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Coffee in the North of Laos: Learning from Keoset

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Presentation at the Sub-Sector Working Group for Farmers and Agribusiness, Department of Technical Extension and Agro-Processing, 25 March 2019 (see www.LaoCoffee.org)

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Coffee in the North of Laos: Learning from Keoset

  1. 1. Keoset Community Coffee Xieng Khouang
  2. 2. What is LURAS?  The Lao Upland Rural Advisory Service (LURAS) is a partnership between MAF and SDC, which started in Dec 2014.  Implemented by Helvetas and DTEAP, with activities in Xieng Khouang, Houaphan, Oudomxay, Xaisomboun and Sayaboury.  Working with farmers to strengthen production, processing and marketing of coffee, tea and KKN rice. The project also works on reducing the risks of pesticide use, especially in maize areas.  Also Secretariat of the Sub-Sector Working Group for Farmers and Agribusiness, cooperating with DoPLA on a policy studies.
  3. 3. The Market for Northern Coffee  Coffee from Xieng Khouang is attracting higher prices than the South  Cherries: 4,000 kip  Parchment: 27,300 kip  Green beans: 35,000 to 45,000 kip  Two related reasons:  Expansion of cafes in VTE and LPB is creating strong local demand  Transportation and transaction costs of sourcing beans from elsewhere are high  Cafes in the capital have been struggling to get green beans!  But the on-going expansion of the production area is the North of Laos means this situation cannot last.  Prices for farmers are likely to drop once the local demand is met and the ‘surplus’ has to be exported.  Can Laos compete with areas such as Yunnan, Shan State and the Lanna area of Thailand where coffee production is also expanding?
  4. 4. Background of Coffee in Khoun District  LURAS is building on earlier coffee initiatives in Khoun District of XK.  Arabica coffee was first planted with support of IFAD in 2001 but then abandoned due to lack of market.  In 2010, the SADU project introduced wet processing and started making connections with private sector.  Following the completion of SADU, farmers stopped processing but continued to sell cherries to local buyers.  In 2016, LURAS started applying a systems approach to achieve greater sustainability.  Currently 714 HH in 40 villages have 393 ha of coffee. Expected yield 46 t cherries. SADU Report, 2012
  5. 5. A Systems Approach  Integrated activities are carried out that take account of the relationships between multiple factors and actors. Collaboration with private sector: promotion of CSR commitments Strengthening local Govt: support to PAFO (coordination) and DAFO (facilitators) Expanding capacity: establishment of nurseries and processing centres Vision and Strategy development: consultant study and stakeholder meetings Strengthening Farmer Organisations, incl. farmer-to-farmer training A systems approach to development of Keoset coffee
  6. 6. Vision for the future  The LURAS team believes that the future profitability and sustainability of Keoset Community Coffee depends on empowered farmers delivering a specialty product.  “Specialty can only occur when all of those involved in the coffee value chain work in harmony and maintain a keen focus on standards and excellence from start to finish.” (Source, SCA)  In practice this means...  A focus on quality not just quantity. Quality must be consistently high.  Farmers moving up the value chain, eg. selling green not red  Getting premiums through certification (eg. organic) and/or maintaining unique identity (eg. single origin)  Establishing long-term partnerships among the value chain actors
  7. 7. Partners 1: Farmers  Investing in the ability of farmers is the key to success for the sector. Small producers need both facilities and skills.  LURAS has demonstrated that the provision of processing facilities can act as a basis for collective action that in turn will enhance the bargaining power of farmer groups.  LURAS has also demonstrated that farmer-to- farmer learning is an effective means for improving skills. Exchanges between Keoset farmers and coffee producers from the Bolaven have strengthened techniques and confidence.  Ownership is important. Not only of productive assets, but also the product identity. LURAS is not simply promoting Lao coffee but Keoset Coffee.
  8. 8. Partners 2: Companies  Farmers need buyers, but they are also vulnerable to exploitation, especially when they have no choice about who they can sell to.  LURAS is promoting partnerships that reduces risks for farmers, and secures supply for locally-based companies. A win-win situation.  And we work with companies that don’t just buy beans, but also roast and retail in Laos, thereby creating jobs and related economic activity.  Competition is important. The project has introduced new companies to prevent the creation of local monopsonies, and thereby ensure that farmers have options.
  9. 9. Partners 3: Technical Assistance  Many projects have introduced coffee in the North, often as an alternative for opium, but failed to make a sustained impact because of unrealistic and inadequate TA.  In some cases, the assistance was too narrow in scope, eg. supporting planting but not processing or marketing.  In other cases the duration of assistance was too short to enable farmer groups to reach the required capability  Some projects have also been unrealistic, failing to adequately analyse profitability of interventions  LURAS recognizes that the introduction of coffee needs at least 5 years of TA, and that different experts may be needed to address a wide range of issues: technical, organisational, marketing, policy, communication.
  10. 10. Partners 4: Local Government  Like other forms of agribusiness in Laos, coffee is vulnerable to rent-seeking behaviour by local government.  Collection of taxes and payments for quotas, permits etc. can undermine the profitability for farmers and companies alike, and stifle the growth of the sector.  These problems appear to be less with coffee in the North of Laos  LURAS experience shows that local government can play a constructive role as coordinators and facilitators.  Effective coordination requires data collection and stakeholder consultations, with transparency as a key ingredient.
  11. 11. Partners 5: Youth  The development of the coffee sector is a long term initiative.  Coffee is also a labour-intensive sector  We cannot succeed if all the youth migrate out of the coffee villages.  For this reason LURAS has a Youth Engagement Strategy (YES)  YES aims to strengthen the connection between agro-processing, rural employment and youth empowerment.  We need to work with the next generation of coffee farmers!
  12. 12. Conclusions  Some key ideas to remember:  A vision of speciality coffee production in Laos  Profitability through consistent quality and premiums  Community ownership of productive assets and product identity  Encouraging partnerships and competition in the engagement with private sector  Be realistic and open when making plans and analysing data.  A long-term perspective, including engagement with youth
  13. 13. For more information: www.LaoCoffee.org

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