binding, a 20 percent higher public investment would lead to a growth rate of just under 5 percent. Recent analyses indicate that a 1 percent growth in agricultural value added will result in 1.6 percent growth of overall GDP. Agriculture will also remain a key driver of the poverty reduction process, notably by incorporating progressively a larger proportion of the smallholders into commercial agriculture.
In various forms of co-management, rural upland communities and the Government will be collaborating to manage natural resources that provide valuable environmental services to the Nation. Fiscal policy measures will be formulated that reward farmers as good eco-stewards to preserve watersheds, protect biodiversity, domesticate NTFPs, and conserve forests. On the basis of secure land titles, rural households and communities will continue to provide environmental services which will be re-valued and include adequate financial contributions from the beneficiaries of these services, among others hydropower and large scale irrigation schemes.
To this end, forests in watersheds will be preserved to ensure their integrity for sustained hydropower production. Biodiversity will be conserved for eco-tourism. NTFPs will be available for consumption to supplement food security and for sale as cash crops to niche markets to increase household income. Forests will be conserved to sequester carbon and allow participation in income-generating international carbon pools (e.g., REDD). A regulatory framework will e developed to allow the active participation in global financial markets and the trade with CO2 certificates and derivates. Each of these environmental services provides revenues to support the economic development and quality of life of the Lao Nation.
Goals, programs and implementation measures
An overview of goals and programs is presented as a Matrix in Annex 1. For the five year period until 2015, a detailed elaboration of the implementation measures is presented in the Agricultural Master Plan (AMP), accompanied by the respective Agricultural Investment Plan (AIP) which has been derived from the present strategic sector framework. The eight programs of the AMP are entitled:
(1) Food production
(2) Commodity production
(3) Sustainable production and farmer organizations
(4) Forestry development
(5) Irrigated agriculture
(6) Other agriculture and forestry infrastructure
(7) Agriculture and forestry research and extension
(8) Human resource development
6. Agriculture is central to the Lao economy. It contributes 42 percent of GDP (2005/06); accounts for at least 15 percent of recorded exports; and accounts for 75 percent of the employed adult workforce. Most households in rural areas are near-subsistence farmers engaged in rice-based agriculture, collecting forest products and raising livestock. The sector is still dominated by smallholders engaged in low-productivity rice production and characterized by low-level use of purchased inputs such as improved seeds/breeds and fertilizers. Most rice is consumed by the farm households that produce it, with less than 10 percent marketed. Agriculture-based products make up approximately 15 percent (in 2007) of total recorded exports, the principal commodities being timber, coffee, corn and non-timber forest products. This proportion has declined rapidly in recent years (from 25 percent in 2004) as a result of the increasing diversification of the export sector, particularly the rapidly-increasing export revenues derived from minerals and energy.
8. Production is primarily done at individual level with very few farmer organizations (groups, cooperatives, or associations), so far allowing for limited economies of scale and very limited bargaining power of farmers when engaged in commercial agriculture. Rural/market institutions are almost non-existent (no market boards, no commodity associations and this under-development stage allows for limited dialogue among stakeholder of a same commodity chain and limited capacity for the government to intervene successfully on markets (avoiding monopolistic behavior, etc.).
9. At the nation level, there are positive trends in yields of all crops except coffee. At the regional level, all crop yields show positive trends (except coffee). In the Central region, both maize and all four crops taken together show positive trends. In the Northern region, rice, maize, vegetables show significant positive trends. At the nation level, maize yields grew most rapidly (annual rate of about 8 percent), followed by vegetables (about 2.7 percent) and rice (about 2.3 percent). The combined crop yield thus grew at a rate of about 4.3 percent. In the Southern region, maize grew at an impressive rate (over 8 percent) while rice grew at only 1.8 percent
Strategic DirectionThe strategic direction for the ANR sector is to ensure a successful gradual transition from subsistence into commercial smallholder production. This can be achieved by applying innovative technologies for the systematic and continuous production of high-value agri-food products for local value-added agro-processing and for domestic, regional, and world markets. Smallholder farmers will be assisted in the creation and operation of voluntary farmer organizations, which are based on the expressed needs and on the proven value-added for the individual farmer, such as formally legalized producer groups, cooperative groups or full cooperatives and commodity associations. To provide both economies of scale and fair terms of trade, these emerging farmer organizations will be supported in playing a strong role as equal trading partners.Smallholder farming systems and the economies of rural communities will be upgraded and become more diversified, to increase production for food security and improve rural living standards. Smallholder agricultural production will be market-oriented, linked by farmer organization and contract farming to local traders, agro-processors, and agribusiness enterprises, including land concessions. The aim is to contribute to reducing rural poverty by creating rural employment opportunities, transferring modern technologies to increase productivity, channeling agricultural production inputs and finance, and facilitating linkages to regional and global value chains.MAF will provide an appropriate regulatory framework, monitoring instruments and a set of effective sanctions to ensure that commercial agriculture and processing will have no negative impacts on the natural environment, human health or other aspects of national interests. In operational terms, the framework will translate into appropriate measures of value chain governance ensuring that smallholder farmers and local small and medium scale enterprises (SME) can retain a fair share of the value added. Additional investments in irrigation, rural market access road, and other high cost rural infrastructure will be linked to a set of society and rural smallholder benefit from such investments.Major themesThe major themes of the ANR sector strategy included a strong focus on modernizing agricultural production and creating value-added food and agricultural products aimed at reducing rural poverty, maintaining food security, and applying results-based management to the natural resources that are the foundation for sustainable agricultural and development and resiliency to climate change. ANR sector development will contribute to articulating national economic development objectives in terms more closely aligned with the United Nationals Millennium Development Goals and in support of regional programs, specifically the Greater Mekong Sub region and the ASEAN Economic Community.Area based productionLowland production will be largely capital intensive, with the application of technologies to improve and maintain the quality of soils and guide the use of agricultural chemicals; use appropriate technology and equipment for mechanized production; and, apply climate change mitigation and adaptation measures. The low land /flatland areas also will be the focus of irrigated agricultural production to produce supplementary dry season rice to ensure food security and high value crops for value-added processing and export to regional and global markets. Entrepreneurial smallholder farmer organizations will be practicing irrigated agriculture in partnerships with agribusiness enterprises; in some locations as mega-projects. Irrigated agriculture projects will be organization bases on Irrigated Agriculture Development Plans (IADPs) prepared by local governments in consultation with communities, and incorporated into district and provincial socioeconomic development plans. The financing of irrigation development and rehabilitation will be in the form of partnerships between communities and interested private investors, with the Government playing a facilitating and coordinating role, while monitoring and evaluating policy implementation.Up and highland agricultural production in the Northern and Southern regions will first and foremost aim to meet local food security needs. Livestock producers will raise cattle and buffalo both for domestic consumption and export, as well as small livestock and fish to meet local protein needs. Upland agricultural production will be more diversified to provide a greater range of food groups to meet the nutritional needs of local populations.
Contributions of the sector to overall national development
In the next 10 years, the Agriculture and Forestry Sector will continue to play a substantial (although gradually declining) role in achieving the expected overall economic growth. On plausible assumptions of a slower decline in public investment and slightly higher FDI and trade, agricultural value added is likely to grow at 4.2 percent per annum. For this growth rate to be maintained, public investment has to be larger by 3 percent. If fiscal constraints are less binding, a 20 percent higher public investment would lead to a growth rate of just under 5 percent. Recent analyses indicate that a 1 percent growth in agricultural value added will result in 1.6 percent growth of overall GDP. Agriculture will also remain a key driver of the poverty reduction process, notably by incorporating progressively a larger proportion of the smallholders into commercial agriculture.
In various forms of co-management, rural upland communities and the Government will be collaborating to manage natural resources that provide valuable environmental services to the Nation. Fiscal policy measures will be formulated that reward farmers as good eco-stewards to preserve watersheds, protect biodiversity, domesticate NTFPs, and conserve forests. On the basis of secure land titles, rural households and communities will continue to provide environmental services which will be re-valued and include adequate financial contributions from the beneficiaries of these services, among others hydropower and large scale irrigation schemes.
To this end, forests in watersheds will be preserved to ensure their integrity for sustained hydropower production. Biodiversity will be conserved for eco-tourism. NTFPs will be available for consumption to supplement food security and for sale as cash crops to niche markets to increase household income. Forests will be conserved to sequester carbon and allow participation in income-generating international carbon pools (e.g., REDD). A regulatory framework will e developed to allow the active participation in global financial markets and the trade with CO2 certificates and derivates. Each of these environmental services provides revenues to support the economic development and quality of life of the Lao Nation.
Goals, programs and implementation measures
An overview of goals and programs is presented as a Matrix in Annex 1. For the five year period until 2015, a detailed elaboration of the implementation measures is presented in the Agricultural Master Plan (AMP), accompanied by the respective Agricultural Investment Plan (AIP) which has been derived from the present strategic sector framework. The eight programs of the AMP are entitled:
(1) Food production
(2) Commodity production
(3) Sustainable production and farmer organizations
(4) Forestry development
(5) Irrigated agriculture
(6) Other agriculture and forestry infrastructure
(7) Agriculture and forestry research and extension
(8) Human resource development
6. Agriculture is central to the Lao economy. It contributes 42 percent of GDP (2005/06); accounts for at least 15 percent of recorded exports; and accounts for 75 percent of the employed adult workforce. Most households in rural areas are near-subsistence farmers engaged in rice-based agriculture, collecting forest products and raising livestock. The sector is still dominated by smallholders engaged in low-productivity rice production and characterized by low-level use of purchased inputs such as improved seeds/breeds and fertilizers. Most rice is consumed by the farm households that produce it, with less than 10 percent marketed. Agriculture-based products make up approximately 15 percent (in 2007) of total recorded exports, the principal commodities being timber, coffee, corn and non-timber forest products. This proportion has declined rapidly in recent years (from 25 percent in 2004) as a result of the increasing diversification of the export sector, particularly the rapidly-increasing export revenues derived from minerals and energy.
8. Production is primarily done at individual level with very few farmer organizations (groups, cooperatives, or associations), so far allowing for limited economies of scale and very limited bargaining power of farmers when engaged in commercial agriculture. Rural/market institutions are almost non-existent (no market boards, no commodity associations and this under-development stage allows for limited dialogue among stakeholder of a same commodity chain and limited capacity for the government to intervene successfully on markets (avoiding monopolistic behavior, etc.).
9. At the nation level, there are positive trends in yields of all crops except coffee. At the regional level, all crop yields show positive trends (except coffee). In the Central region, both maize and all four crops taken together show positive trends. In the Northern region, rice, maize, vegetables show significant positive trends. At the nation level, maize yields grew most rapidly (annual rate of about 8 percent), followed by vegetables (about 2.7 percent) and rice (about 2.3 percent). The combined crop yield thus grew at a rate of about 4.3 percent. In the Southern region, maize grew at an impressive rate (over 8 percent) while rice grew at only 1.8 percent
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