Govt pledges to boost commercial farm production

LAO PDR (Vientiane Times) - The government has established a committee to promote agricultural productivity for supply to domestic and export markets, while tackling illegal imports along borders.

Agriculture is the foundation of Laos’ economy but has not developed as anticipated.

The government will also inspect agricultural products imported from neighbouring countries to determine which can be produced domestically, to reduce the nation’s over reliance on imports. The move comes as the country’s current account deficit is widening amidst fluctuating exchange rates, resulting in increasingly low foreign currency reserves.

Deputy Minister of Agriculture and Forestry, Dr Bounkhuang Khambounheuang, told Vientiane Times on Wednesday that boosting productivity should be the top priority for the government to ensure national food security.

“Actually we can produce enough to supply the market, but the volume of our production is small and scattered, making distribution difficult,” he said. “Another important thing is that our growers use organic fertiliser and traditional farming methods, but the price of their products is higher than that of imported produce,” he added.

Dr Bounkhuang said that in neighbouring countries, crops and vegetables are cultivated on broad acre farms using chemicals and fertiliser to produce higher yields. Lao entrepreneurs prefer to import these products due to the lower prices and one-stop-shop convenience offered. “We have a problem with market arrangements for growers to sell their crops. Marketing promotion is also critical for consumers to buy organic crops,” the deputy minister added.

Laos’ current account deficit is expected to rise to 12 percent this year with imports projected to grow faster than exports, according to a recent report from the World Bank. The newly established committee, which is chaired by Deputy Prime Minister Sonexay Siphandone, will ensure producers and suppliers work together to satisfy market demand. However, the private sector has called on the government to take serious action to battle illegal cross border trade because smuggled products are killing the local industry.

Many entrepreneurs blamed the lack of agricultural zoning, with not enough land set aside for farming in fertile areas coupled with urban encroachment such as has occurred around Vientiane. Another challenge Lao growers is that agricultural production remains expensive because of the high cost of borrowing and the imported materials necessary for farming, including fertilisers and tractors.

Furthermore, irrigation for dry-season rice production has been abandoned due to excessive electricity charges to pump water. In fact, international demand for Lao agricultural produce is huge, but the nation is unable to supply. For instance, Cuba would like to purchase 100,000 tonnes of rice while Indonesia has asked for 1 million tonnes of rice and Vietnam needs 500,000 head of livestock, but Laos is incapable of meeting these orders.

Critics say line ministries need to work together to define what crops need to be grown for domestic consumption and which ones are needed in regional markets. Additionally, government sectors must strengthen their coordination and communication and assist farmers in improving crop quality and quantity to meet regional market demand.