Regulating Contract Farming to Empower Smallholder Farmers in Laos

The Laos Taskforce on Responsible Agricultural investment had a chance to learn directly from smallholder farmers about their concerns relating to contract farming during field visits in March 2021 to Nan district, Luang Prabang province, Laos.

During the visits, a team led by the Investment Promotion Department (IPD), Ministry of Planning and Investment, with support from MRLG and in cooperation with the Department of Policy and Legal Affairs (DoPLA), Ministry of Agriculture and Forestry, and partners including GIZ, FAO, Oxfam and Village Focus International, met with communities, representatives of local government, and the private sector.

For both investors and farmers, contract farming (CF) remains relatively new in Laos and often requires some experimentation to get started. This is partly because Laos has no specific CF regulation, meaning that although farmers may stand to benefit from contract production, many are uncertain about the process and often remain in weaker positions in terms of dealing with investors.

The Laos taskforce on RAI visits banana plantation in Nan district, Luang Prabang province. Photo: Rob Cole

Some of the concerns expressed by farmers in Nan district included lack of familiarity with contract requirements and production techniques, uncertainty about government roles and responsibilities, and lack of clarity about gender equality in contract signing.

For investors, key concerns were greater clarity in the registration processes, help from the government to ensure farmers understand contracts and policies, as well as to secure enough production to make their investment viable.

Local government agencies were meanwhile keen to widen public awareness of CF, and to be involved in the contract process to ensure farmers and investors are properly represented.

The issues raised during the field visits were the topic of a workshop in Luang Prabang, Laos from 30 March – 1 April, 2021 attended by 40 representatives from the Laos RAI Taskforce. A key objective of the event was to support dialogue between relevant government departments towards collaborating on new regulatory tools for CF in Laos, to ensure mutual benefits for smallholders and investors.

Director General Outakeo Keodouangsinh of IPD (center) while exchanging the idea with Dr. Micah Ingalls, MRLG Team Leader during the RAI workstream reflection workshop in Luang Prabang.

The event was attended by Director General Outakeo Keodouangsinh of IPD and Director General Dr. Thatsaka Saphangthong of DoPLA, to provide technical guidance on how to move forward with regulating CF in Laos.

Dr. Tatseka noted the intention of DoPLA to work together with IPD to avoid the exploitation of farmers in CF investments, and welcomed more support for technical requirements in this effort, based on the need to respond to the rapidly changing situation for farmers and investors.

Dr. Outakeo observed the importance of identifying the government departments in charge of the regulatory process for CF, and what kinds of policies or mechanisms are needed, which would have to be flexible to respond to different investment models. Dr. Outakeo highlighted the need to support farmers to manage supply-demand dynamics and connect to new opportunities, including those that will come with the opening of the Laos-China railway.

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