Climate-Friendly Agribusiness Value Chains Sector Project Survey Report

1 | P a g eTA8897-REG: Climate Friendly Agribusiness Value Chain Sector Project (CFAVC)
APPENDIX 14: Survey of rice and vegetable activity in Khammouane, Savannakhet, Saravane,
Champasak, and Vientiane provinces.
Project Preparatory Technical Assistance (PPTA)
ADB TA8897-REG: Climate Friendly Agribusiness Value Chain Sector Project (CFAVC)
Written by:
Phetsoulaphonh Choulatida, Deputy Team Leader / Agribusiness Value Chain Specialist
Santisouk Soukhasith, Rural Infrastructure Specialist/Civil Engineer
Phonesavanh Keoasa, Agro-processing Specialist
October 2016

ACKNOWLEDGEMENTS
This report was written by Mr. Phetsoulaphonh N. Choulatida, the Deputy Team Leader / Agribusiness
Value Chain Specialist. Some parts of this report compiled from Lao translation of the original reports
from Mr. Santisouk Soukhasith, Rural Infrastructure Specialist/Civil Engineer, and Mr. Phonesavanh
Keoasa, Agro-processing Specialist. It is the outcome of 28 days (first trip was 1-3 June 2016, second trip
was 12-19 June 2016, third trip was 17 June-2 July 2016, and last trip was 15-25 September 2016) of
administering feasibility study in six provinces of Vientiane province, Khammouane, Savannakhet,
Saravane, Champasak, and Sekong, Lao PDR especially rice and vegetables producer and processing
groups which cover in the pilot projects where ADB funded.
The mission is a part of interim period mission to conduct focal group discussion with rice and
vegetables producers, vegetables import-export companies, bio-fertilizer factories, rice mills, and local
authorities in order to identify detailed sub-projects and ensure that the outcome from this study will be
applicable by all stakeholders who are currently working on rice and vegetables commodity chain.
I myself wish to acknowledge the assistances provided by PPTA team, Mr. Vinoth Vansy (ADB national
project coordinator) and his subordinates in the provinces and districts that assisted community’s
dialogue and field visits, Mr. Khamthanh Khamdeng (Head of Department of Planning and Cooperation),
Mr. Sengthong Phouangkhamvang (Deputy head of Department of Agriculture Extension and
Cooperatives), Mr. Sisavath Vanthanou (Deputy head of standard and certification section), and also I
am very thankful to Sir. Duncan Burnett (Team Leader in Lao PDR) from Landell Mills Development
Consultants co., ltd for high valuable suggestions and strongly supports my study mission.
The authors personally give an overwhelming thanks to EA, Technical committees, provincial and district
authorities, private sectors, and communities to provide nice discussion during my studies.
October 10, 2016
Deputy Team Leader / Agribusiness Value Chain Specialist
ADB TA8897-Reg: Climate-Friendly Agribusiness Value Chains Sector Project
Lao PDR
P.O.Box:
Vientiane Capital,
Tel: +856(0)21 285170-71
Fax: +856(0)21 285172
Mobile: +856(0)20 5564 1055, 23878899
Email: Phet.choulatida@gmail.com ; Phet.choulatida@yahoo.com

TABLE OF CONTENTS
Acronyms and abbreviations page
I. Executive summary……………………………………………………………………….………………………………....... 6
II. Introduction…………………………………………………………………………………….………………………...……… 6
III. Methodology……………………………………………………………………………………..……………………………… 7
IV. Key analysis and findings from this study…………………………………..……………………………………… 8
1. Khammouane province (rice commodity)………………………………………………………………………….. 8
1.1. Irrigation improvement ……………………………………………………………………………………………….…. 8
1.2. Access road to the production area….…………………………………………………………………………….. 12
1.3. Value chain actor…………………………………………………………………………………………………………….. 15
1.3.1. State rice seed center (Xebangfai)……………………………………………………………………………….. 15
1.3.2. Farmers’ facilities ……………………………………………………………………………………………………..... 16
1.3.2.1. Bio fertilizer production group ……………………………..………………………………………….………. 16
1.3.2.2. Rice seed production group………………………………………………….………..………................... 17
1.3.2.3. Commercial rice production group……………………………………………………..….………………... 18
1.3.2.3. Household agro-processing group…………………………………………………..……….................. 19
1.3.3. Rice mill enhancement…………………………….…………………………………………………………………… 20
1.3.4. The feasibility study of a six year upgraded rice mill (case of Vanida rice mill)…………….. 21
2. Savannakhet province (rice commodity)…………………………………………………..……………………….. 28
2.3.1. State rice seed center (Thasano)………………………………………………………………………………….. 29
3. Saravane province (rice commodity)………………………..…….………………………………………………….. 34
3.3.1. State rice seed center (Nongdeng)……………………………………………………………………………….. 37
4. Champasak province (vegetable commodity)………………….…………………………………………………. 41
4.3.2.2. Vegetable seed production group…………………………………………………..………................... 45

4.3.2.3. Commercial vegetable production group……………………………………….…..….………………... 45
4.3.2.4. Vegetables processing in Champasak province………………………………………………………….. 46
4.3.2.4.2. Household agro-processing group…………………………………………………..………................ 50
4.3.2. The feasibility study of a six year upgraded vegetables collection and marketing
infrastructure (case of Thongset vegetables hub)…………………………………………………………………
60
5. Vientiane province (vegetable commodity)………………….……………………………………………………. 60
5.3.2.2. Vegetable seed production group…………………………………………………..………................... 65
5.3.2.3. Commercial vegetable production group……………………………………….…..….………………... 65
5.3.2.4.2. Household agro-processing group…………………………………………………..………................ 66
Annex……………………………………………………………………………………………………………………………………… 68
Reference……………………………………………………………………………………………………………………………….. 84

ACRONYMS AND ABBREVIATIONS
ADB Asian Development Bank
AISP Agriculture Infrastructure Sector Project
CFAVC Climate-Friendly Agribusiness Value Chains Sector project
EA Executive Agency
EM Effective Micro-organism
EMRIP The Enhancing Milled Rice Production
EWEC East West Economic Corridor project
DAFO District Agriculture and Forestry Office
DOA Department Of Agriculture
FDI Foreign Development Index
GAP Good Agriculture Practice
GMS Great Mekong Sub-region
HH Household
IDP Indochina Development Partners Group
IFAD International Fund for Agricultural Development
JICA Japan International Cooperation Agency
LKIP Lao Kip Currency
MAF Ministry of Agriculture and Forestry
MDG Millennium Development Goal
MOU Memorandum Of Understanding
NAFRI National Agriculture and Forestry Research Institute
NGPES National Growth and Poverty Eradication Strategy
OA Organic Agriculture
ODA Official Development Assistance
OOG Office Of Governor
PAFO Provincial Agriculture and Forestry Office
PN Phon Ngam (name of rice seed variety)
PPP Potential for Public Private Partnerships
PPTA Project Preparatory Technical Assistance
SNRMPEP Sustainable Natural Resource Management and Productivity Enhance Project
TDK Tha Dok Kham (name of rice seed variety)
TSN Tha Sa No (name of rice seed variety)
USD Currency of United State of America

I. EXECUTIVE SUMMARY
This report provides an analysis and evaluation of the current and prospective scenario of core sub-
projects for rice and vegetable value chains how CFAVC project leading to implementation. There are
five provinces of Vientiane province, Khammouane, Savannakhet, Saravane, and Champasak had
conducted the studies on irrigation rehabilitation for rice and pond creation for vegetable design and
costing for each particular sub-projects. Road access to the production areas were proposed by
stakeholder with design and cost calculation has done by PPTA team. For two core sub-project on rice
mill upgrading and vegetable hub improvement look detailed assessment, profitability, liquidity and
financial stability for future selection by EA and implementation team. The methods of analysis include
trend, horizontal and vertical analyses, challenging, and opportunities to have a good synergy for the
benefit of smallholder famers. Other calculations include rates of return on Shareholders’ Equity and
Total Assets and earnings per share to name a sakeholder. All calculations can be found in the provincial
section part. Results of data analyzed show that all elements of real needs and CFAVC project
intervention. In particular, comparative performance is poor in the areas of profit margins, liquidity,
internal and external control, and inventory management.
The report finds the scenario of the core sub-projects in the current position seems to be positive. The
major areas of weakness require further investment and helpful action by management.
Recommendations discussed include:
 Rehabilitating irrigation canals for rice and create pond for vegetables
 Improving existing farm road
 Upgrading rice mill for a better acceptance by domestic and international markets
 Improving vegetable hub and replicate the model to other potential places
The report also investigates the fact that the analysis conducted has limitations. Some of the limitations
include: forecasting figures are not provided nature and type of core sub-projects is not known nor the
current economic conditions data limitations as not enough information is provided or enough detail i.e.
monthly details not known results are based on past performances not present.
II. INTRODUCTION
This preliminary feasibility study has intended to collect information for Technical committee to inform
its recommendations, in particular to increase numbers’ understanding of how Climate-Friendly
Agribusiness Value Chains Sector project (CFAVC) design is fitted and will implement aligning
government’s goal and local communities’ need. The analyzed data can be evidence, and other
resources are primarily uniquely available in the country of Lao PDR to support CFAVC project. This
report gives a provision of an opportunity to explore a proof concept of the technical committee and EA.
In particular the feasibility introduces more rigorous approaches.
In regard to the analysis and findings what we found in this study, stakeholder all share one common
challenge: how to best move rice and vegetable product from the farm to the marketplace along the
chain actors from farmers, seed producer, bio-fertilizer farm producer, mechanical service provider, rice
miller/vegetable hub, collector/trader, and the domestic and international market as final consumer.
This is especially crucial for small and midsize actors (farmers, rice miller, and vegetable hub
operator/cooperatives) who may not have enough capital to own their own trucks, their own
refrigeration units, or their own warehouse space. They might not have the resources to develop
sophisticated distribution routes, build effective marketing campaigns or network with regional buyers

and customers.” It is generally accepted that small and mid-sized actors (family farmers, rice millers,
vegetable hub cooperatives) are at a distinct disadvantage when selling to larger markets. They are
often excluded from mainstream market channels because conventional distributors and retailers look
to achieve lower, more competitively priced products through high volume purchases and to avoid the
transaction costs associated with purchasing from many different small suppliers. The smaller farmers,
rice millers, and vegetable hub cooperatives may also be financially unable to maintain infrastructure
like green house, farm mechanical facilities, rice milling equipment, washing and packing facilities and
cold storage facilities, which are necessary for larger volume sales. And in many cases by accepting a
lower return on their investments and labor than larger competitors. The often higher gross revenues
yielded by direct vs. wholesale marketing channels do not necessarily translate into higher profits for
the stakeholder (farmer, rice miller, and vegetable hub operator). There is a distinct need in the region
to develop larger markets for local produce and to find new and better ways for stakeholder involved to
differentiate and verify their products as locally grown. Working with farmers on one end of the rice and
vegetable chain, the rice miller and vegetable hub cooperative/operator have played a crucial role in
support commercial farmer growing the local rice and vegetable movement throughout the provinces.
Existing commercial rice and vegetable farm groups also have a wealth of experience developing
initiative, which was an early, innovative effort to aggregate and distribute the quality and quantity of
rice and vegetable products of small farmers to meet the demand by domestic and regional markets.
III. METHODOLOGY
The five provinces of Vientiane province, Khammouane, Savannakhet, Saravane, and Champasak, in Lao
PDR were selected as the sites of study conducted by team of consultants and local government service
officers. In particular, the sites’ selection was based primarily on the plenty of Lao people growing rice
and vegetables for market purpose. On the other hand, these sites are already included into MAF’s
strategy by 2030 stated that 10 provinces will focus on rice, and some of them are vegetables.
The study’s goal was to determine the feasibility of CFVAC project is creating an entry point of rice and
vegetable value chains for implementation phase. The feasibility study was conducted over the detailed
core sub-project intervention. To begin the process, stakeholder oriented, and a community stakeholder
meeting was held. This was followed by a series of farmer meetings held locally in each of the five
provinces. Subsequently, the research drew on the connections and information gathered from these
stakeholder meetings and employed multiple forms of inquiry, including: publicly available data from
agricultural sector, a survey of rice miller and vegetable hub operator to learn what was already being
done and how they perceive a prospective, a survey of rice and vegetable commercial production
groups to assess the need for various prospective functions and to determine the availability of product,
a survey of local institutions about the rice seed demand for locally grown rice and vegetable.
For this study we primarily focused on the rice mill upgrading and vegetable hub cooperative/operator
with additional survey on irrigation infrastructure improvement and farm road access to be repaired. For
spotlight discussions on rice mill upgrading and vegetable hub improvement show in each part by
province section, and for irrigation survey and farm road access conducted only in Khammouane and
Champasak province to be representative data of other location since time is limited for PPTA team to
do the study. This feasibility study gives detailed of core sub-projects, which will incorporate the
findings and recommendations from this report.

VI. KEY ANALYSIS AND FINDINGS FROM THIS STUDY
1. Khammouane Province (Rice Commodity)
1.1. Irrigation improvement:
The local government of Khammouane province aims to promote modern farming in Nongbok district
for commercial rice production. The Chanthavong rice mill engages to lead this modern farming for 500
hectares with 11 villages. Currently 170 hectares of rice field were completed land leveling. There are
two pumps with 75 KW of horse power irrigate for whole area. The priority to improve irrigation for rice
production, the PAFO proposes two irrigations as shown below.
Table 1. Prioritized irrigation canals need to improve from soil canals to concrete/bricks canals
No.
Irrigation scheme in
Nongbok project
No. of
village
Irrigated area ( ha ) No. of
household
Total cost
(USD)Rainy season Dry season
1 Thamuang-2 canal 3 500 500 294 187,500
2 Xokbo canal 2 400 400 153 150,000
Total 5 900 900 437 337,500
Note: the initial design survey and cost are available at Irrigation section, Khammouane-PAFO.
Figure 1- irrigation canals map in Thamuang village, Nongbok district, Khammouane province
Existing Earth Canal to be Upgrade to Brick canal
Existing Earth Canal to be Upgrade to Concrete canal

Figure 2- Initiative design to upgrade the Thamuang-2 irrigation earth canal to concrete canal

Table2. Cost estimate for 1 km
Item Description Unit Quantity Unit cost
($)
Amount
($)
Remark
1 Common Excavation cu.m 0.00 1.36 0.00
2 Back fill both side of wall cu.m 960.00 8.30 7968.00
3 Lean concrete cu.m 60.00 96.60 5796.00
4 Reinforce concrete of canal
Base slab
cu.m 100.00 385.04 38504.00
5 Brick wall and Paste in side of
canal
sq.m 150.00 385.04 57756.00
6 Reinforce concrete of column
and tie beam
cu.m 1.61 385.04 619.14
Total: 110643.14 $/Km

Figure 3- Initiative design to upgrade the Thamuang-2 irrigation earth canal to brick canal

Table3. Cost estimate for 1 km
($)
Amount
($)
Remark
1 Common Excavation cu.m 170.00 1.36 231.20
2 Back fill both side of wall cu.m 400.00 8.3 3320.00
3 Lean concrete cu.m 55.00 96.60 5313.00
4 Reinforce concrete of canal
Base slab
cu.m 90.00 385.04 34653.60
5 Brick wall and Paste in side of
canal
sq.m 1371.86 24.68 33857.50
6 Reinforce concrete of column
and tie beam
cu.m 5.63 385.04 2167.78
Total: 79543.08 $/Km
1.2. Access road to the production area:
The existing communal road needs to be improved in order to serve rice and crop production for market
in round year. The PAFO proposed 10 Km from Dan village to Sadue village in Nongbok district,
Khammouane province. Estimation of daily using the road is 98 trucks, 112 hand-tractors, 150
motorbikes, 80 bicycles and 77 men walking. The cost of investment is 50,000 USD. This road will be
served for five villages along Mekong river bank such as Dan, Dongphangphao, Thamuang, Phonsao-Ae,
and Sadue village.

Table4. Infrastructure (farm road) need to improve
infrastructure Length (km) No. of village No. of HH Cost (USD)
Road improvement 10 5 475 50,000
Total 10 5 475 50,000
Source: Survey 2016
Figure 4- Road improvement map in Thamuang village, Nongbok district, Khammouane province
Figure 5- Maintenance gravel access road (Length = 7490m, width = 5.00 m)
Existing Gravel Access Road to be Maintenance
Existing Earth Access Road to be Upgrade to Gravel Access road

Table5. Cost estimate
($)
Amount
($)
Remark
1 Scarify and recompact existing
road 15 cm depth
sq.m 37450.00 0.47 17601.50
2 Embankment fill cu.m 6741.00 6.43 43344.63
3 Sub base and base course,
incl. new material (CBR> 25%
min)
cu.m 5992.00 11.20 67110.40
4 Reinforced Concrete C25 mpa
for inlet outlet structure
cu.m 55.89 300.52 16796.06
5 Installation of culverts
Dia.800mm
sq.m 90.00 184.51 16605.90
6 Guide post at culvert location cu.m 30.00 20.36 610.80
Total: 162069.29 $
21638.09 $/km
Figure 6- Upgrade Earth to Gravel access road (Length = 5830 m, Width = 5.00 m)

($)
Amount
($)
Remark
1 Clearing and Grubbing sq.m 23320.00 0.26 6063.20
min)
cu.m 4664.00 11.20 52236.80
cu.m 44.71 300.52 13436.85
Dia.800mm
sq.m 72.00 184.51 13284.72
Total: 211841..06 $
36336.37 $/km
1.3. Value chain actors:
1.3.1. State Rice Seed Center (Xebangfai rice seed center)
The Xebangfai rice seed center officially known as “Xebangfai Agricultural Research and Development
Center” aims to produce sufficient purity seeds to Khammouane rice farmers by incorporating to 10
villages (seed producers) to produce F2 seeds namely TDK8 (glutinous rice), TDK11 (glutinous rice), XBF1
(glutinous rice), XBF2 (non-glutinous rice), and XBF3 (non-glutinous rice). The annual rice seed
production is 270 tons, meaning that 20 tons produced by Xebangfai center and 250 tons produced by
farmers. The Xebangfai center will provide F2 rice seed to 10 seed producers to do F3 seed
multiplication and sell back to the Xebangfai rice center in good price 3,500 kip/kg (the usual price of
paddy is 1,900-2,200 kip/kg) to do screening and sorting for the best quality before distributing to other
farmers growing. In case of 10 seed producers have facilities to do sorting and screening the purity of
seeds they can directly sell to farmers or millers as long as market availability. The Koutchap village sold
at 4,000 kip/kg according to interview Mr. Bounchanh Khemmalath the farmer leader of rice seed
producer group. The seed multiplication training course offered to 10 seed producers by Xebangfai
center staff, the curriculum covers from soil improvement, land preparation, seedling, fertilizer
application, transplanting, water management, pest control, harvesting, and post-harvest (including
machinery and equipment maintenance).

Table7. the facility and equipment required by Xebangfai state rice seed center
Type of Center
Rice seed multiplication plots
at village level
facility required by state rice
seed center
Cost estimation
Xebangfai
Agricultural
Research and
Development
Center
Navangthong village (Official)
Navang-Yai (Official)
Koutchap village (Official)
Natai village (Official)
Teung village (Official)
Dongmakba village (Official)
Namuang village (Official)
Muangsum village (Official)
Pak-eitou village (Official)
Hatkhamhieng village (Official)
Dryer (20 ton) X 1 unit
Modern seed sorter X 1 unit
Canal improvement (300 m)
Equipment storage (20m X30m)
Fence installtion (20 hectares)
60,000 USD/unit
150,000 USD/unit
30,000 USD
60,000 USD
15,000 USD
Total Cost 325,000 USD
Source: Survey 2016
In order to meet the annual F3 rice seed demand, the Xebangfai center plays the crucial role to
implement MAF strategy by increasing 10% of actual production in both quality and quantity of seeds.
Mr. Nongkhan Sengsoulin, head of Xebangfai center reported to PPTA team that he needs to improve
the infrastructure of the center as major priority due to some equipment and facilities are broken and
missing, it needs to be upgraded and purchased if the province aims to export rice. There are few things
that required by Xebangfai center (find table 7).
1.3.2. Farmers’ facilities
1.3.2.1. Bio-fertilizer production group
The PPTA team visited three villages of Kout-Chap, Donkiew, and Natai group whom currently produce
bio-fertilizer for domestic markets. These three villages were supported by ADB/WGA/TA8163/LOA.MAF
since October 2014 until June 2016. Mainly their product is using for “Healthy soil” and their product
can apply with GAP/Organic vegetables and rice. The equipment that project provided to these group
there are: pelletizer, mixer machine, kilns (5 kilns), and crusher/grinder machine. For the source of the
raw materials used and their prices per product in 1 ton, there are 350 kg of rice husks (collect from rice
mills to conversion into bio-char), 350 kg of manure (cattle & buffalo), 250 kg of clay soil under lake and
pond, 30 kg of rice bran purchase, and 20 kg of lime purchase. The capacity of each is 100 tons per year;
they sell to own markets and some of fertilizer used by their rice farm. The project provided training and
schedule for taking the samples to test in the laboratory. The projects also facilitated for registration and
proceed to the certification and the groups just contributed the basic documents referring to project
required. Many year of equipment used, the spare part is limited to find locally, and some facility is
unworkable. Therefore, these groups would propose to have new one replacing (see table 8 below).

Table8. the facility required by Bio-fertilizer producers in Nongbok district, Khammouane province
Type of farmer Farmer group Farm facility required Cost estimation
Bio-fertilizer
production
Kout-Chab village (Official)
Donkiew village (Official)
Rice husk burner X 3 unit
Compost mixer machine X 1
Soil Mixer Machine X 1 unit
600 USD/ 3 units
500 USD/unit
400 USD/unit
Source: Survey 2016
1.3.2.2. Rice seed production group
During the study taken in August 2016, three rice seed production group were visited namely Kout-Chap
village, Navangthong village, and Natai village. These three villages have been supported by Small Holder
Development Project, there are 10 householders volunteer to be group member per each village. The
project provided in kind in total amount of 154,000,000 Lao Kip (USD 19,250) list of those facilities are:
transplanting machine, sorter, trashing machine, two flat-bed dryers, bag sewing equipment, 100 kg of
weight, two paddy moisture testers, seed sprayers, small land leveling facility, and weeds cuter. Plus
contribution of farmers is 78,000,000 Lao Kip (USD 9,750) to build house for farmer center, land
construction, and electricity installation for all equipment (interview Mr. Vilaivanh Phanthakhod as
acting farmer leader in Kout-Chap village).
These villages produce rice marketable seed based on market demand such as TDK8, Thai Hommali 105,
and RD 15, the annual production is 50 tons / each village. Besides that rice seed producer also provide
mechanical services to other farmers on land preparation, transplanting, harvesting and trashing.
Currently the some equipment cannot perform very well, no spare parts, and broken that it’s effecting
to declined seed production in coming years. The rice seed farmers were asking some equipment to
continue recent work and involve in value chain as active actor. Therefore, the list required is proposed
in the table 9 below.
Table9. the facility required by rice seed producer groups in Nongbok district, Khammouane province
Type of farmer Rice seed producers Farm facility required Cost estimation
Rice seed
production
(also provide
services to other
commercial rice
farmer groups)
Navangthong village (Official)
Navang-Yai (Official)
Koutchap village (Official)
Teung village (Official)
Dongmakba village (Official)
Namuang village (Official)
Muangsum village (Official)
Pak-eitou village (Official)
Hatkhamhieng village (Official)
Dryer 5-10 ton
Moisture tester
Temperature tester
Bag sewing machine
Small Rice harvesting Machine
Thrasher machine 4 F Power
14 HP
Tractor KUBOTA
L3608SP,1647cc,36
Rice transplanting Machine
KUBOTA SPW-48c
Rice seed trays X 2,000 unit
10,000 USD
500 USD
300 USD
200 USD
5,000 USD
8,000 USD
20,000 USD
6,500 USD
1,320 USD

Combined harvester KUBOTA
DC-70
Rice storage 60 X 1 unit
Seed spraying Machine X 1
Rice polisher X 1 unit
31,500 USD
20,000 USD
350 USD
4,500 USD
Source: Survey 2016
1.3.2.3. Commercial rice production group
Referring to agreement of the Minister regarding agriculture production groups No. 2984/MAF, issued
on 25 September 2014: the agreement stipulates the principles, regulations, and conditions concerning
the establishment and progress of agriculture production groups in or der to promote and strengthen
small-scale farmers’ production meanwhile preparing them to be members of agriculture cooperatives.
The khammouane authotity realizes economic growth from rice sector, four districts have formed as
commercial rice producer group (find table 10) that aim to sell paddy to rice mill groups that registered
with the provincial trade chamber under provincial department of industry and commerce. The rice
value chain requires the group of farmer links to the group of rice mill in order to create cooperatives.
The problem is that MAF created decree no.136/NA on cooperative under enterprise law no.11/NA
dated 09 November 2005; it aims to group small holder farmer to do business on agriculture, but it
contradicts to the Ministry of Industry and Commerce (MoIC) decree on Entrepreneurs association to
provide services and trading due to the combination of rice mill and rice farmer into single umbrella (rice
association), it really needs to improve the decree, sine both decree written separately, the joint policy
improvement is crucial part of this ADB TA8897 project (Mr. Viset Khotsouvanh, head of product
promotion and development division, MoIC).
These commercial rice farmer groups have created under the MAF’s agreement of the Minister
regarding agriculture production groups No. 2984/MAF, issued on 25 September 2014, the agreement
itself defines the agricultural farmers forming as group, the registration, management committees,
eligible members, monitoring, and it is enforced through the Department of Agriculture Extension and
Cooperatives (DAEC) of the Ministry of Agriculture and Forestry (MAF). The DAEC comprises a Registrar
at central level and a province registrar in each province of the country of Lao PDR.

Table10. List of commercial rice production groups in Khammouane province
Source: Small Holder Development Project 2012 and updated by PPTA team 2016
1.3.2.3. Household agro-processing group
Rice chip is predominant production in Thakek district including Nongbok district, the raw material is
from second and third grade of rice or half broken rice. Mrs. Deng lives in Nabo village gave information
to PPTA team, each 100 kg of milled rice could produce 120-180 kg of rice chip in one day. Meaning that
she bought 420,000 Lao kip (USD 53) per 100 kg and produce rice chips, she is able to earn money
1,500,000 Lao Kip (USD 188). Her family is running on this small business, not for other thing else, it is
just playing as actor to add value to rice sector in Khammouane province. Simple facilities show in the
table 11 below.

Table11. Small scale food processing groups in Khammouane province
Rice chip
production in
Thakek
(small scale)
Nabo village
Chomthong village
Chomcheng village
Santisouk village
Milled rice grinder X 1 unit
Flour mixer X 1 unit
Large pot X 4 units
Packaging machine X 1 unit
3,000 USD/unit
2,700 USD/unit
400 USD/ 4 units
2,000 USD/unit
Source: Survey 2016
1.3.3. Rice mill enhancement
The situation of rice mill in Khammouane is classified as medium and small scale rice mill, just mill the as
normal rice but cannot polish grain for special favorable standard as regional market needed. In 2009,
Khammouane Development Rice Mill Group was established and beginning phase consists of 17 rice
mills to be membership and today remaining only 15 rice mills showing in table 8 below. This rice mill
group role is to promote the commercial rice farmer production in Khammouane province with applying
3+2 contract farming, rice mill provides capital (seed, fertilizer, pesticide, and land preparation),
extension services (farmer group formulation, and farmer capacity building) and market (buy back
guarantee and price warranty), meanwhile farmer is labor and land. Recently 111 farmer groups with
more than 2,000 hectares in four districts of Thakek, Nongbok, Xebangfai, and Xaybouly (Savannakhet)
have been selling paddies to this rice mill group. New seed varieties supply regularly to farmers to
ensure single variety and quality to market. Moreover, rice quality improvement is not enough; rice mill
equipment upgrading is very crucial factor to be improved in parallel. At that time, rice was unable to
export due to low grade. This rice mill group realizes the importance and decision made by investing 4
billion kip (USD 500,000) to upgrade slightly full service rice mill such as installing color sorter and
polisher. Consequently this group was able to export 780 tons of milled rice to EU market in 2014; but
after that lot, this rice mill group unable to export to EU for second lot due to Lao rice is low standard. In
order to meet international standard, firstly this group aims to get GMP standard by the end of the year
2016. (interview Mr. Phetsamone as chair of Khammouane Development Rice Mill Group).
To upgrade rice mill equipment is related to knowledge and learning acquisition of owner, not just who
want to upgrade but poor knowledge on mechanical aspect leading to failure end the end.
 For the large scale rice mill in this group, the capacity is 1,7 tons per hour, if these six rice mills
wish to export quality of milled rice they need to upgrade 4 sets of color sorter and 3 sets of rice
polisher that can meet the Chinese and Thai standard (see annex 1 and 2). The milling recovery
is 55%, if upgrade the equipment will increase both quality and quantity by 10%.
 Medium scale of this group consists of six rice mills, the capacity is 1 ton per hour and milling
recovery is 45%, if upgrade the equipment will increase both quality and quantity by 10%.
 Small scale of rice mill consists of three rice mills, the capacity is 0,5 ton per hour and milling
recovery is 35%. These rice mills cannot upgrade as high as large and medium rice mills above,

they just upgrade based on knowledge and supply milled rice to large and medium rice mills to
do color sorting and polishing.
Table12. list of equipment for diffirent categories of rice mill to be upgraded in Khammouane
Capacity Rice mill category Upgrading equipment Cost estimation
Large scale
(15 Tons/day up)
Mr. Chanthavong Rice Mill
Ms. Vanida Rice Mill
Mr. Soulivan Rice Mill
Mr. Chantha Rice Mill
Mr. Bounmy Rice Mill
Mr. Phetsamon Rice Mill
1. Dryer (25 tons) X 1 set
2. Pre-cleaner (3t/h)
3. Paddy separator (3t/h)
4. Paddy husker (3t/h)
5. Adrasive whitener X 3 unit
6. Rice polisher X 2 unit
7. Rotary shifter X 1 set
8. Rice grader X 3 set
9. Color sorter (320 channels) X 3
set
10. Weight + sawing machine
11. truck weight scale
(weighbridge)
12. Rice storage (30m X 40 m)
65,000 USD/set
10,000 USD/unit
9,000 USD/unit
15,000 USD/unit
12,000 USD/unit
12,000 USD/unit
7,500 USD/set
9,000 USD/set
45,000 USD/set
12,000 USD
125,000 USD/set
240,000 USD
Total cost 705,500 USD
Medium scale
(8-10 Tons/day)
Mr. Phanthala Rice Mill
Mr. Soi Rice Mill
Ms. Khammany Rice Mill
Ms. Seth Rice Mill
Ms. Vasana Rice Mill
Mr. Soukkaseum Rice Mill
1. Pre-cleaner (1t/h) X 1 set
2. Paddy husker (1t/h) X 1 set
5. Husk aspirator X 1 set
6. Rotary shifter (1t/h) X 1 unit
3,000 USD/set
4,000 USD/set
5,000 USD/unit
9,000 USD/set
2,000 USD/set
3,000 USD/unit
Small scale
(2-5 Tons/day)
Ms. Laithong Rice Mill
Ms. Bang Rice Mill
Ms. Lamphoun Rice Mill
1. Horizontal stone husker X 3 set
3. Rice grader 1 set
12,000 USD/set
1,000 USD
4,000 USD
Source: survey 2016.
Upgrading equipment helps to increase quality, quantity, energy safe, and low labor cost. If need to
meet international and regional standard, this rice mill group have to follow as mentioned in table 12 in
different categories of rice mill.
1.3.4. The Feasibility Study of a Six Year Upgraded Rice Mill (Case of Vanida Rice Mill)
During the technical committee meeting held on 29 August 2016, the Vanida rice mill in Khammouane
province was proposed by technical committee for selecting case study classified as medium rice mill.
a). Overview of the Vanida Rice Mill:

 The Vanida rice mill has been promoting rice farmers in four target districts of Nongbok,
Xebangfai, Thakek, and Xaybouli in total land area of 2,000 hectares (763 hectares of irrigated
rice farming) and milled paddies in its own rice miller.
 To increase the quantity and quality to be milled and for domestic and international trading
purposes, the Vanida rice mill engaged also on buying field wet paddies and dried it with the use
of its own drier of either its solar concrete pavement and or mechanical grain drier.
 Some other assets and income involved directly or indirectly were not included in the shown
income statement and its balance sheet 2015 which is hereto attached. The financial aspect
shown is mainly for this rice mill.
 TDK8, TDK11, and Hommali rice varieties have been promoting for commercial rice.
 The Vanida rice mill equipment is slightly two-stage compact technology but if compare to
Thailand, this rice mill is single-pass technology.
b). Financial aspect of the Vanida Rice Mill:
 The Vanida rice mill has started establishment on the year 1995, but real operation was in the
year of 2000 with initial assets of approximately USD 12,500.00 and that includes the land and
building.
 When this rice mill has reached to its 15th year of operation and that was year 2015, the rice
mill has an estimated asset of USD 187,500.00 (See Balance Sheet as of December 31, 2015).
 The information being disclosed by this paper are Balance Sheet as of December 31, 2015; Rice
Mill Statement of Cash Flows and Rice Mill Income Statement involved on financial of Rice Mill
only on its capacity to mill.
 Activities and the bases of financial aspect existing in the rice mill are attached. The rice mill
feasibility study gives information about the upgrading equipment of the rice mill and
assumptions of the project which were been gathered from the reliable sources.
Project Cost: USD 705,500.00`see table 12 above
Objective/s:
 To meet domestic and export market demand with GMP standard requirement
 To ensure the Whitish White Polished Rice.
 To compete with other traders on trading the whitish white polished rice locally and abroad.
Target accomplishment of the project is 120 calendar days that involve machinery procurement and
installation.
c). the Vanida Rice Mill Profile:
 The Vanida rice mill falls under commercial category that is on milling and trading.
 The name of the rice mill is Vanida Rice Mill.
 The rice mill established 15 years ago as an ordinary miller and engages under single
proprietorship.
 The rice mill bears under renewed business permit number: 4409/ERO.KM issued last July 22,
2016.

 The total asset of the rice mill is approximately USD 187,500.00. (See Balance Sheet as of
December 31, 2015).
 The rice mill is engaging in milling “rice”. Engaging also on buying wet field harvested paddies
and drying it with the use of both sunshine pavement and vertical mechanical drier.
 Some other activities and assets involved directly and or indirectly to the rice mill such as
paddies storage, rice warehouse, trucks, mechanical drier, drying pavement and some others
were not included.
 Working capital of this project proposal is USD 187,500.00 as shown in Vanida Rice Mill’s
Balance Sheet as of December 31, 2015.
d). Business Activities:
 Milling rice from the rice mill’ proceeds of rice producer groups in four target districts and
packing with own logo for local market.
 Milling rice from rice miller group and packing with Thai logo for EU market.
 Milling rice from the customers’ farm for their consumption and for selling their farm proceeds
in terms of milled rice by retail or traders in the locality.
 Milling rice from the firms’ purchased rice as “Buy and Sell” and trades it to some provinces
of Savannakhet, Bolokhamxay, and Vientiane capital.
e). Management / Administrative Aspect.
 Organizational structure was set up with 15 managerial staff as permanent status.
 Create an employment for 50 workers as daily requirement.
 The owner/proprietor stand as the manager/supervisor of the rice mill with 2 permanent
workers which stand as the miller operator and the other one is the operators’ helper. Part time
workers were sometimes hired when needed especially during harvest season. The number of
days per week depends on the supply and demand of the product.
 The workers are compensated in a part-time rate of real task, quantity milling, and paddies
loading and unloading in approximately 20 USD/day.
f). Technical Aspect of the Vanida Rice Mill:
 The rice mill is situated along the national southern road KM 13, Laophokham village, Thakek
district, Khammouane province, Lao PDR with an area of rice mill land size is 3 hectares, within
150 square meter of rice mill machinery installation.
 Products will be transported from 15 Farmer groups in 21 villages with the area of rice
production 2,000 hectares. The rice field in dry season is 763 ha in 4 Districts via access roads to
the rice mill site which is around 100 km, and 30 km from rice mill to the market places in
Thakek district as capital city.
 The rice mill has its own water source, and the power supply is from the provincial branch of
Electric du Laos Company limited.
 Skilled laborers will be hired within the locality.

Table13. Vanida rice mill’s balance sheet in 2015
Current Assets: 2010 2011 2012 2013 2014 2015
Cash (see income statement) 305,588.30 316,654.50 377,422.70 384,111.40 702,011.80 733,087.50
Accounts receiveable - - - - - -
Merchandise inventory - - - - - -
Total current assets 305,588.30 316,654.50 377,422.70 384,111.40 702,011.80 733,087.50
Fix Assets:
Milling machinery - - - 100,000.00 - -
Rubber polisher 21,000.00 - - - - -
Ruber huller (rewinded) installed on 2012 - - 30,000.00 - - -
Sunshine concrete pavement for paddies drying - - - 10,000.00 - -
Building 127,446.00 138,334.00 138,633.00 138,772.00 245,188.00 219,926.00
Total fix assets 148,446.00 138,334.00 168,633.00 248,772.00 245,188.00 219,926.00
Current liabilities
Accounts payable - - - - - -
Total current liabilities - - - - - -
Capital
Capital 81,019.30 101,001.50 130,904.70 (8,345.60) 313,138.80 356,431.12
Net income 229,465.30 239,335.50 299,537.70 240,426.40 558,326.80 576,357.12
Total capital 148,446.00 138,334.00 168,633.00 248,772.00 245,188.00 219,926.00
Balance Sheet (USD)
Balance sheet (December 31, 2015)
VANIDA RICE MILL
(with comparative figure for the year 2013 and 2014)
Source: survey 2016

Table14. Vanida rice mill’s income statement in 2015
2010 2011 2012 2013 2014 2015
Income:
Milling amount of owned rice produced 305,588.30 316,654.50 339,680.43 345,700.26 561,609.44 586,470.00
Milling amount from rice miller group - - 37,742.27 38,411.14 140,402.36 146,617.50
Total Revenue: 305,588.30 316,654.50 377,422.70 384,111.40 702,011.80 733,087.50
Cost of production
Milling cost (electicity) 2,700.00 2,700.00 2,700.00 4,000.00 4,000.00 4,800.00
Some engine maintenance 6,689.00 7,885.00 8,451.00 12,577.45 12,577.45 13,815.13
Total cost of production 9,389.00 10,585.00 11,151.00 16,577.45 16,577.45 18,615.13
Gross Profit: 296,199.30 306,069.50 366,271.70 367,533.95 685,434.35 714,472.37
Operating expenses 8,976.00 8,976.00 8,976.00 18,711.80 18,711.80 20,426.50
Operator wages 16,988.00 16,988.00 16,988.00 37,744.00 37,744.00 40,325.00
Helper wages 5,677.00 5,677.00 5,677.00 7,013.75 7,013.75 7,013.75
Supervision fee 560.00 560.00 560.00 850.00 850.00 850.00
Miscelaneous expenses 34,533.00 34,533.00 34,533.00 62,788.00 62,788.00 69,500.00
Total operating expenses 66,734.00 66,734.00 66,734.00 127,107.55 127,107.55 138,115.25
Net income 229,465.30 239,335.50 299,537.70 240,426.40 558,326.80 576,357.12
VANIDA RICE MILL
Income Statement (year ended December 31, 2015)
Income Statement (USD)
Source: survey 2016

Table15. Vanida rice mill’s statement of cash flows in 2015
2010 2011 2012 2013 2014 2015
Cash flows from operating activities:
Net income 229,465.30 239,335.50 299,537.70 240,426.40 558,326.80 576,357.12
Depreciation expense 9,782.00 9,782.00 9,782.00 14,355.00 14,355.00 16,250.00
Accounts receiveable - - - - - -
Merchandise inventory - - - - - -
Net cash provided by operating activities 219,683.30 229,553.50 289,755.70 226,071.40 543,971.80 560,107.12
Cash flows from investing activities:
Rubber polisher 21,000.00
Rewinded rubber hullers 30,000.00
Net cash flows from financing activities 21,000.00 229,553.50 30,000.00 226,071.40 543,971.80 560,107.12
Increase (decrease) in cash 198,683.30 229,553.50 259,755.70 226,071.40 543,971.80 560,107.12
Cash balance in the beginning - - - - - -
Cash balance in the end 198,683.30 229,553.50 259,755.70 226,071.40 543,971.80 560,107.12
VANIDA RICE MILL
Statement of Cash Flows (year ended December 31, 2015)
Statement of Cash Flows (USD)
Source: survey 2016

g). Production Processes of the Rice Mill Project:
1. The Vanida rice mill is milling rice from the commercial rice production groups and rice miller
group as trading.
2. This rice will be subjected for milling with a moisture content of 14%.
3. Existing Equipment are Milling Machinery, Rubber Polisher, Rubber huller (rewinded) installed
on 2012 and Building.
4. An equivalent of glutinous rice (TDK) 50 kg of milled rice has been paid of USD 46.25 or USD
0.925 / kg of milled rice. And for Non-glutinous rice (Lao jasmine rice) 50 kg of milled rice has
been paid of USD 60.00 or USD 1.2 / kg of milled rice.
5. Average annual volume as of 2015 of milled rice for existing market is 10,394 bags (6,331 bags
for glutinous rice, and 4,803 bags for non-glutinous rice).
6. Production cost is USD 18,615.13
7. The Vanida rice mill has milled rice or extending its services four districts of Thakek, Nongbok,
Xebangfai, and Xaybouly (Savannakhet). It does milled rice owned by costumers engaging on
trading to be delivered by its rice mill not only within the Khammouane province, but also to
some provinces of Savannakhet, Bolokhamxay, and Vientiane capital.
8. Production capacity of the rice mill is 120 bags of milled rice per day.
9. Existing equipment of the rice mill are Rice Storage Room, Milling Machinery (Dryer with, Pre-
cleaner, Paddy separator, Paddy husker, Abrasive whitener, Rice polisher, Rotary shifter, Rice
grader, Color sorter, Weight + sawing machine), Truck weight scale, and industrial building.
Some other equipment or machineries involved directly or indirectly to the rice mill were not in
the project proposal such as cargo trucks and solar pavements.
10. The main products of this rice mill are milling rice of its own products from the lowland rice farm
of farmer groups, and rice miller group for trading.
11. Empty and brand new sacks purposely for 50 kg/bag, 25 kg/bag, 10 kg/bag, 5 kg/bag, and 1
kg/bag of milled rice can be purchased from Vientiane capital.
12. In every 100 kg of milled rice, there has an estimated 38 kg of waste material generated.
13. Waste materials are in the form of rice hulls.
14. There are 2 kinds of rice hulls generated, fine and roughed hulls.
15. Fine hulls is usually utilized as hog consumptions and usually the supply is high on demand and
out of the market while the roughed hulls were usually stocked on a pit until decomposed for
the use of rice mill’ organic materials on farmer group’s irrigated rice field and some other
purposes such as energy source for mechanical dryer.
16. Lack of technical capabilities and machine for whitish white Rice Milled.
17. As the years goes on of operation, rice polisher of the said rice mill is now very obsolete and
can’t compete anymore the modern rice polisher operated in the ASEAN countries.
18. No hardware assistance yet obtained from government institutions.
19. Proposed technology by acquisition & upgrading of Rice White Polisher.
20. Needed equipment specifications must the machine is versatile for milling rice of all degrees of
whiteness with negligible broken. Higher yield of rice, easy replacement and longer life of
abrasive wheels and compact design are the highlights of the machine in table 12 above.

2. Savannakhet Province (Rice Commodity)
According to discussion with PAFO, the province expresses that it really needs to build agro-irrigation
scheme, it’s not just repair or improve some parts of the scheme, but at the end full functioning will
never serve at all. Therefore, the priority of the province is targeting irrigation scheme in Xaybouli
district; in order to improve agro-irrigation in Phouhuazaowa, there are three villages benefiting from
this project namely Kang village, Dangsavanh village, and Hathkhamdy village. The irrigated are is 2,160
hectares. The total cost is approximately 810,000 USD. Another one is Somsa-aat irrigation covering
three villages of Somsa-aat, Nahuathong, and Naxiengkhan with estimate cost of 150,000 USD (if budget
is still available).
Table16. Prioritized irrigation canals need to improve from soil canals to concrete/bricks canals
No.
Xaubouli project
No. of
village
household
Total cost
1 Phouhuazaowa canal 8 2,160 2,160 842 810,000
2 Somsa-At canal 3 400 400 255 150,000
Total 11 2,560 2,560 1,097 960,000
Note: the initial design survey and cost are available at Irrigation section, Savannakhet-PAFO.

Figure 7- Phouhuazaowa irrigation project map
The access road should be connected to above irrigation, the length of road along to irrigation and serve
three villages of Kang, Dangsavanh, and Hatkhamdy village is around 57 KM, the cost of investment is
285,000 USD. Estimation of daily using the road is 250 trucks, 130 hand-tractors, 177 motorbikes, 85
bicycles and 150 men walking.
Table 17. Infrastructure (farm road) need to improve in Savannakhet
infrastructure Length (km) No. of village No. of HH Cost (USD)
Total 57 3 319 285,000
2.3.1. State Rice Seed Center (Thasano rice seed center)
The Savannakhet province grows rice in 200,000 hectares to export to China in amount of 20,000 tons
per year. Therefore, how to manage rice value chain properly and share benefit equally to all actors in
value chain are biggest challenges for Lao rice sector in the long run period. The rice seed production is a

crucial part of quality of rice to be exported; it requires value chain partners to submit ahead a seed
demand to Thasano rice seed center, otherwise farmers and rice millers will complain that no availability
of seed in Lao PDR (mentined by Dr. Phouthdalay the head of Thasano rice seed center). The facilities
are missing in this rice seed center are modernized rice seed dryer, and seed sorter if the center does
not have these, it seems to be hard to produce 6,000 tons per year of seed. This center has good
networking with six seed producer groups at village level, the farmers help for F3 seed multiplication
and send back to center for purity and quality certification before distributing to other commercial rice
farmer groups and rice mills. The list of marketable rice seed are TDK1, TDK8, RD6, Homsavanh, TSN7,
TSN8, and TSN9.
Table 18. the facility and equipment required by Thasano state rice seed center
Type of Center
Rice seed demonstration
plots at village level
seed center
Cost estimation
Thasano Rice
Research Center
Somsa-At village (Official)
Muangkhai village (Official)
Visaysong village (Official)
Kongpathoumvan village
(Official)
Pongna village (Official)
Panomxay village (Official)
Modern seed dryer (25t) X 1 unit
60,000 USD
380,000 USD
Importantly, TDK1 could not grow very well in the higher 30 ͦC of temperature; TSN7,8,9 carefully
growing in the cold weather will result to low yield; RD6 is Thai seed variety; and Homsavanh (non-
glutinous rice) only grow very well in the rainy season.
The PPTA team discussed with two villages of Somsa-At village in Saybouly district and Phai village in
Champhone district as model village did successfully produced 310,765 tons per year of compose/bio-
fertilizers. Since these villages have obtained technical knowledge from previous ADB and smallholder
development project (Annual PAFO report, 2015). After project phased out, the sustainable approach is
replicating among communities and this is great milestone that this ADB TA8897 project has to take a
consideration on existing groups for strengthening the value chain of rice in Savannakhet.
Table 19. Facilities required by bio-fertilizer farmer groups
Bio-fertilizer
production
Somsa-at village (Saybouly)
Phai village (Champhone)
Rice husk burner X 3 unit
Compost mixer machine X 1
Soil Mixer Machine X 1 unit
600 USD/3 units
500 USD/unit
400 USD/unit

There are six seed producer groups have sun-contract with the Thasano Rice Seed Center, F2 seeds
multiplication done at the Center and village level responsible for F3 seed multiplication. The training
package on rice seed are provided regularly by the center staff, and some essential equipment provided
by various project namely ADB, Smallholder development project, and EU from phase to phase. The
capacity of each village is 50 Tons per year of seeds and sold back to The Thasano Rice Seed Center to
certify seed. And some villages have dryer and sorter equipment and do own processing and sell directly
to farmers and village rice mills with affordable price 4,000 Lao Kip per kilogram.
Table 20. Facilities required by rice seed farmer groups
Type of farmer Rice seed farmer group Farm facility required Cost estimation
Rice seed
production
(also provide
services to
commercial rice
farmers)
Somsa-At village (Official)
Muangkhai village (Official)
Visaysong village (Official)
Kongpathoumvan village
(Official)
Pongna village (Official)
Panomxay village (Official)
Dryer 5-10 ton
Moisture tester
Temperature tester
Bag sewing machine
14 HP
Tractor KUBOTA
L3608SP,1647cc,36
KUBOTA SPW-48c
DC-70
10,000 USD
500 USD
300 USD
200 USD
5,000 USD
8,000 USD
20,000 USD
6,500 USD
1,320 USD
31,500 USD
20,000 USD
350 USD
4,500 USD
The farmer group establishment is followed to agreement of the Minister regarding agriculture
production groups No. 2984/MAF, issued on 25 September 2014. Those potential farmers can be
selected during the project implementation are shown in the table 21.

Table 21. List of commercial rice production groups in Savannakhet province
Source: Small Holder Development Project 2012 and updated by PPTA team 2016
There is no any predominant in Savannakhet province.

Rice mills in Savannakhet province consists of 1,143 rice mills where wet paddies collected and mill for
good quality of milled rice by four commercial rice mills (IDP rice mill located in Nasop. IDP rice mill
located in Khuadam, Siewlinda rice mill and Kasethlao rice mill to buy wet paddies from farmers, small
rice mills, and collectors aiming export milled rice to China market (15,000 tons/year) and European
market (1,445 tons/year). The rice mill category cab be difined based on milling capacity following
 Large scale: it’s really modernized rice mill owned by foreigners and Lao investors
 Medium scale: it’s usually owned by Lao people
 Small scale: it’s also owned by Lao people
Table 22. list of equipment for diffirent categories of rice mill to be upgraded in Savannakhet
Large scale
(15 Tons/day up)
IDP Modern Rice Mill
Siewlinda Rice Mill
Lao World Rice Mill
Kasethlao Rice Mill
Financial support
Regularly paddies supply
Cooperation with medium and
small rice mill
Total cost
Medium scale
(8-10 Tons/day)
Mr. Ponma Rice Mill
Ms. Yuli Rice Mill
Mr. Souksamai Rice Mill
Mr. Khounhuan Rice Mill
Mr. Seuth Rice Mill
Mr. Kham Rice Mill
3,000 USD/set
4,000 USD/set
5,000 USD/unit
9,000 USD/set
2,000 USD/set
3,000 USD/unit
Small scale
(2-5 Tons/day)
Mr. Vixay Rice Mill
Mr. Thuan Rice Mill
Mr. Nouphet Rice Mill
Mr. Daothavy Rice Mill
12,000 USD/set
1,000 USD
4,000 USD
This ADB TA8897 project should not try to support those largest rice mills like: IDP, Siewlinda, Lao World,
and Kaserhlao, because of these rice mills have capability to buy bulk paddies from three sources
namely farmers, collectors, and small rice mills. Some of them buy only milled rice and process as final
product to export to regional and international markets since they have modernized equipment in place.
Nowadays, the province has been trying to establish rice association and it’s aiming to sell to one door
service if other investors want to buy rice have to follow bidding process.

3. Saravane Province (Rice Commodity)
By discussion with DDG of PAFO in Saravane and head of irrigation section, the Nongdeng irrigation
scheme is serious priority to be improved. The secondary and tertiary on-farm irrigation canals of L4 and
L5 (find the figure no.8.2), in this irrigation area consists of 7 water user groups were officially
established by local government in 15 villages that benefit to 518 households.
Table 23. Prioritized irrigation canals need to improve from soil canals to concrete/bricks canals
No.
Nongdeng project
No. of
village
household
Total cost
1 L4: 2nd and 3rd canal 7 200 200 282 75,000
2 L5: 2nd
and 3rd
canal 8 300 300 310 112,500
Total 15 500 500 518 187,500
Note: the original design survey and cost are available at Irrigation section, Saravane-PAFO.
Figure 8- Layout of Nongdeng irrigation rehabilitation project map

Figure 8.1- Layout of Nongdeng irrigation rehabilitation project map

Figure 8.2- Layout of canals and road to be improved map
The road will be improved under CFAVC project, only one road connects to the Nongdeng irrigation
scheme above. The MC-1 shows in the layout of Nongdeng irrigation rehabilitation project in Saravane
province. Meaning that, 8 Km of length will improve along MC-1 main concrete canal.
Table 24. Infrastructure (farm road) need to improve in Saravane
Infrastructure (MC-1 road) Length (km) No. of village No. of HH Cost (USD)
Total 8 15 518 40,000
The cost of investment is 40,000 USD. Estimation of daily using the road is 120 trucks, 110 hand-tractors,
65 motorbikes, 35 bicycles and 97 men walking.

3.3.1. State Rice Seed Center (Nongdeng rice seed center)
The Nongdeng Rice Seed Center has official name called “Nongdeng Agricultural Research Center” the
land area of this center is 35 hectares, therein 20 hectares of rice farm, 9 hectares of forage, 2 hectares
of pig raising farm, and 2 hectares of fish pond. The center cooperates to the Napok Rice Research
Center, Livestock Research Center, Fishery Research Center in Vientiane capital, and Vietnamese
project. During five years, the center is able to produce 140,130 tons of F2 rice seeds, 418,755 tons of F3
rice seeds, distributed to farmers 380,685 tons, and 238,200 tons of stockpiles (in case of emergency for
drought and flooding). The center has sub-contract with 10 seed producer groups at village level, 30
tons of rice seeds can be produced by each village.
Table 25. the facility and equipment required by Nongdeng state rice seed center
Type of Center
Rice seed demonstration
plots at village level
seed center
Cost estimation
Nongdeng
Agricultural
Research Center
Khamthong village (Official)
Donmuang village (Official)
Nongkhulu village (Official)
Tanpiew village (Official)
Nongsai village (Official)
Natium village (Official)
Phao village (Official)
Beungxay village (Official)
Muang village (Official)
Paksuak village (Official)
Fence installtion (20 hectares)
Canal improvement (??? m)
Modern seed dryer X 1 unit
Automatic seeding machine
KUBOTA SR-K800TH (500-800
trays/hour)
Rice seed trays X 5,000 trays
680,000 USD
784,000 USD
380,000 USD
380,000 USD
5,000 USD
7,500 USD
Total Cost 2,236,500 USD
The center has very low capacity to produce rice seed (35-40 tons per year) since there is poor facilities
and it needs to purchase as shown in table 25.
There is no any farmer produce bio-fertilizer in Saravane province.
There are 10 seed producer groups have sun-contract with the Nongdeng Rice Seed Center, F2 seeds
multiplication.

Table 26. Facilities required by rice seed farmer groups
Type of farmer Rice seed farmer group Farm facility required Cost estimation
Rice seed
production
(also provide
services to
commercial rice
farmers)
Khamthong village (Official)
Donmuang village (Official)
Nongkhulu village (Official)
Tanpiew village (Official)
Nongsai village (Official)
Natium village (Official)
Phao village (Official)
Beungxay village (Official)
Muang village (Official)
Paksuak village (Official)
Dryer 5-10 ton
Moisture tester
Temperature tester
Bag sewing machine
14 HP
Tractor KUBOTA
L3608SP,1647cc,36
KUBOTA SPW-48c
DC-70
10,000 USD
500 USD
300 USD
200 USD
5,000 USD
8,000 USD
20,000 USD
6,500 USD
1,320 USD
31,500 USD
20,000 USD
350 USD
4,500 USD

Table 27. list of commercial rice production groups in Saravane province
There is no any predominant in Saravane province.

The province has classified two large rice mills represented by Bounma rice mill located in Thamphouang
village, Lakhonpheng district, and Mr. Chou rice mill. For the medium rice mill has six rice mills
represented by head of group the Xieng Non Pho Chalearn rice mill located in NathanKo or Ko village,
Saravane district, and Kan-Ha rice mill located in Houay kok noi village, Vapie district. And there are
seven small rice mills. The annual commercial rice production is 183,547 tons (30 hectares of land area,
meaning that 25,000 hectares of rainfed rice and 5,000 hectares of irrigated rice).
Table 28. list of equipment for diffirent categories of rice mill to be upgraded in Saravane
Large scale
(15 Tons/day up)
Mr. Bounma Rice Mill3
Mr. Chou Rice Mill4
1. Dryer (25 tons) X 1 set
2. Pre-cleaner (3t/h)
3. Paddy separator (3t/h)
4. Paddy husker (3t/h)
6. Rice polisher X 2 unit
9. Color sorter (320 channels) X 3
set
10. Weight + sawing machine
11. truck weight scale
(weighbridge)
12. Rice storage (30m X 40 m)
65,000 USD/set
10,000 USD/unit
9,000 USD/unit
15,000 USD/unit
12,000 USD/unit
12,000 USD/unit
7,500 USD/set
9,000 USD/set
45,000 USD/set
12,000 USD
125,000 USD/set
240,000 USD
Medium scale
(8-10 Tons/day)
Mr. Bounkham Rice Mill1
Mr. Keobuaban Rice Mill1
Mr. Kanha Rice Mill2
Mr. Thongphanh Rice Mill3
Mr. Pachak Rice Mill3
Mr. Soukkhamsai Rice Mill4
3,000 USD/set
4,000 USD/set
5,000 USD/unit
9,000 USD/set
2,000 USD/set
3,000 USD/unit
Small scale
(2-5 Tons/day)
Mr. Tuay Rice Mill1
Mr. Kongkeo Rice Mill2
Mr. Bounthavy Rice Mill2
Ms. Khonesavanh Rice Mill3
Mr. Ti Rice Mill4
Mr. Dong Rice Mill4
Mr. Kham Rice Mill4
12,000 USD/set
1,000 USD
4,000 USD
1
Rice mill located in Saravane district
2
Rice mill located in Vapi district
3
Rice mill located in Lakhonpheng district
4
Rice mill located in Khongxedon district

Note: IDP rice mill, Seng-Arthith rice mill, and Pavina rice mill in Champasak province come and buy from
medium and small rice mill in Saravane province.
4. Champasak Province (Vegetables Commodity)
The Champasak province has 12 reservoirs, and 4,197 Indian water pumps with 16 horse powers. The
262 water users ‘groups are formed and fee collection is 100,000 kip per ha that it’s reasonable for
irrigated rice farmers, the irrigated are is 17,546 ha for dry season and 20,915 ha for rainy season. By
discussion with PAFO in this province, irrigation project for vegetable will be created a new pond for
individual and cluster purposes. Therefore, the PPTA team surveyed only there are three villages of
THongset, Nongsoung, and Kongtoun for representatives of vegetable production group in Champasak
(Pakxong, LaoNgam, and Thateng district) and Vientiane province.
Table 29. Prioritized irrigation needs to create water collection ponds
No.
Pakxong project
No. of
village
household
Total cost
1 50 Water collection ponds 3 100 100 226 295,800
Total 3 100 100 226 295,800
Note: the initial design survey and cost are not available at Irrigation section, Champasak-PAFO.
Figure 9- Layout of water collection pond creation

($)
Amount
($)
Remark
1 Earth excavation cu.m 1765.33 2.03 3583.62
2 LDPE sheet (0.3 mm thick) sq.m 510.44 2.96 1510.90
3 LDPE lining sq.m 510.44 1.61 821.81
Total: 5916.33 Per 1 pond
The Champasak province aims to increase the farm production by added value to improve road
access at beginning of road no.1 starts from Nongbungkeo village through Phoukhaothong, Nongte,
Nonsavang, Nongkall, Haouayxan, and ending at Xetapong village; it’s around 7 km of distance. And
road no.2 starts from Kongtoun to Houayhinkhao, and ending at Seikhot village, it around 7 km of
distance. There are 10 villages benefit from these road improvements.
Table 31. Infrastructure (existing farm road) need to improve in Champasak
Infrastructure (access road) Length (km) No. of village No. of HH Cost (USD)
Road no.1 improvement 7,5 7 811 162,286
Road no.2 improvement 7,5 3 357 162,286
Total 15 10 1,168 324,571
The cost of investment is 27,500 USD. Estimation of daily using the road is 171 trucks, 200 hand-
tractors, 88 motorbikes, 119 bicycles and 282 men walking.

Figure 10- Maintenance gravel access road no.1 (Length = 7490m, width = 5.00 m)
Figure 11- Maintenance gravel access road no.2 (Length = 7490m, width = 5.00 m)
Existing gravel access road to be improved (maintenance)
Existing Gravel Access Road to be Maintenance

Figure 12- Maintenance gravel access road (Length = 7490m, width = 5.00 m)
($)
Amount
($)
Remark
1 Scarify and recompact existing
road 15 cm depth
sq.m 37450.00 0.47 17601.50
min)
cu.m 5992.00 11.20 67110.40
cu.m 55.89 300.52 16796.06
Dia.800mm
sq.m 90.00 184.51 16605.90
Total: 162069.29 $
21638.09 $/km
4.3. Value Chain Actors:
Boloven plateau is a highland in the south of Lao PDR consists of Pakxong district (Champasak), Thateng
(Sekong), and LaoNgam (Saravane). It is rich and suitable for growing horticulture crops. Not
surprisingly, these three districts are at the centre of Lao PDR’s cabbage production. Cabbages are sold
through local traders both to the capital Vientiane and for export to Thailand where Bangkok is the main
consumption centre. The Boloven farmers can produce more than relatively low-value cabbage. With
the growing demand for non-native and safe food in South East Asia and elsewhere and with increasing
tourism in the area, opportunities for other, higher value crops, are growing. The altitude of Pakxong (>
1,000 meters) and the rest of the Boloven provide a cool climate. Adequate rainfall allows year round
production. This gives the area a comparative advantage over the hot, and often dry, lowlands
surrounding it. A range of cool climate and subtropical crops can be produced for three potential

markets: the local hotel and restaurant tourist-oriented market, the Thai market with Bangkok as main
centre of consumption, and the overseas Asian ethnic markets in Europe and the Middle East.
But although the potential is there, it is not always easy for the local farmers to translate this into a
profitable business. The obstacles and challenges range from unfamiliarity with the new crops and with
the international standards and specifications of the demanding buyers. There are also complicated
export procedures to deal with, new harvesting and packaging methods and the need to finance on-
farm investment such as plastic canopies, net houses, pump sets and irrigation equipment. The growing
and post-harvest practices for the often specialty new crops such as coriander, Italian basil and rocket
salad, are very different and more demanding than for the bulky cabbage which they are used to
growing. And while cabbage can always be sold to multiple itinerant middlemen although sometimes at
a loss, these new crops must be grown under contract to make sure that there is a buyer who usually
also must provide certain inputs such as seed, and growing specifications.
Recently, the vegetables post-harvest technology in Bolovan has three practices such as: household
processing (small scale), fresh vegetables pre-post-harvesting (large scale), and dried vegetables
processing (large scale).
There is no any farmer commercially produce bio-fertilizer in Champasak province. The farmers only
produce for home garden use purpose.
4.3.2.2. Vegetables seed production group
There is no any commercial vegetables seed farmer production group. Most of seeds imported from
Thailand, Japan, and China who are main seed suppliers in South East Asia countries. Since Paxong
Boloven plateau is large cabbage produce in Lao PDR and export to Bangkok, Thailand. Currently the
Chia Tai Company produces specific seeds for Lao Vegetables farmers in Paxong Boloven plateau such
as: Champasak1 seeds (rainy season) and Champasak2 seeds (dry season), these seeds are cabbage and
Chinese kale. The most vegetable types that vegetables farmers have been growing there are: cabbage,
Chinese flowering cabbage, Chinese kale, long yard been, chili, eggplant, and tomato. The annual cost of
vegetable seeds spent is 562 USD per hectare.
4.3.2.3. Commercial vegetables production group

Table 33. list of commercial vegetables production groups in Champasak province
The Pakxong and Bachiengchaleunsouk districts mainly focus on coffee plantation and vegetables
production. The vegetables create stable income to farmers 20 million USD/year (interview Mr.
Viengxay Sipaphone, deputy head of PAFO in Chapasak province). This value chain has been employing
contract farming with 21 provinces of Thailand to export cabbage, Chinese kale, tomato, long-yard bean,
chilli, pumpkin, lemon, etc. One of key chain actor, reported by Mrs. Inpaeng Samuntee as the president
of Pakxong Development Export-Import Co.,ltd known as huge collector buys vegetables from 840
vegetables producers in Pakxong district in Lao PDR and export to Ubonraxhathani market in Thailand.
Currently she asks 50 ha of land concession near Wangtao Lao-Thai border for vegetables shifting
market where vegetables hub will be employed (cool chains and refrigerated trucks).
4.3.2.4. Vegetables processing in Champasak province
4.3.2.4.1. Industrial vegetables processing for export market
4.3.2.4.1.1. Fresh vegetables hub
4.3.2.4.1.1.1. Commercial vegetable producer in Pakxong district
Table 34. the farm facility required by fresh vegetables farmer groups
Commercial
fresh vegetables
production in
Houayset village (Official)
Katoud village (Official)
Kongtoun village (Official)
Green house X 60 unit
Depth electric pump + installation
Water tank (2,500 liters)
1,500 USD/unit
15,000 USD/unit
500 USD/unit

Pakxong,
Thateng* and
LaoNgam**
(large scale)
Lycheung village (Official)
Nongsoung villages (Official)
Thongkatay village
Thongkalong village
Lakkhao village*
Kongta-Youn village*
Hua-Xedon village*
Phoukham village**
Houayseng village**
Nongtom village**
Pork hem village**
Daxianoi village**
Len village**
Storage building (10m X 20m)
Vegetables pre-processing unit
(cold room, grading, washing, and
packing)
Refrigerated truck
40,000 USD/unit
50,000 USD/unit
31,000 USD/unit
4.3.2.4.1.1.2. Vegetables shifting place
During the study, the PAFO officer, PPTA team, Provincial Commerce, and Environment Officer visited
the currently market place for vegetables commodity shifting place in the Lao-Thai border known as the
Vangtao – Chongmek international border check point. Ms. Inpeng SAMUNTEE the president of Pakxong
Development Export-Import Co., LTD and Mr. Montree CHOMSAMUT the president consultant in
agricultural economics were interviewed. This commercial fresh vegetables value chain has been
employing contract farming with 21 provinces of Thailand to export cabbage, Chinese kale, tomato,
long-yard bean, chilli, pumpkin, lemon, banana, etc. One of key chain actor, reported by Ms. Inpeng
Samuntee known as huge collector buys vegetables from 840 vegetables producers in Pakxong, Thateng,
and LaoNgam district in Lao PDR and export to Ubonraxhathani market in Thailand. Currently she asks
50 ha of land concession near Wangtao Lao-Thai border for fresh vegetables shifting place called
“Champasak Agriculture Market Center” where vegetables hub will be employed two cold rooms and
few refrigerated trucks in Laos side (detail can find figure 13-layout vegetables shifting place map). This
market place will ensure an acceptance for international hygiene standard; it costs 25 million USD of
infrastructure investment.

Figure 13- Layout of Vegetables shifting place map
Legend:
⓪⑪ : Bio-waste and recycle for renew energy source (biogas)
①②③④ : Vegetables storage
⑤⑥ : Cold room
⑦⑧⑨⑩ : Vegetables storage
⑫⑬⑭⑮ : Canteen
⑯⑰⑱⑲ : Guest house
⑳ : Money exchange
: Entrance and exit gate
: Office
: Logistic point
15 Nos. : Bike parking area
16 Nos. : Car parking area
17 Nos. : Truck parking area
23
21
24
22

4.3.2.4.1.2. Dried vegetables hub
Dried vegetables production for export to Taiwan in China, it starts operating in 2015 by the First Foods
Sole Co., Ltd, this company located in Thongkatay village, Pakxong district, Champasak province, Lao
PDR. Mr. Liao Chin-Hua as chairman, and Mr. Onkeo Bunthavongxinh as committee (ex-head of PAFO-
Champasak) are the key contact persons. Currently there are six villages grow fresh vegetables and
supply to this company 1,000 – 2,000 tons per year to process as dried vegetables for export. The
company provides technical training on particular crops; vegetables seeds and fertilizers also give to
farmers, farmers will take care on land preparation, farm infrastructure, and follow crop cultivation
agenda provided by company. The production capacity of this company is 700 tons per day, chemical
residue will be firstly inspected at the farm before entering to company and secondly inspection can be
done once again before packaging. The heat steam dryer uses for first stage of food processing, it
follows by cold team dryer sets at - 41 ͦC to make foods dry properly and hygienic produce.
Figure 14- Layout of dried vegetables processing steps in the First Foods Sole Co., Ltd

Table 35. the farm facility in required by dried vegetable farmer groups
Commercial
dried vegetables
production in
Pakxong
(large scale)
Lak11 village
Lak48 village
Lak49 village
Lak50 village
Nonsavang village
Nongchanh village
10 Green houses
Depth electric pump + installation
Water tank (2,500 liters)
Storage building (10m X 20m)
15,000 USD
15,000 USD/unit
500 USD/unit
40,000 USD/unit
4.3.2.4.2. Household agro-processing group
Table 36. the farm facility in Boloven plateau (Pakxong, Thateng, and LaoNgam)
Mak-mao fruit
Wine production
in LaoNgam
(small scale)
Dong village**
Horkong village**
LaoNong village**
Haysok village**
Thongko village**
Bottle enclosure machine X 1 unit
Bottles pasteurized dryer X 1 unit
Bottle grasses X 1,000 bottles
Large pot X 2 units
Fruit grinder X 2 units
Water distilling machine X 1 unit
Vine measurement meter X 1 unit
Wine Filter X 2 units
Gas stove X 1 unit
Vine stainless container (2,000
liters) X 1 unit
1,000 USD/unit
4,000 USD/unit
800 USD
160 USD/unit
120 USD/unit
150 USD/unit
100 USD/unit
500 USD/unit
300 USD/unit
300 USD/unit
Passion fruit
juice production
in LaoNgam
(small scale)
Nongkae village**
Phok-Ngay village**
Bottle enclosure machine X 1 unit
Bottles pasteurized dryer X 1 unit
Bottle grasses X 1,000 bottles
Fruit grinder X 2 units
Water distilling machine X 1 unit
Sugar measured meter X 1 unit
Gas stove X 1 unit
Stainless container (2,000 liters) X
1 unit
Refrigerator X 1 unit
100 Kg scale X 1 unit
1,000 USD/unit
4,000 USD/unit
800 USD
120 USD/unit
150 USD/unit
100 USD/unit
300 USD/unit
300 USD/unit
500 USD/unit
100 USD/unit
80 USD/unit
40 USD/unit
**Mr. Khamsavath Phanthavilay, head of green earth center (VFI), contact no. +856 (020) 55041042

4.3.2. The Feasibility Study of a Six Year Upgraded Vegetables Collection and Marketing Infrastructure
(Case of Thongset vegetables hub)
During the technical committee meeting held on 29 August 2016, the Thongset vegetable hub in
Champasak province was proposed by technical committee for selecting case study classified as Lao
owned enterprise and cooperative that local government aims to support for modern farmer group.
4.3.2.1 Overview of the Thongset vegetable hub
Company name: Vegetable Cooperative Enterprise in Pakxong
Owner: Mr. Mone as farmer leader
Contact no.: 020 97866997, Thongset village, Pakxong district,
Champasak province, Lao PDR
Location: 15˚12’59”; 106˚ 18’ 8”
Vegetable Cooperative Enterprise in Pakxong
Location: this Thongset vegetable hub is located in Thongset village, Pakxong district, Champasak
province.
Name: Krom Palit Peut Pak (Group to Supply Vegetable Crops)
Area: 33 ha; 24 families
Facilities: 40 Green Houses and sub-surface irrigation and cold chain (cold room at site, refrigerated
truck come from Thailand to pick up packaged vegetables
Produce: High quality organic
Business Model: Vegetable Hub and Spokes. Hub is located in Thailand, spokes are in Laos. Farmers
produce on contract to Hub. Hub picks up vegetables from cooperative and sells to retail outlets in
Thailand (Marco, Lotus and Big C) Mean price paid to farmers for cabbage is 7,000 Kip/kg (30 Baht) .
Retail Price in Thailand is 65 Baht/kg. Retail price to farm gate ratio is 2:1.7. Compare this with the price
paid to farmers for non-organic lower quality cabbage (1,500 Kip/Kg- price ratio, organic to non-organic
4.7:1)
Value Chain Linkages and Comparative Advantage: Pakxong district is situated in the Bolovens
highlands in the south of Laos. The land in Paksong is rich and suitable for growing horticulture crops.
Not surprisingly, Pakxong district is at the centre of Lao PDR’s cabbage production. Cabbages are sold
through local traders both to the capital Vientiane and for export to Thailand where Bangkok is the main
consumption centre.

But Boloven farmers can produce more than relatively low-value cabbage. With the growing demand for
non-native and safe food in South East Asia and elsewhere and with increasing tourism in the area,
opportunities for other, higher value crops, are growing. The altitude of Pakxong (> 1,000 meters) and
the rest of the Boloven provides a cool climate. Adequate rainfall which allows year round production.
This gives the area a comparative advantage over the hot, and often dry, lowlands surrounding it. A
range of cool climate and subtropical crops can be produced for three potential markets: the local hotel
and restaurant tourist-oriented market, the Thai market with Bangkok as main centre of consumption,
and the overseas Asian ethnic markets in Europe and the Middle East.
But although the potential is there, it is not always easy for the local farmers to translate this into a
profitable business. The obstacles and challenges range from unfamiliarity with the new crops and with
the international standards and specifications of the demanding buyers. There are also complicated
export procedures to deal with, new harvesting and packaging methods and the need to finance on-
farm investment such as plastic canopies, net houses, pump sets and irrigation equipment. The growing
and post-harvest practices for the often speciality new crops such as coriander, Italian basil and rocket
salad, are very different and more demanding than for the bulky cabbage which they are used to
growing. And while cabbage can always be sold to multiple itinerant middlemen although sometimes at
a loss, these new crops must be grown under contract to make sure that there is a buyer who usually
also must provide certain inputs such as seed, and growing specifications.
A FAO-operated and CFC-funded project is helping farmers to deal with these challenges. “We want to
establish a direct link between Lao farmers and buyers in Thailand of higher-value produce. Framers
should be fairly treated in this cross-border trade, while improving their productivity and income. The
project aims to connect the Boloven vegetables producers to international markets but in the meantime
it has become clear that there are also some opportunities to supply local restaurants serving Italian and
French cuisine.
The project initially targeted 40 farmers in Pakxong district who used to produce low-value cabbage. The
project provided them with training on land preparation, seeding techniques and pest and disease
management (with support from FAO-IPM Programme and Australian Volunteer International
Development Programme) to grow clean and Good Agriculture Practice (GAP) certified cabbage, iceberg
lettuce, coriander, rocket salad and a number of other crops. Plastic sheet for canopies was made
available so that farmers could produce delicate crops such as lettuces and coriander also during the
rainy season.
FAO introduced several potential buyers from Thai companies to the farmers and facilitated the
establishment of written contracts to create a responsible and mutually fair relationship between the
farmers and the buyers. In close collaboration with national and provincial authorities, a two year
agreement was signed with a Thai company with extensive experience on exporting certified produce
and a strong sense of corporate social responsibility.
In 2012, there was a survey in the five provinces in Boloven where cabbage farmers are located. This
showed that most of them sell their cabbage at farm gate. They almost fully rely on middle-men and
grow without contract. The use of contracts helped to ensure for the buyer a regular supply of good
quality produce and for the farmers an assured market, a stable price and thus a stable income.
Some of the vegetables reach the tables of Europe and the Middle East. The buyer in Thailand re-exports
to the EU and the Middle East. A total of 1,500 kg of coriander was exported in the four months from

May to August 2014, valued at 15 million LAK, for re-export to Europe. Other crops that will be exported
are chili, sugar pea, mint, tomato, eggplant, yard long bean and asparagus. Currently exports take place
once fortnightly by refrigerated pick-up truck with a capacity of 800 kg. When production volumes pick
up the frequency will be increased.
The project has so far benefited 40 farmers, allowing them to have a higher and more stable income
than when they grew only cabbage. The FAO-CFC project funded a small packing house that is being
completed and that can be used by any current or future buyers. It will help to streamline the logistic
process and allow the establishment of a supply chain directly from Pakxong to Bangkok airport without
the produce having to pass through a Thai packing house. This will further help Lao farmers to become
more competitive thanks to reduced post-harvest losses, reduced transport and logistic costs and
improved quality and it will help to attract more buyers and exporters to Pakxong and neighboring
districts.
Cost of production : For one green house (one season: (770,000 Kip)
Revenue: One green house (one season=2,030,000 Kip)
Net Profit: One green house (one season= 2,030,000 kip – 770,000 kip = 1,260,000 kip /green house)
Total net profit: 3 seasons= 1,260,000 kip x 3= 3,780,000 kip
Total profit for cooperative: 40 green houses x 3,780,000 kip = 151,000,000 Kip ($ 18,667 for one year)
Management: Managed by cooperative with quality control provided by Thai technician who makes
rounds at site
Training and extension: Thai Hub buyer has roving technician who supervises quality among framer
groups in Thailand and Laos.
Extension and Training: Thai HUB training DAFO/Paksong; DAFO/Paksong trained farmers
Investment: Start-up support from ODOP (FAO)- seeds and fertilizer in first year-after second year,
seeds only
Crops: cabbage, tomato, chili, cucumber, long bean, egg plant, strawberry, lettuce, kale
Investment in green houses, cold chain and irrigation: Paid by cooperative household members
(4,000,000,000 kip, $50,000)

Figure 15. Thongset vegetable production activities and infrastructure
Cooperative Leader with Cabbages Flowering Horticulture
Under root Irrigation Strawberries under Plastic
Chili under Plastic Other Variety of Chili

Sub-surface irrigation Cold Store
Figure 16. Location of Thongset vegetable hub

4.3.2.2 Functions of the Vegetables Collection and Value Addition Cluster (vegetable hub)
The function of Thongset vegetable hub known as “Fresh produce packaging house in Thongset village”
to reduce post-harvest loss from the farm gate and store vegetables longer since daily export quota is
limited for some of the day when farmers’ production is go peak may affect to low price. The Thongset
vegetable hub is managed by association, 33 members will benefit from this technology.
4.3.2.3 Start-Up Requirements for a Vegetables Collection and Value Addition Cluster (vegetable hub)
a). Equipment:
Table 37. Fresh produce packaging house in Thongset village, Pakxong district, Champasak province
NO. List of equipment Quantity
Availability
Cost (USD)
Yes No
1 Land Area ( 1 hectare) 1 X 30,000.00
2 Building (10 m X 13.5 m) capacity 1 X 12,000.00
3 Washing machine 1 X 2,000.00
4 Grading machine 1 X 3,000.00
5 Sorting manually - - - -
6 Cold room (5m X 4m X 4.5 m) capacity 10 tons 1 X 20,000.00
7 Air condition X 500.00
8 Refrigerated truck, capacity 3 tons 1 X 30,000.00
9 Refrigerated system incl. installation 1 X 15,000.00
10 Truck 1 X 15,000.00
11 Electric power source incl. installation 1 X 1,000.00
Total 128,500.00
b). Management:
Managed by cooperative with quality control provided by Thai technician who makes rounds at site
c). Training and Capacity Building:
The role of Thai vegetable hub is providing the training package to DAFO staff and vegetable farmer
leaders in Paksong district; the DAFO staff in Paksong will train farmers in target area to supply produce
to Thai hub in the border (Wangtao-Chongmek international check point), Thai Hub buyer has roving
technician who supervises quality among framer groups in Thailand and Laos.

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