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

terms may not improve sharply. On the other hand quantities
offered by the groups may be on the low side. Better prices
might be had if groups can join hands pooling their crops,
know-how and contacts. A larger volume might also make
trading with bigger markets deeper inside Thailand more
viable.
That said, the shortage of buyers and dependence upon
Thailand is in part a consequence of Chinese restrictions on
corn imports. “Since 2003 only a limited number of trucks
can cross the Chinese border which is open only one day
per week. We could get a higher price from the Chinese
market compared with Thailand,” says Somdee.
Once Route Three’s rehabilitation is complete early in 2008
and if barriers to trade fall as expected when the China-Asean
free-trade zone opens in 2010 groups in Bokeo could find
competition for their produce increases. Working together to
sell directly to traders at the market in Muang La (Mong La)
in Yunnan province could improve terms, stabilize demand,
and reveal opportunities for other crops.
China’s market may have greater long-term prospects given
rising wealth, increasing food demand, loss of agricultural
land and a stirring awareness of organic produce.
Access to capital for investment is another challenge that
hampers the ability of farmers and groups to add value, such
as drying corn, which would earn higher prices. “What the
farmers want is the group to have the warehouse and mill
here,” says Simuang, the farmer in Ban Dan.
overcome these constraints because it doesn’t have much
money. We are worried that if we borrow from the bank
we cannot repay. If the harvests are good we will be more
confident borrowing from the bank. If we borrowed money
we would buy pumps and invest in building a warehouse
so we could store corn to wait for a better price,” says
Myseng.
That the groups think about constructing irrigation systems
is encouraging because it suggests a degree of self-reliance
and motivation, but it also reflects the reality. “The Kumban
has made a request to the district to build an irrigation system
in the rice field area so that in the dry season cash crops like
corn can be grown. But the district does not have a budget
yet,” says Saithong.
Production groups along the Mekong River in Bokeo are now
firmly established. Contracting arrangement with farmers for
the most part work smoothly. Their trading position may be
strengthened if they cooperate together in bargaining with
Thai traders and seeking opportunities to diversify, especially
in China.
However the major barrier they face to raising production
and adding value is their inability to access capital to
finance warehouses, simple factories and most importantly
irrigation.
“For the future we hope we can build a yard to dry the corn
because now we have to sell raw corn for lower prices.
We want a processing factory to improve the quality of our
product. We want to have warehouse to store our product
until the market prices are higher. It’s only an idea, it will really
depend on our income,” says Somdee, deputy head of the
Ban Dan production group.
Irrigation, or rather lack thereof, is another barrier to
increasing production. “If I had an irrigation system I could
grow vegetables, cabbage, any crops in the fields after
harvesting rice. My land is far from the river, I don’t know
how to pump water from the river or streams,” says Nanuon,
the farmer in Si Don Ngeng.
Groups claim they are unable to finance irrigation systems.
“Farmers mostly depend on the climate and the seasons,
for example this year they face drought. The group cannot
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