Contract Farming in Lao PDR: Cases and Questions - LAD - nafri

the surrounding Kumban, jammed between hills and the river.
Signs of prosperity are fewer. The production group of Nam
Nyon, which traces its roots back to 1997 and now covers
395 of 624 families in four villages, contracts in the dry season
for mangetout; and in the rainy season for yellow flowers
similar to marigolds, corn, and also buys forest produce such
as “mak dao” a kind of small sugar palm, bamboo shoots,
and broomgrass.
Continuing along the river from Nam Nyon, the land leaves
the hills behind for rolling plains where stands Si Don Ngeng,
a large, somewhat dusty, village serving around a dozen
villages in the Kumban. There are a few pick-ups and tractors
around, some households earn a few extra baht from small
shops. Its prosperity is probably lower than Ban Dan, but
certainly higher than Nam Nyon. Farmers here grow corn
under contract. The Si Don Ngeng Group was up and
running by 1996. Its 13 staff manage contracts with about
80 families across 12 villages. It is the largest of three groups
in the Kumban.
Their prosperity is to some degree determined by geography.
Ban Dan and Si Don Ngeng both enjoy access to level fields
promising higher yields than the slopes and riverbeds around
Nam Nyon. Their customers and markets are mostly found
across the river in Thailand, not through the mountains with
the rest of Laos. Evidence of their integration into the Thai
economy can be seen in any wallet or purse in which baht fills
the folds and kip is small change.
Global connections
Just how far produce from these groups of farmers travels
is hard to say. Doubtless Thai traders are selling the corn
to Thailand’s industrial food processors, who in turn serve
domestic and foreign markets. Thailand’s agro-industry
reaches far beyond the Mekong.
“We buy Vietnamese seeds in Oudomxay from an agent
for CP Vietnam, which sells different varieties to those from
Thailand,” says Somdee Somwongdet, deputy head of the
Ban Dan production group, one of eight groups competing in
Ban Dan Kumban.
Thailand’s CP (Charoen Phokphand) is among the largest
agro-industry conglomerates in Asia.
Members of the production groups in Bokeo try to keep
abreast of prices in nearby Thai villages. Many have friends or
relatives across the river. In some places they can also listen
to Thai radio, watch Thai television and talk on Thai mobile
telephone networks. Such connections also bring new
practices. “Sometimes I go to Thailand to see how friends
are doing things,” says Simuang Chaloenpon, 64, head of
Lao Front for National Construction of Dan Tin Kumban since
2003.
Contract? What contract?
Contracts themselves are as likely to be by word as on paper.
“I’ve been working like this for five years based on trust, I
haven’t actually signed a contract,” says Simuang who
decades ago worked his way up the Mekong as a deckhand
from Vientiane and now farms 9 rai (1.44 hectares) of corn
under contract.
Nanuon Siwijai, 45, a farmer who grows corn on 2 rai in Si
Don Ngeng signs to acknowledge receiving seeds, fertilizer
and herbicide from the group which he joined five years ago.
But he does not interpret that as a formal contract. “I do not
sign a contract, I only make an agreement with the group.”
Familiarity is one reason why some groups feel there is no
need for paper contracts with farmers. “At the very beginning
we signed contracts with the Thai traders, then with farmers.
Recently we don’t sign contracts with the farmers because
we all know each other and how the system works,” says
Myseng Tammawong, 48, a party member who was formerly
the village head and is now in charge of the finances of the Si
Don Ngeng production group.
In Nam Nyon the village head doubles as the head of each
village production sub-group guaranteeing the farmer will pay
back the cost of seeds and fertilizer and only sell the crop to
the group.
Whether the group feels a contract is necessary depends
in part on the farmer’s reputation, his experience, and his
relationships. Simuang, a respected elder, is not required to
sign a contract, unlike others in the Kumban.
“At first the group only had a gentleman’s agreement with
farmers. But it was not clear, sometimes the farmers sold to
the market. We discussed this within the group concluding
we should make contracts with the farmers,” says Somdee,
the Ban Dan production group’s deputy head.
Whatever form the contract takes the obligations are similar.
A group will advance inputs like seeds to farmers in return for
the right to buy the harvest at an agreed price, which is often
tied to the prevailing market price.
25