Government and non-government agencies in Laos are increasingly aware of the strategic role that agricultural marketing enterprises (agro-enterprises) and markets play in local economic development and poverty reduction. The Small-scale Agro-enterprise Development in the Uplands (SADU) project provides the necessary understanding and skills.

Poverty alleviation in remote upland areas, where access to markets is limited, is a critical issue in Lao PDR. Agro-enterprise development can contribute to poverty alleviation by increasing and diversifying income, providing improved access to markets, improving product quality, adding value to raw products, and providing service industries. At the core of the SADU approach lie the participation of the farmers, targeted interventions, guided replication of successful interventions and building on best practices.

Better market access for farmers
The aim of the SADU project is to facilitate agro-enterprise development through improved market access for small-scale farmers. Partner institutions are provided with tools, methods and skills to help them achieve this goal. The SADU project has developed an Agro-Enterprise Development Process (AEDP). The AEDP consists of a series of participatory assessment tools like the Rapid Market Mapping and the Participatory Market Chain Survey, which help identify market opportunities for farmers and enterprises. Crucial in the process are the “Stakeholder Chain Analysis” forums during which market interventions are planned with the partners and the farmers and market linkages are established.

The AEDP in Laos has revealed promising market potential for livestock (cattle, pigs, poultry), maize, peanuts, and fruits. Currently the market potential for wild (forest) tea is being assessed. In Vietnam an AEDP promotes market access for cattle, cassava, maize, watercress, persimmon, bamboo, and bananas.

Fairness and transparency
Production for markets is still relatively new in Laos. The SADU project assists farmers to establish linkages with market operators and work out efficient and transparent terms based on fair trade principles. The project also assists in creating an environment conducive for such processes. For example, one project intervention successfully reduced the high number of check-points and the burden of administrative paperwork required for marketing cattle, which constrained livestock export to Vietnam. Provincial authorities in the concerned province reduced the number of check-points drastically, aligned administrative procedures and are now operating a one-stop shop for cattle exports to Vietnam. The project has thus also developed “good practice“ in improving economic conditions for farmers.

The manner in which the project is set up facilitates institutionalisation of the agro-enterprise development processes at local, district, provincial and national levels. The implementing partners in the project, the National Agriculture and Forestry Extension Services (NAFES) and the National Agriculture and Forestry Research Institute (NAFRI), discuss the results of the SADU implementation directly with the Ministry of Agriculture and Forestry and as such embed the project results in the national level policy agenda. At provincial and district levels the SADU project has established a “Learning Alliance” which functions as a forum for exchange and learning but also as a means to advocate for the dissemination of results and for interventions to take place in districts and provinces.

Challenging transition
The transition from traditional, production-oriented development initiatives towards market-based interventions and innovations is challenging. SADU offers a new approach. While the commercialisation of the agricultural sector is a recent development in Laos, it is progressing rapidly and on a large scale through foreign direct investments. Small-holder farmers in the uplands still rely heavily on subsistence farming and face tough challenges if they shift towards a market-oriented production system.

Not only smallholder farmers lack experience and skills to function in a market-oriented system. Government agencies and evolving private sector actors (traders, local processors etc.) also lack experience and need to enhance their capacities in order to become competitive in the market. Government agencies struggle to find an appropriate role in the rapidly commercialising environment. Government policy as well as the knowledge levels and attitudes of government officials are still in a transition, characterised by a government apparatus that is geared towards controlling rather than supporting and facilitating the trade process.

The project in brief

Contact
Cooperation Office Lao
SDC, East Asia Division