At the second regional MRLG Stakeholder Consultation Workshop in Vientiane, Mike Dwyer presented on the research he and Thoumthone Vongvisouk had done in northern Laos on the effects of falling rubber prices on smallholder rubber farmers. Presented at the Mercure hotel on 24 February, 2016.

1. 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011" 2012" 2013" 2014" 2015"
Falling
Rubber
Prices
in
Northern
Laos:
Local
Responses
and
Policy
Op:ons
Thoumthone
Vongvisouk,
PhD
Na:onal
University
of
Laos,
Faculty
of
Forestry
Sciences
Michael
Dwyer,
PhD
University
of
Bern,
Centre
for
Development
and
Environment
MRLG
Regional
Stakeholder
Workshop
24
February,
2016

2. 0
5
10
15
20
25
30
35
40
45
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Singapore
Commodity
Exchange,
No.
3
Smoked
Rubber
Sheets
(Index
Mundi)
CNY/kg
Rubber
(plan:ng)
boom
7
years
later
CONTEXT

3. RESEARCH
QUESTIONS
1. How
are
rubber
producers
and
government
officials
responding
to
the
recent
fall
in
rubber
prices?
2. Are
producer
responses
related
to
produc:on
arrangements,
and
if
so,
how
and
why?
3. How
are
rubber
prices
in
northern
Laos
actually
determined?

4. STUDY
DESIGN
Broad
not
deep
• 2
provinces,
5
districts,
7
villages
• Qualita:ve
>
Quan:ta:ve
• 20
days
of
fieldwork
Interviews
with:
• PAFO,
PICO
et
al.
(n=8)
• DAFO,
DICO
et
al.
(n=15)
• Village
representa:ves
(n=7)
• Private
sector
actors
(n=3)
• TOTAL:
33
interviews
with
68
parWcipants
Literature
review
• Connect
plan:ng
with
harves:ng
• Build
on
VT
(2015)
and
Shi
(2015)

5. RESULTS

6. 0
5
10
15
20
25
30
35
40
45
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Average
annual
purchase
price
for
rubber,
northern
Laos
(Luang
Namtha
Provincial
Investment
and
Commerce
Office
sta:s:cs)
Singapore
Commodity
Exchange,
No.
3
Smoked
Rubber
Sheets
(Index
Mundi)
CNY/kg
1.
Provincial
Rubber
Management
CommiZee
(LNT)
• Promo:ng
farmer
marke:ng
groups
• Calcula:ng
recommended
prices
• Brokering
(nego:a:ng)
rubber
purchases
• Banning
land
conversion
Provincial
Rubber
Management
Commiaee
created
VERY
LIMITED
LEVERAGE
RQ
1

7. Banning
land
conversion
(LNT
only)
UNDER-­‐REPORTING?
RQ
1

8. 2.
Not
enforcing
contracted
floor
prices
Contracted
floor
prices
were
the
excep:on,
not
the
rule:
• 4
of
7
companies
discussed
did
not
have
them.
(Total:
3
LNT,
4
OUD)
But
in
the
3
cases
we
found,
these
seem
to
not
be
enforced.
• Viengphoukha
District:
there
is
contracted
floor
price,
but
the
company
“could
not
afford
to
pay
based
on
the
contract.”
(Gov’t
interview)
• Xai
District:
“this
set
price
[of
LAK
5,000/kg]
have
not
been
enforced
…
.
Rubber
prices
in
our
province
and
district
are
based
on
what
buyer
offers.
(Gov’t
interview)
• Houn
District:
“The
floor
prices
set
in
the
contract
is
5.000
k/kg,
but
the
company
s:ll
pay
lesser
than
floor
prices.
The
company
is
not
payment
based
on
the
contract.
We
proposed
this
the
provincial
level
many
:me,
but
we
did
not
receive
any
responses
from
the
provincial
level.
At
the
district,
we
also
proposed
the
district
mee:ng,
but
again
no
responses
from
the
district
authori:es.”
(Gov’t
interview)
RQ
1

9. 3.
Encouraging
farmers
to
sWck
with
rubber
“It
is
not
maaer
rich
or
poor;
whoever
have
rubber
planta:on
and
pa:ent
in
working
in
their
rubber
planta:on
will
get
income.”
(LNT-­‐NT
DAFO)
“Although
rubber
prices
are
falling
at
LAK
5,000–6,000/kg
is
OK
for
local
people
to
tap
rubber
–
they
gain
from
rubber
planta:on
[more]
than
other
agricultural
ac:vi:es.”
(OUD
PAFO)
THE
BAN
HAT
NYAO
STORY
RQ
1

10. 1. Wai:ng
for
prices
to
rise
(not
tapping)
2. Tapping
with
household
labor
3. Land
sales
to
wealthier
buyers
in
or
out
of
village
4. Land
leases
to
outside
investors
for
conversion
to
other
crops
(e.g.
bananas)
5. Aggrega:on
(including
collec:ve
ac:on)
to
aaract
higher
prices
Responses
by
rubber
producers
RQ
2

11. 1. WaiWng
for
prices
to
rise
(not
tapping)
2. Tapping
with
household
labor
3. Land
sales
to
wealthier
buyers
in
or
out
of
village
4. Land
leases
to
outside
investors
for
conversion
to
other
crops
(e.g.
bananas)
5. Aggrega:on
(including
collec:ve
ac:on)
to
aaract
higher
prices
Responses
by
rubber
producers
RQ
2
“With
[prices
at]
4
Yuan/kg,
we
have
to
tap
our
rubber
by
ourselves.
In
the
case
of
households
that
have
large
area
of
rubber
planta:on,
they
tap
only
liale
part
of
their
rubber
planta:on
based
on
their
household
labor
forces.”
(Village
interview,
Ban
Hat
Nyao)

12. 1. WaiWng
for
prices
to
rise
(not
tapping)
2. Tapping
with
household
labor
3. Land
sales
to
wealthier
buyers
in
or
out
of
village
4. Land
leases
to
outside
investors
for
conversion
to
other
crops
(e.g.
bananas)
5. Aggrega:on
(including
collec:ve
ac:on)
to
aaract
higher
prices
“Selling
rubber
planta:ons
is
normal
[here]
–
it
depends
on
having
buyers.
The
growers
[who
sell]
are
mainly
poor
households
in
villages.
Buyers
are
mainly
businessmen
from
the
province
[capital]
as
well
as
Chinese
investors.
…
However,
during
the
falling
rubber
prices,
no
one
wants
to
buy
rubber
planta:on.”
(Government
interview,
Oudomxai)
Responses
by
rubber
producers
RQ
2

13. Rubber
prices
Posted
rubber
price,
Yunnan
Rubber
Co.
factory,
Luang
Namtha
1. Floor
prices
not
enforced:
3
examples
2. Recommended
prices
>
actual
prices
3. “Prices
are
mainly
based
on
what
buyers
propose.”
(Gov’t
interview)
RQ
3

14. 0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Prices
paid
to
rubber
farmers
(RMB/kg)
XSB
(KIs,
Tang
et
al.
2009)
XSB
(Online
data)
Provincial
sta:s:cs
LNT
Village
interviews
LNT-­‐Sing
Village
interviews
LNT-­‐NT
Village
interviews
LNT-­‐VPK
Village
interviews
OUD-­‐Xai
Village
interviews
OUD-­‐Houn
Where
rubber
prices
come
from
• Prices
drop
by
~
half
from
China
to
Laos
• Some
of
this
is
probably
quality-­‐related,
but
some
is
market
power.
RQ
3

15. CONCLUSIONS
1. Boom
crop
vs.
strategic
commodity?
Lao
producers
losing
twice:
to
a
global
boom
crop
and
a
Chinese
strategic
crop
2. This
is
selecWng
for
wealthier
rubber
producers.
If
a
smallholder
model
is
going
to
prevail,
a
more
regulated
model
is
needed.
Enforcing
floor
prices
is
just
the
:p
of
the
iceberg.
3. Ban
Hat
Nyao:
we
need
to
learn
the
right
lessons:
• Shiv
from
public
to
private
credit
launched
the
land
market
• Hat
Nyao
got
lucky
in
the
price
environment;
smallholders
today
need
price
supports.
4. More
research
needed
on
(a)
households
impacts
of
tapping
at
low
prices;
(b)
distribu:on
of
rubber
holdings;
(c)
role
of
debt
in
land
conversions
and
transac:ons;
and
(d)
Chinese
agribusiness
strategy
&
market
power.

16. Full
Report
(53
pages):
hap://www.laofab.org/document/view/2827
Execu:ve
Summary
(3
pages):
hap://www.laofab.org/document/view/2828
Presenta:on
(37
slides):
hap://www.laofab.org/document/view/2829

17. Acknowledgments
MAF
DAEC,
Somxay
Sisanonh,
LURAS
Project,
Helvetas,
Andrew
Bartlea
Representa:ves
of:
• Hat
Nyao,
Sop
Sim,
Oudomsin,
Phiyer,
Nam
Ngeun,
Kor
Noi
and
Mokpalai
villages
• Luang
Namtha
PAFO,
PICO,
PDPI
• Namtha
DAFO,
DICO
• Sing
DAFO,
DICO,
DDPI,
DFO
• Vieng
Phou
Kha
DAFO,
DICO,
DFO
• Oudomxai
PAFO,
PICO,
PDPI,
PFO
• Xai
DAFO,
DICO,
DDPI
• Houn
DAFO,
DICO,
DDPI
• Sino-­‐Lao
Rubber
Company
• Yunnan
Rubber
Company
NUoL
Faculty
of
Forestry,
Mr.
Chimmy
Bounlom
Melanie
Canet,
Weiyi
Shi,
Dietrich
Schmidt-­‐Vogt,
Zhuang-­‐Fang
Yi