DEVELOPING AGRICULTURAL  POLICIES FOR RICE-BASEDFARMING SYSTEMS IN LAO PDR       AND CAMBODIARice-based Systems Research: ...
Project partners   University of Queensland   National University of Laos   Cambodian Development Resources Institute ...
Project Aim   Contribute to improved agricultural policies    for rice-based farming systems in Laos and    Cambodia, tak...
Objective 1    To analyse current agricultural strategies,    policy processes, and policy settings in Laos    and Cambod...
Objective 2   To demonstrate the benefits of evidence-based    policy development in Laos and Cambodia    through feedbac...
Objective 3   To examine agricultural policy trends in other    countries in the region, especially Thailand and    Vietn...
Objective 4   To collaborate with agricultural policy agencies    in Laos and Cambodia to identify improved    policy opt...
Timeline   Workshop 1 - Inception Meeting (August 2011)   Workshop 2 - July 2012   Outputs of Year 1 - Dec 2012   Work...
Phases of Research   Year 1 – Rice policies in Cambodia and Laos (in    context of Thailand and Vietnam)   Year 2     P...
Components of Year 1 theme Regional overview and comparison of rice  policies Specification of rice farming systems (mai...
Case studies underway in Laos   Irrigated and rainfed rice-based farming    systems in southern Laos (Savannakhet)     t...
Case studies underway inCambodia   Fertiliser supply chain: a case study in Takeo    Province   Policy options for impro...
Research problems andrationale   Rice is main crop, contributes to economic    growth   In 2010-11, production is 8.4 m ...
Methodology   Focus on Takeo     One of main lowland rice production areas     High flow of farm inputs, credit provisi...
Fertilizer value chain studyTheng Vuthy, PhD
Fertilizer import and distributionpoints      Thai Entry Point                                                Thai Distrib...
Fertilizer procurement and distributionchannels
Fertilizer channels in Takeo                              Licensed Cambodian Importers                                (1 b...
Urea and DAP value chain (Feb,2012)                                                Granular Urea                DAP (USA) ...
Blended fertilizer samples nutrientanalysis                                                              % Total     % Tot...
Fake fertilizer – how does ithappen?   From blender/producers – either poor blending    quality or mixing (reported both ...
Reduction of fake fertilizers   MAFF and PDA cracked down on fake    fertilizers by     increasing  certification and tr...
Farm creditKem Sothorn
Supply of credit to rice farmers   Good supply of credit from MFIs   Borrowers increasing, mostly larger farmers   Most...
Impacts of credit on ricefarmers   Not all credit used for agriculture   Farmers mostly use credit to diversify income  ...
Preliminary observations   Credit for rice farmers can work effectively if    there is good combination of     physical ...
Rice value chainNou Keosothea and Chhim Chhun
Links in rice value chain                                                   Store in the            Sun dry               ...
Relationships in rice valuechain   Farmers sell rice immediately after harvest   Local traders the first link, transport...
Prices and margins along chain                                                    Wet season rice         Dry season riceK...
Preliminary findings   Wet season rice is for home consumption, dry    season rice is for income and repayment of    inpu...
Rice contract farmingNou Keosothea
Nature of contractualarrangements   Contractor solely developed the contract terms   Contractor provided rice seed witho...
Benefits to contractedsmallholders Received good quality seed without  interest Guaranteed market with better price For...
Problems faced by famers Obeying contract terms on quality,  moisture content, and transportation to the  mill Lack of c...
Conditions enabling smallholders to benefitfrom CF schemes   Secured market for the product   Increasing credit for ‘goo...
Summary   Contract farming has benefited ‘good’ farmers    in study areas by giving access to …     good     quality see...
Next steps for Year 1 plan   Analysis and draft case study reports   Sharing research findings in regional    workshop i...
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Developing Agricultural Policies for Rice-Based Farming Systems in Lao PDR and Cambodia

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Theng Vuthy, CDRI, Cambodia

Rice-based Systems Research: Regional Technical Workshop
Australian Centre for International Agricultural Research (ACIAR)

13-15 June 2012, Vientiane, Laos

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Developing Agricultural Policies for Rice-Based Farming Systems in Lao PDR and Cambodia

  1. 1. DEVELOPING AGRICULTURAL POLICIES FOR RICE-BASEDFARMING SYSTEMS IN LAO PDR AND CAMBODIARice-based Systems Research: Regional Technical Workshop Australian Centre for International Agricultural Research (ACIAR) 13-15 June 2012, Vientiane, Laos Theng Vuthy, CDRI, Cambodia
  2. 2. Project partners University of Queensland National University of Laos Cambodian Development Resources Institute Chiang Mai University (Thailand) Centre for Agrarian Systems Research and Development (Vietnam)
  3. 3. Project Aim Contribute to improved agricultural policies for rice-based farming systems in Laos and Cambodia, taking into account trends in Thailand and Vietnam, in line with ACIARs food security initiative for the Mekong region.
  4. 4. Objective 1 To analyse current agricultural strategies, policy processes, and policy settings in Laos and Cambodia in the context of regional social, economic and environmental constraints and trends.  Review agricultural constraints, trends, and strategies in the region through interviews with key informants, review of policy documents, and analysis of secondary data.  Prepare a comparative analysis and synthesis of these constraints, trends, and strategies.
  5. 5. Objective 2 To demonstrate the benefits of evidence-based policy development in Laos and Cambodia through feedback from selected case studies.  Use locally grounded case studies to explore the implementation and impacts of selected policies.  Conduct project workshops to review, compare, and analyse case studies in relation to constraints, trends, strategies, and processes.  Feedback to policy actors through Project Advisory Group, reports, and policy briefs.
  6. 6. Objective 3 To examine agricultural policy trends in other countries in the region, especially Thailand and Vietnam, and the implications of cross-border trade and investment for policies in Laos and Cambodia  Identify key policies and trends in Thailand and Vietnam of relevance to Laos and Cambodia  e.g.,agricultural commercialisation, crop diversification, rural credit, mechanisation, contract farming.  Conduct case studies of direct impacts of traders and investors from Thailand and Vietnam on
  7. 7. Objective 4 To collaborate with agricultural policy agencies in Laos and Cambodia to identify improved policy options and strengthen policy development processes  Involve policy staff in training workshops, field studies, analysis of data, and preparation of policy options.  Organise in-house reviews and policy forums in Laos and Cambodia in conjunction with collaborating policy agencies.  Prepare a manual on evidence-based policy analysis.
  8. 8. Timeline Workshop 1 - Inception Meeting (August 2011) Workshop 2 - July 2012 Outputs of Year 1 - Dec 2012 Workshop 3 - July 2013 Outputs of Year 2 - Dec 2013 Interim Project Report - March 2014 Forums in Laos and Cambodia - May 2014
  9. 9. Phases of Research Year 1 – Rice policies in Cambodia and Laos (in context of Thailand and Vietnam) Year 2  Policies regarding agribusiness investment and contract farming for non-rice crops (maize, sugarcane, rubber, …);  Policies regarding livestock production and trade (cattle, buffaloes, …)
  10. 10. Components of Year 1 theme Regional overview and comparison of rice policies Specification of rice farming systems (mainly lowland) Production and input constraints (farm size, land, seed, fertiliser, water, extension, credit, risk) Output constraints (post-harvest, marketing, trade barriers) Diversification (alternatives to producing rice on the same land) Contract farming, farmer organisations
  11. 11. Case studies underway in Laos Irrigated and rainfed rice-based farming systems in southern Laos (Savannakhet)  techniques of rice production  production cost and returns  diversification of farm activities Supply of inputs and services to rice farmers  seeds,fertilizer, water, credit  government and private-sector Rice value chain and cross-border trade  Laos-Vietnam  Laos-Thailand
  12. 12. Case studies underway inCambodia Fertiliser supply chain: a case study in Takeo Province Policy options for improving credit supply to rice producers: a case study of in Takeo Province Rice value chain: a case study in Takeo and Southern Vietnam Rice contract farming in Cambodia: a case study in Takeo and Kampong Speu provinces
  13. 13. Research problems andrationale Rice is main crop, contributes to economic growth In 2010-11, production is 8.4 m tons, surplus 4 m tons But there are constraints …  Farm inputs – poor quality fertilizers, pesticides, seeds  Credit – limited access to working and investment capital  Rice marketing – high potential, but many issues surrounding post-harvest operations and cross-
  14. 14. Methodology Focus on Takeo  One of main lowland rice production areas  High flow of farm inputs, credit provision, cross- border trade, and emergence of contract farming Qualitative approach – KIIs and FGDs in four districts with different access to irrigation Respondents - farmers, traders, contractors/millers, exporters, importers, MFIs, government officials Secondary and primary data
  15. 15. Fertilizer value chain studyTheng Vuthy, PhD
  16. 16. Fertilizer import and distributionpoints Thai Entry Point Thai Distribution Centers Vietnam Distribution Organic Distribution Centers Organic Entry Point Vietnam Entry Points Future Vietnam Urea Entry Point
  17. 17. Fertilizer procurement and distributionchannels
  18. 18. Fertilizer channels in Takeo Licensed Cambodian Importers (1 based in Takeo, 4 in flow) Prov. distributors / wholesalers Mobile distributors / wholesalers Prov, District and Village Retailers Seasonal Village Distributors Credit sales Cash sales Smallholder Farming Households Note: Quality fertilizer flow ; Possible fake flow
  19. 19. Urea and DAP value chain (Feb,2012) Granular Urea DAP (USA) % of imported % of imported ($/50 kg) price ($/50 kg) price Bag Cost Importer at Vietnam border - - 31.5 100 Transport to Cambodia (<100km@$0.25) - - 0.3 0.8 Into store - - 0.1 0.2 Cost into Border Warehouse - - 31.8 101.0 Label change & importers markup - - 1.7 5.3 Importers Selling Price 24 100 33.5 106.3 Transport to province (100 km @ 0.25) 0.3 1.0 0.3 0.7 Distributor markup and handling 0.8 3.1 0.8 2.2 Into store Provincial Distributor 25.0 104.1 34.5 109.3 Provincial distributor markup 0.5 2.0 0.5 1.4 Distributor selling price 25.5 106.1 35.0 110.7 Transport to village dealer & handling - - 1.0 2.9 Into store at village dealer - - 36.0 113.6 Dealer markup for cash sale 3.3 12.7 0.5 1.4 Retail Cash Price 28.8 118.9 36.5 115.0
  20. 20. Blended fertilizer samples nutrientanalysis % Total % Total Total NutrientSample # Product % Total N % Total P2O5 K2O Sulfur % 5. 20-20-15 21.90 10.50, 11.40 9.00 77.00 12. 20-20-15+TE 16.40, 16.80 16.70, 17.40 14.20 88.00 21. 20-20-15+TE 17.10 18.20, 18.00 13.60 68.22 24. 20-20-15 17.70, 18.50 19.50 11.60 90.18 28. 20-20-15 20.70 19.60 9.77 91.04 34. 20-20-15+TE 17.20 17.50, 17.30 12.80 86.36 38. 20-20-15 17.80, 18.10 21.20 10.40 90.36 42. 16-16-8-13(S) 13.90 5.51, 5.47 0.15 12.10 48.90 43. 16-8-8-13(S) 17.20 8.66 2.85 15.60 89.72 46. 20-20-15-13(S) 24.60 12.80, 12.20 11.90 2.12 89.64 60. 16-8-8-13(S) 16.30 6.80, 6.92 3.47 15.00 83.41 73. 20-20-15 + TE 17.80, 19.00 20.30 9.41 88.56 88. 20-20-15 + TE 16.10,16.20 20.30 11.70 87.64 92. 20-20-15 +TE 15.80,16.10 21.10 9.79 85.44 97. 25-20-10 +TE 23.00 19.60 12.30 99.82 102. 20-20-15 + TE 21.60 16.20, 16.60 9.43 86.60Source: IFDC / WB, 2010; Note: Overall index value of the fertilizer is 98%
  21. 21. Fake fertilizer – how does ithappen? From blender/producers – either poor blending quality or mixing (reported both from Thailand and Vietnam) Adulteration and or dilution (e.g., mixing poor fertilizer with good one) Re-bagging – putting poor quality or cheap fertilizer in bag labeled with urea or DAP Coating with oil to change product appearance (e.g., coating 6-20-0-4 to give DAP appearance) During high prices in 2008-9, about 30% of fertilizers were fake
  22. 22. Reduction of fake fertilizers MAFF and PDA cracked down on fake fertilizers by  increasing certification and training of wholesale and retail shops  farmer training and awareness Increase competition of importers for market share in a small total market Farmers have realized that cheap fertilizers do not provide good crop responses
  23. 23. Farm creditKem Sothorn
  24. 24. Supply of credit to rice farmers Good supply of credit from MFIs Borrowers increasing, mostly larger farmers Most small farmers still cannot access credit Factors limiting access to available credit -  Lack of collateral  High risk and vulnerability among the poor  Small farm size and poor physical infrastructure  Lack of skills to use credit effectively  Lack of livelihood diversification  Difficulties in forming group loan
  25. 25. Impacts of credit on ricefarmers Not all credit used for agriculture Farmers mostly use credit to diversify income sources and for household expenditure Most farmers access inputs from traders on credit with high interest rate General improvement in living conditions and food security, partly because of access to credit Women are better managers of household expenditure and investment
  26. 26. Preliminary observations Credit for rice farmers can work effectively if there is good combination of  physical infrastructure  market availability  skill and extension services  mechanisms to cope with shocks and reduce vulnerability Most MFIs focus on their own sustainability rather than helping farmers by reducing interest rates
  27. 27. Rice value chainNou Keosothea and Chhim Chhun
  28. 28. Links in rice value chain Store in the Sun dry house Local rice mill Transport to Village or PhnomFarmers local Penhproduce collectorsvarieties Provincial rice mill of rice Exporting Regional traders Transport to Vietnamese traders Vietnam Indicate the huge amount of paddy
  29. 29. Relationships in rice valuechain Farmers sell rice immediately after harvest Local traders the first link, transporting to regional traders Vietnamese traders are key to setting price, quality, and quantity Actors get information (prices, quantity, quality) mainly from Vietnamese traders Traders manipulate information for own benefit Farmers are price takers No active producer organizations in place Local traders are short of capital  capacity to buy rice about 5-10 tons per day  no storage facility
  30. 30. Prices and margins along chain Wet season rice Dry season riceKey Value Chain Actors Price % of farm Price % of farm (riel/kg) gate (riel/kg) gateFarmers’ selling price 1,000 100 850 100Handling and transport 150 15 - -Village or local collectors’ markup 150 13 20 2.4Village or local collectors’ selling price 1,300 130 870 102.4Regional traders ‘/ millers’ handling and markup 200 20 80 9.4Regional traders’ / millers’ selling price 1,500 150 950 111.8Exporters’ handling and markup - - 80 9.4Vietnamese traders’ buying price - - 1,030 121.2
  31. 31. Preliminary findings Wet season rice is for home consumption, dry season rice is for income and repayment of input costs Post-harvest operations inefficient – storage, Cambodia trading capacity, investment capital; Farmers are price takers, no bargaining power Local and regional traders make more profit Rice marketing is highly dependent on Vietnamese traders who set prices, quality, and quantity of rice marketed in Cambodia
  32. 32. Rice contract farmingNou Keosothea
  33. 33. Nature of contractualarrangements Contractor solely developed the contract terms Contractor provided rice seed without interest and bought rice about 300 to 500 riel/kg above market price from contracted farmers Farmers not included in contracting process and can only agree or disagree with the contract terms Local authorities (villages and communes) were used to monitor the contract terms at the village level and received cash 50 riel/kg from contactor Contractor managed, controlled, and approved
  34. 34. Benefits to contractedsmallholders Received good quality seed without interest Guaranteed market with better price For farmers who kept the contract terms, cash loan at 1.4% per month  cf. MFI interest rate 2-3 % per month Received technical support from contractor which can improve yield (e.g. 0.5-1 ton/ha) Overall increase in rice price for villages
  35. 35. Problems faced by famers Obeying contract terms on quality, moisture content, and transportation to the mill Lack of cost and benefit analysis of CF membership Natural disasters - drought and flash flood led to farmers losing money Some contract farmers did not follow the contract terms and contractor did not renew contract for whole village
  36. 36. Conditions enabling smallholders to benefitfrom CF schemes Secured market for the product Increasing credit for ‘good’ farmers Better selection of farmers and locations Good management to plan, organize, and coordinate production Provide technologies that are suitable for small famers Strict monitoring of quality and quantity of members’ product to benefit whole community
  37. 37. Summary Contract farming has benefited ‘good’ farmers in study areas by giving access to …  good quality seed  credit  technology  market Benefits come with problems of …  monitoring  complying with the contract terms  natural disasters (drought and flood)
  38. 38. Next steps for Year 1 plan Analysis and draft case study reports Sharing research findings in regional workshop in Danang in July Revised draft reports addressing comments from the workshop Publish in ACIAR report

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