This document outlines 12 practical measures that can help small farmers in Laos get a better deal under commercial agriculture. It discusses issues like rent-seeking behavior, monopsonies, and elite capture that undermine farmers' benefits. The 12 measures aim to empower farmers by giving them more control, economic influence, and livelihood security. They include diversifying farming, reducing input costs, selling at better prices, adding value, improving quality and identity of products, connecting producers and consumers, democratizing farmer groups, improving negotiation skills, access to finance, networking, and tackling anti-competitive practices. The document argues a systems approach is needed to combine these measures for greatest impact.

1. Andrew Bartlett
Team Leader & Policy Adviser
Lao Upland Rural Advisory Service
12 Practical Measures
to help small farmers get a better deal
under commercial agriculture in Laos
Sub-Sector Working Group for
Farmers and Agribusiness
Vientiane, 20 Sep 2017

2. Introduction
p The Deputy Minister of Agriculture has called for an ‘urgent
response’ to the problems facing small farmers in Laos.
p The commercialisation of agriculture has brought new income
opportunities for rural people while also bringing a number of
problems such as land grabbing, unfair contracts, debt and
exposure to toxic chemicals.
p Studies have been carried out and recommendations have
been made. It could take years, however, before new policies
are approved and implemented.
p What can be done right now by projects and organisations that
are engaged in agricultural development?

3. Context
p The terms rent-seeking, monopsony and elite-capture
appear repeatedly in the literature on agribusiness in Laos
p IPSARD: “small holders are vulnerable to rent-seeking
behaviour”
p FAO: “Farmers and traders are significantly constrained in
their ability to take marketing decisions on account of
widespread monopsonistic regulations for important
crops”
p NAFRI: “there is a large overlap between the
administrative/power structure of the village and the
management structure of the [farmer] group. While this
situation can potentially favor a good vertical integration
of the group ... it can also lead to some form of elite
capture”.

4. The key issue
p Rent-seeking and monopsonies erode the possible
benefits of agricultural commercialization for small
farmers.
p In a nutshell: farmers have little power in this system
p The 12 measures outlined below are guided by the idea
of empowerment.
p At each step, the question that needs to be answered is
will this activity give farmers more power? Will it give
farmers more control over their lives, more economic
influence, more livelihood security?

5. 1. Diversifying farming systems from the bottom up
p Why: Investments in the
agric sector often take the
form of large-scale
monocultures (rubber,
maize, bananas, cassava,
sugar) with negative social
and enviro impacts. By
contrast, diversified farming
has a number of benefits for
food security, economic
resilience, resource
conservation, etc.
p Example: A wide range of participatory planning processes
have been tested. Land-use planning by TABI, landscape
modelling by EFICAS, and less formal community consultations
used by NGOS such as Helvetas, CARE and OXFAM.

6. 2. Reducing the cost of external inputs
p Why: Commercial farming
involves external inputs, ie.
things which the farmer has to
buy such as seeds and
fertilisers. Most are imported
from neighbouring countries...
even chicks!
p Example: The UDIN project in Xieng Khouang supported
enterprising farmers who specialise in rearing fingerlings
and making fish food to supply other villagers who want to
maintain fish ponds.

7. 3. Selling when prices are higher
p Why: Crop prices are lowest immediately
after harvest and traders take advantage
of this. In the case of maize, Lao farmers
have sometimes been unable to sell
because neighbouring countries have
stopped border trade to protect their
own farmers.
p Example: The VECO project in Sayaboury helped farmers
to form groups which were able to store maize until the
market prices improved.

8. 4. Adding value (and creating jobs)
p Why: Most commercial farmers
are producing raw materials.
Companies are making profits
from selling processed goods.
Farmer groups and small
enterprises can get a higher
portion of the final price if they
add value themselves before
selling.
p Example: Women in Ban Na Uoo in Xieng Khouang are
running a highly successful enterprise, making and selling rice
noodles. This is a self-initiated business with a low capital
requirement; no project or government agency was involved
in starting the noodle making. Other communities can learn
from examples like this.

9. 5. Improving quality (and the identity) of Lao products
p Why: Local food products are competing
with imports that are attractively packed
and branded. Consumers attitudes often
favour foreign goods which are more
varied and widely advertised.
p Example: Support for processing and
marketing need to be accompanied by
efforts to convince Lao consumers that local products can
be just as good if not better than imported goods. A
number of projects have supported training in the
establishment of an Internal Control System (ICS) that
allows group certification of organic produce.

10. 6. Connecting Lao producers and consumers
p Why: Shorter chains between
producers and consumers can
benefit everybody in the food
system. The understanding
between the two sides improves
the opportunities for matching
supply and demand, building
trust, and achieving a premium
price.
p Example: The organic vegetable
market in Vientiane, originally
established with support of the
PROFIL project, has now been
running independently for more
than 10 years.

11. 7. Democratisation of farmer organisations.
p Why: Many farmer groups are
affected by ‘elite capture’. Benefits
for ordinary members are limited
because the leaders are acting as
middle men who manage the
connection with outside traders,
and take a bigger share of the
income.
p Example: With the support of the LURAS project, the
Department for Technical Extension and Agro-Processing
(DTEAP) is producing and testing a series of guides for
farmer groups.

12. 8. Improving negotiating ability of small producers
p Why: The weak bargaining
power of small farmers is partly
due to lack of knowledge about
legal rights and market prices,
and little experience in a how to
negotiate for a better deal.
p Example: ‘Think Before You
Sign’ training package produced
by LEAP, used by a FAO, NUDP
etc.
p Example: many market info
systems, from chalk boards to
mobile phones
Think Before You Sign Contract
Rights of Farmers
We can’t sell our products. The buyers are
giving us a very low price. They promised us a
higher price. What should we do?
Contract farming might help to overcome this problem
because normally the investors will responsible for production
inputs, techniques and market. So you don’t have to worry
about where to sell your products.
But you must be the one that make these
decisions. It is your right to sign the
contract. Don’t let other people sign it on
your behalf. After signing, you need to take
a copy of the signed contract.
Elements of Contract Document
What should we consider before making
decisions on contract farming?
First, you need to know about your responsibilities
and then responsibilities of the company. Check
carefully the price for different qualities, quantity
of product and time for selling. You should also
check the minimum price guaranteed?
You should also mention other risk like what are
the responsibilities of both the parties in case of
natural disaster
Conflict Resolution Mechanism
What should we do in case of
violation of contract terms?
You should file a written complain with the following details:
1. Name and address of the person or a company violating
the contract.
2. Name, age and your address of applicant
3. The problem, evidence (if available) or minutes of previous
meetings
4. Your signature with date and location. Then signd and
stamped by the village authority.
You can ask for supports from District Justice Office, or Committee for Economic
Conflict at the Provincial Justice Office. You can also consult with the Lao Bar
Association as the following address:
Vientiane capital: 021 990445-6, Champasack: 031 252410, Oudomxay: 081
211548; Department of Justice Management: 021 412052 and Department of
Justice, National Assembly: 021 413504.
Department of Agriculture Extension and Cooperatives Phone: 021 732072; Fax: 021732092; P.O BOX: 811
Supported by:

13. 9. Improving access to finance
p Why: Commercialisation has led
to an increase in financial debt for
many farmers. And the existence
of debt creates a vicious circle in
which farmers are willing to sell at
low prices.
p Example: Micro-finance schemes allow farmers to get
loans at reasonable interest rates. Many approaches have
been implemented, such as savings and credit groups
initiated by Women’s Union, and commercial services
supported by MAFIP

14. 10. Improving networking among small producers
p Why: Another reason for
the limited bargaining
power of small
producers is that they
are geographically
scattered, which results
in having a weak voice in
any decision-making
p Example: The Lao Farmer Network is an informal
association of 26 farmer groups from around the country,
that has been organising exchanges within the country -
and internationally - for the past 5 years.

15. 11. Tackling monopsonistic practices
p Why: The granting of trading
concessions by local authorities is a
common practice. These concessions
often have a duration of 30 years or
longer. As a result, an entire generation
of farmers have no choice about who
they can sell their produce to, or the
price they are going to get.
p Example: The SSSJ project successfully lobbied for the
cancellation of a monopsony for tea in Oudomxay. In the
same province, LURAS pulled out of working in a
particular District when it became clear that a company
was not willing to provide a better deal for farmers.

16. 12. Tackling rent-seeking behaviour of local govt
p Why: The collection of fees, commissions
and taxes - officially and unofficially, in
cash and in kind - undermines the
profitability of small farmers. In many
cases fees are collected from traders,
who subsequently offer lower prices to
producers.
in Xieng Khouang, which managed the construction and
bought technical advice from the local Irrigation
Department. The resulting channel was of a higher standard
than if funds had been allocated to the Department and
construction undertaken by a contractor.
p Example: LURAS allocated funds for
irrigation infrastructure to a community

17. A systems approach is needed
p While each PM will bring some benefits to small
farmers, for greatest impact a systems approach is
needed.
p This goes beyond a typical value chain approach.
p The VC approach ignores the fact that rural
livelihoods depend on multiple sources of food and
income, and
p Ignores the critical interactions between the
elements of farming systems that determine
productivity, profitability and sustainability.

18. Alternatives to value chains
p Two related frameworks are available that are highly
relevant to the conditions faced by small farmers in
Laos:
n food sovereignty: the right of peoples to healthy and
culturally appropriate food produced through ecologically
sound and sustainable methods, and their right to define
their own food and agriculture systems.
n Agroecology: often seen as a set of practices
(intercropping, IPM, SRI, agroforestry, organic production),
but equally important is how farmers make decisions about
their practices and the way in which those practices give
them greater control of their lives.

19. Conclusion
p An urgent response to the problems facing small farmers in
Laos is possible!
p Practical measures that help small farmers have already been
tested in Laos. The tools are available.
p The challenge is to combine these measures in a systematic
manner
p In order to achieve this the concepts of agroecology and food
sovereignty provide a valuable alternative to value chain
analysis.
p Without steps in this direction, rent-seeking, monopsonies and
elite-capture will continue to stifle the development of fair and
sustainable commercial agriculture.