Commercialization of Rice and Vegetables Value Chains in Lao PDR : Status and Prospects
Rice is Lao PDR’s biggest agricultural commodity in terms of farmers involved in production, cropland area allocated, and food consumption. Rice also generates important economic spillover effects, supporting jobs in milling, trading, and food cate...
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| Language: | English |
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World Bank, Washington, DC
2018
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| Online Access: | http://documents.worldbank.org/curated/en/577801535723026712/Commercialization-of-Rice-and-Vegetables-Value-Chains-in-Lao-PDR-Status-and-Prospects http://hdl.handle.net/10986/30404 |
| Summary: | Rice is Lao PDR’s biggest agricultural
commodity in terms of farmers involved in production,
cropland area allocated, and food consumption. Rice also
generates important economic spillover effects, supporting
jobs in milling, trading, and food catering sectors
nationwide. Vegetables are emerging as a new source of
growth, benefiting from the rising demand of more affluent
and urbanized Laotians for nutritious and diverse diets.
This report studies the extent of commercialization of rice
and vegetables value chains in Lao PDR, the main challenges
and opportunities, and ways to increase their contribution
to the country’s economic development. Economic benefits are
maximized when farmers have incentives to produce for profit
while consumers gain from reasonable prices and good quality
of products. Therefore, this report focuses on the cost
buildup between farmers and consumers, motivated by the high
retail rice prices in Vientiane vis-à-vis complaints of low
farm-gate prices. The report follows a qualitative and
quantitative value chain approach combined with a detailed
regulatory assessment. It is based on about 100 interviews
with key experts and stakeholders. It studies the value
chain for rice from Khammouane to Vientiane Capital and for
vegetables from Vientiane Province to Vientiane Capital.
Theresults are not country representative; they should be
read as a snapshot of the selected value chains in selected
areas in 2017. Yet this work is unique for Lao PDR, among
the first to generate detailed estimates of cost build-up at
each stage of the value chain using primary data and
applying a consistent methodology. It is also unique in
generating knowledge on the vegetables value chain, which is
less studied than those of rice and other agricultural
commodities in Lao PDR. The study finds that Lao farmers
receive a relatively high farm-gate price, yet high
production costs “eat” their profits (rather than low
farm-gate prices, as often perceived in the country).
However, the share of farm-gate prices in wholesale and
retail prices in Lao PDR is the lowest among its peers. This
dampens farm supply responses. In addition, the issues
holding back the rice sector in Lao PDR pertain to: (i) low
productivity and quality management at the farm and
immediate post farm levels; (ii) a fragmented milling sector
dominated by small operators with old technology; (iii) an
overall market system that fails to provide incentives for
product quality; and (iv) the lack of a significant consumer
class with high purchasing power that could foster
consolidation of wholesale and retail sectors and reduce
their costs. In summary, the high cost of paddy production
and operational inefficiencies among multiple players in the
value chain areresponsible for high consumer rice prices. |
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