Upland and Agriculture Policy

48803

LAO PEOPLE’S DEMOCRATIC REPUBLIC Policy, Market and Public Disclosure Authorized Agriculture Transition in the Northern Uplands Public Disclosure Authorized Public Disclosure Authorized

THE WORLD BANK

Washington, DC East Asia and the Pacific Region Sustainable Development Department

This study was prepared by the Rural Development, Natural Resources and Environment Unit (EASRE) of the Sustainable Development Department of East Asia and Pacific Region of the World Bank.

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CONTENTS

Acknowledgments...... i Executive Summary...... iii I. Introduction ...... 1 II. Typology of Northern Uplands Agriculture Production Systems...... 5 A. Traditional Agriculture Systems...... 5 B. Emerging Production Systems...... 7 C. Geographical Clusters of Production Systems ...... 10 III. Upland and Agriculture Policy...... 15 A. National Socioeconomic Development Plan 2006-2010 and Elaborated Plan ...... 15 B. Agriculture and Forestry Sector Strategy – 4 Goals and 13 Measures...... 17 C. General Policy Implementation Issues ...... 20 IV. Emerging Market Dynamics and Impacts...... 24 A. Regional Trade Agreements and Strategies ...... 24 B. Contract Farming Arrangements and Land Concessions...... 25 C. Implementing Contracts and Concessions...... 27 D. Provincial Market Pulls and Development Dynamics...... 30 E. Concluding Remarks...... 39 V. Transition Outcomes: Livelihoods and Sustainability ...... 41 A. Coping Strategies and Transition Dynamics in Upland Production Systems ...... 41 B. Winners and Losers in the Uplands Transformation...... 48 C. Sustainability Aspects of Upland Livelihood Strategies ...... 53 D. Environmental Outcomes of the Upland Transformation...... 54 E. Synthesis on Policy Outcomes and Policy Gaps ...... 59 VI. Livelihood Development: Policy and Support Options...... 61 A. Integrated Rural Development Approaches...... 61 B. Policy Framework...... 62 C. Role of Government in the Transition...... 63 D. Environmental Outcomes...... 64 Annex A. Production Change for Major Crops and Cattle in Northern Uplands, 1995 and 2005...... 66 Annex B. Swidden Agriculture Systems – Misconceptions and Empirical Evidence ...... 67 Annex C. Contract Farming Arrangements in the Northern Uplands ...... 69 Selected Bibliography...... 72 References...... 74 ACKNOWLEDGMENTS

The Report Lao People’s Democratic Republic: Policy, Market, and Agriculture Transition in the Northern Uplands is the outcome of a close and fruitful cooperation between the World Bank, the Ministry of Agriculture and Forestry of Lao PDR (MAF), and the Agence de Développement de France (AFD). The final report was written by a team led by Ulrich Schmitt (World Bank) under the overall guidance of Ian Porter (Country Director, World Bank), Patchamuthu Illangovan (Country Manager, World Bank) and Rahul Raturi (Sector Manager, World Bank). The team included Anthony Zola and Ulrich Apel (World Bank, consultants) and Marian Delos Angeles (Word Bank Institute).

Field work was made possible through the excellent support received from the MAF Department of Planning that actively participated in all field missions and facilitated the consultations with Provincial and District Agriculture and Forestry Offices and with related projects in the study provinces. In addition, the task team greatly benefited from the valuable guidance provided by Etienne Woitellier (Country Director, AFD) and Zacharie Mechali (Rural Program Officer, AFD). From the World Bank, Steven Schonberger, Richard Chisholm, Dina Umali-Deininger, and Gillian Brown provided useful comments on the final draft report. The final report was copyedited by Sheldon Lippman (World Bank, consultant).

The study received generous funding from the Japan Policy and Human Resources Development Fund (PHRD) and the Trust for Environmentally and Socially Sustainable Development (TFESSD), which is gratefully acknowledged.

ACRONYMS AND ABBREVIATIONS

ACMECS Ayerwaddi-Chao Phraya-Mekong Economic Cooperation Strategy ADB Asian Development Bank ASEAN Association of Southeast Asian Nations CAFTA China-ASEAN Free Trade Agreement CO2 Carbon dioxide DAFEO District Agricultural and Forestry Extension Office DAFO District Agriculture and Forestry Office DMC Direct seeding, mulch-based conservation GDP Gross domestic product GMS Greater Mekong Subregion GWP Global warming potential ha Hectare HDI Human Development Index LECS Lao Expenditures and Consumption Survey LFAP Land and Forest Allocation Program MAF Ministry of Agriculture and Forestry (Lao PDR) NAFRI National Agriculture and Forestry Research Institute NAFTA North America Free Trade Agreement NSDEP National Socio-Economic Development Plan NTFP Non-timber forest product PAFO Provincial Agriculture and Forestry Office TIG Trade in Goods (Agreement) UNESCO United Nations Educational, Scientific, and Cultural Organization WTO World Trade Organization

ii EXECUTIVE SUMMARY

The Northern Uplands of Lao People’s more than 50 percent in 2001. Slowing Democratic Republic (PDR), agricultural growth is leaving an comprising the provinces of Phong increasingly smaller share of national Saly, Luang Namtha, Bokeo, Houa income to the majority of the Lao Phan, Xieng Khouang, Oudomxay, population, which remains dependent Xayabury, Luang Prabang, and on agriculture. northern Vientiane, remains one of the The Northern Uplands has long been lagging regions in mainland Southeast subject to the Government’s Asia. The Northern Uplands is nearly determination to transform the upland exclusively agriculture based with economy and social structure toward a almost 90 percent of rural households modern and unified socialist society. involved for most of their time in crop To this end, a set of upland policies and livestock production. The have been established that have structural transformation from noticeably advanced the transition subsistence to commercial agriculture, from traditional forest-based swidden integration of markets, and agriculture and livelihood systems development of the rural non-farming toward sedentary and intensive sector are only slowly taking place. agriculture and commercialization. During the mid-1990s to the mid- Among these policies are the Land and 2000s, rural poverty in the Northern Forest Allocation Program, the Uplands declined steadily and Stabilization of Shifting Cultivation significantly. This reduction was Policy, the Opium Eradication primarily driven by strong agricultural Program, and the Village Cluster growth and productivity gains Development Program. Each of these combined with improving road programs, as well as other agriculture linkages. The Northern Uplands, commercialization policies, has however, remains one of the poorest progressed considerably over the past regions in Lao PDR with a poverty years. Simultaneously, the Northern headcount above 40 percent or more Uplands has been exposed to regional than 800,000 people—about half of all growth dynamics, particularly from people living in poverty in Lao PDR. China, Thailand, and Vietnam, which Out of 72 nationally designated have gained a strong momentum poverty districts, 47 are located in the particularly during the past several Northern Uplands; and of that subtotal, years. As Lao PDR is further 32 are identified as priority poverty developing its economic and trade districts. Poverty incidence and relations and transport linkages with its severity remain much higher among neighbors, the Northern Uplands will the various ethnic groups who make up increasingly supply agriculture approximately two-thirds of the products to its neighbors to which it Northern Uplands population. At the also serves as a land and production same time, agriculture contribution to resource base. overall gross domestic product (GDP) The combination of upland policies is declining. In 2005/06 it accounted and regional market forces is driving a for about 40 percent as compared to transition from traditional livelihood

iii systems to new agriculture production mineral fertilizers and pesticides. models as well as changes in While irrigation areas are expanding, agricultural crop composition away the total area of this production system from traditional upland rice toward a remains small. variety of cash crops and increasing Annual cash cropping in large-scale numbers of livestock. In 2008, the area monocultures, particularly the mono- under traditional forest-based swidden cropping of maize, is emerging in cultivation practices is estimated to many areas and replacing upland rice account only for 20-30 percent of total and, in some cases, even paddy rice. cultivated area in the Northern Uplands The maize production area has nearly while about 70-80 percent of all tripled over the past decade from a farming areas are in a state of recorded area of 23,000 hectares transition. More specifically, a number (1995) to more than 66,000 hectares of non-traditional, new production (2005). The Northern Uplands systems can be identified across the accounts for 75 percent of the increase Northern Uplands that have emerged in production area in Lao PDR, most and are evolving in response to those of which occurred since 2002. Maize is market dynamics and policy now primarily being produced for implementation. export to China, Thailand, and Vietnam. Annual (maize) cash Emerging agricultural production cropping involves the use of hybrid systems varieties, fertilizer and pesticides, the Fixed rotational cropping is burning of crop residues for land developing as the most widespread, preparation, and plowing on steep non-traditional production system slopes. Cash cropping is also across the Northern Uplands. It is still beginning to encroach on young characterized by subsistence regenerating forests and on (degraded) production of upland rice on large natural forests. areas but numerous cash crops Industrial plantations of tree crops, (including maize, cassava, Job’s Tears, mainly rubber, teak, and eucalyptus, ginger, sesame, beans, etc.) are being are becoming common across the increasingly introduced into this Northern Uplands. Rubber plantations system. Fixed rotational cropping has have already been established on more emerged in response to land allocation than 40,000 hectares and with about and fallow access restrictions in 120,000 hectares being targeted for traditional swidden systems. As a planting. An important implication of consequence of fixed permanent rubber plantation development for cropping and, in particular, the upland livelihood security is that elimination of fallow periods, natural rubber plantations are competing for soil fertility is decreasing and, in the land with traditional food crops. medium term, farm yields are likely to Rubber plantations, although only decline and soil erosion is likely to being authorized on bare and fallow increase. land, are also increasingly encroaching Modernized rice-based farming is into existing natural forest areas. based on supplemental irrigation Intensified production of livestock is a during wet and dry seasons and is relatively recent trend observable increasingly replacing the traditional across the Northern Uplands and wet seasonal rice cropping. This characterized by locally concentrated system includes mechanized plowing, large numbers of ruminant livestock, high-yielding varieties, and the use of

iv uncontrolled forest grazing, foraging border contract farming arrangements with limited supervision, deliberate and land concessions. and repeated use of fire in forest areas Government policy encourages private to induce growth of fresh grasses, and initiatives, including those by foreign poor and insufficient pasture investors from neighboring countries management. About 87 percent of rural to promote contract farming, especially households in the Northern Uplands in horticulture and tree crops. engage in large livestock production, However, in the absence of a of which about 38 percent sell regulatory framework, the provinces livestock. and districts are required to be innovative in their dealings with Regional Market Dynamics and domestic and foreign investors Impacts interested in contractual arrangements. A number of contract farming models Cross-border trade has become a have been tested with a mixture of critical factor in economic results and only a few models have development in the Northern Uplands emerged that merit further since about 2003. Regional and consideration as standard practice that domestic traders and agri-businesses might meet the needs of local farmers, are taking increasing advantage of the commercial enterprises, and local strategic position of the Northern authorities. However, the distribution Uplands as an important production of benefits, which are generated under base for agricultural products in these arrangements, is presently not demand by the expanding markets in well documented or understood. The China, Thailand, and Vietnam and are longer-term implications for poverty sourcing food crops, agricultural raw alleviation, especially for materials, livestock, and non-timber disadvantaged groups, the forest products, and other niche environment, and issues such as products. Besides the progress made in migration, are generally unclear and recent years in improving transport and require further research. communication infrastructure, free trade agreements among Greater Transition Outcomes Mekong Subregion (GMS) member countries and bilateral and multilateral With significant progress in trade and investment initiatives implementing the upland policy launched by China, Thailand, and framework, as well as progress in Vietnam are beginning to shape the regional integration, swidden practices environment for private sector have been giving way to new commercial activities in the Northern permanent agriculture and other land Uplands. Among these are the uses, which are still evolving. Upland Ayerwaddi-Chao Phraya-Mekong farmers have responded with different Economic Cooperation Strategy coping strategies to accommodate the (ACMECS); the China-ASEAN Trade restrictions posed by existing policies in Goods (TIG) Agreement, and and, where possible, have ongoing customs reforms and simultaneously responded to harmonization of trade regulations opportunities brought about by within the Greater Mekong Subregion. regional market demand. As the A reflection of this greater integration uplands transition progresses, the is the emergence of a variety of cross- transition outcomes are coming into clearer focus.

v The two main coping strategies therefore depends on the strength of adopted by upland farmers across the the market pull factor, which is a Northern Uplands include the function of access to market introduction of annual and perennial infrastructure. The stronger this market cash crops into previous upland rice pull, the less restrictive is the policy farming systems and, often framework—reflecting an inherent simultaneously, the intensified contradiction in the policies that production of large ruminants. These remote upland farmers face more strategies have resulted in the restrictions with regard to their accelerated and permanent conversion livelihood opportunities and transition of previous fallow land and young options while only those farmer secondary forests into permanent households with market access tend to cropping and grazing land. Also in benefit from the policies. A key response to the upland policies, conclusion is that the current policy farmers have shortened or abandoned framework in its implementation is not fallow and regeneration periods on sufficiently sensitive to those of the agriculture land and intensified Lao society who live in remote areas cropping on smaller areas concentrated with limited market access and few around settlements with the common alternatives for ensuring food security result that areas now under permanent and generating income other than cultivation show signs of soil traditional swidden agriculture. degradation and declining yields. Field In this context, it is important for observations indicate that the Government and other stakeholders to intensification of annual cash cropping, gain a better understanding of the types the expansion of industrial tree of households that tend to gain and plantations, and intensified livestock lose in the transition process. In the production are generally not reducing uplands, natural capital and assets of pressure on the upland environment; households are mainly determined by and the intended introduction of the policy framework. The Land and sustainable land use practices, Forest Allocation Program tends to following the elimination of swidden decrease access to land, the agriculture, is not happening. In fact, Stabilization of Shifting Cultivation the shift from previously extensive Policy tends to reduce long-term agro-forestry land use patterns to quality of crop land and requires the intensive permanent agriculture on shift to new production models that are sloping lands raises concerns about unfamiliar to upland farmers, and the land degradation and sustainability in Village Cluster Development may lead the longer term. to changes in the size of land holdings The current upland and agriculture and land tenure and insecurity. policy framework, which in this study Households, which are characterized is represented by the 4 Goals and 13 by stable access to and sufficient Measures of the Ministry of quality of land combined with secure Agriculture and Forestry, is promoting tenure and good access to agriculture commercialization and infrastructure, are likely to benefit in market integration while its broader the transition to a market-oriented upland and rural development-related agriculture sector. Those households elements have primarily restricting that experience restrictions in land effects on upland communities and access, reduced quality of land, and their livelihood strategies. The success increasing insecurity of tenure of promoting commercial agriculture combined with poor access to

vi infrastructure are likely to lose in the rural electrification remain critically transition simply because they are important for regional integration and lacking market opportunities to cope commercialization, these investments with restrictions by the policies. And need to be complemented by finally, households that are currently geographically targeted and integrated not being reached by either policies or support for rural livelihood infrastructure are likely to continue development in marginal areas. This upland swidden agriculture with little would include support for small-scale, changes on livelihood security. community-based rural infrastructure; agricultural technologies that are And finally, while the Northern adapted to livelihood needs but also to Uplands remains an ecologically and changing production and market relatively intact region as compared to conditions; health and sanitation; and neighboring countries, new landscape- education to build and improve level trends are emerging that indicate household assets and enable upland the uplands ecosystems and natural communities to better participate in the landscapes are becoming less resilient transition. With regard to the emerging and more vulnerable as a result of the production systems, tailored support in transformation process. These impacts new production technologies for fixed include farming soil degradation in the rotational cropping, upland and areas of intensive maize-growing and intensified rice cultivation, cash fixed rotational cropping, particularly cropping, and livestock raising should in the absence of sensible crop be provided, particularly through rotations and organic fertilization; land investments that promote the adoption and forest degradation through of sustainable production and grazing overgrazing and transition to fire- practices; improve the delivery of driven grassland landscapes; and the livestock services, and strengthen local transformation of secondary natural institutional development and forests into industrial tree plantations. marketing support. Support Options for Managing the Enhancing the policy framework. A Uplands Transition careful and open policy assessment of whether the underlying assumptions There are four key areas for supporting with regard to traditional farming a successful transitional framework in practices, upland environmental the Northern Uplands. degradation, and upland poverty are Promoting targeted integrated rural adequate and relevant would be an development approaches. There is a important step toward making the strong rationale for public intervention upland and agriculture policy to provide disadvantaged communities framework less restrictive for upland in poor and marginal environments livelihoods and more pro-poor with livelihood support in the form of sensitive. A useful assessment should demand-driven integrated rural build on evidence and local development approaches. The experiences with traditional land use Northern Uplands is becoming practices and their livelihood and food increasingly heterogeneous in the security benefits, socio-cultural and course of the transition, with some ethnic conditions, and ecological areas advancing and others being left appropriateness in the upland behind. While investments in single environment of Lao PDR. assets, such as road infrastructure or A revised upland and agriculture

vii policy framework would distinguish trade liberalization and regional between the different levels of integration, producers began to intervention. On the one hand, policy respond to market signals from interventions could be tailored to different sources, mostly outside of location-specific characteristics; for Lao PDR. It is in this context that the example, in places where market Government should redefine its role opportunities are not available, upland from one of being a central planner to communities should not be subjected one of being a facilitator, monitor, and to the same extent of land use guide. Defining the 4 Goals and 13 restrictions as those that have Measures and the individual opportunities for alternative income agriculture-related programs in more generation outside traditional detail could help to develop a better agricultural practices. This would sense of the public and private sector require a more careful and flexible elements in this policy framework as sequencing of policy implementation, well as the potential fiscal implications especially in the case of the Land and and funding needs. Forest Allocation Program and the Managing environmental outcomes. Stabilization of Shifting Cultivation Managing the environmental outcomes Policy. On the other hand, policies of the transition process requires could be formulated in ways that Government attention. Four areas stand distinguish between individual out: impact of intensified livestock production systems, market access development, cash crop monocultures, conditions, and remoteness level of large-scale rubber plantation upland communities as well as market development, and community-based participants. Policies should not only resource management. These can be focus on smallholder producers but addressed in the context of integrated also include private commercial watershed management as well as investors if overall poverty reduction through further promotion of existing and rural development objectives are to participatory research and extension be achieved. approaches. Avoiding negative long- Defining the role of government in term impacts on the environment the transition. The role of government would also require improving in the upland agricultural development enforcement of existing regulations on process is likely to become such technologies as direct seeding, increasingly more important in light of mulch-based conservation agriculture, the more complex nature of the market. tractor plowing, and forest protection Prior to the 6th and 7th Party combined with investment efforts to Congresses, agricultural development scale-up such proven technologies. focused on national and local food Community management of natural security and meeting the immediate forests resources, especially the needs of the Lao people. The market sustainable production of valuable was clearly identified as a domestic timber, has a good potential for market. Subsequent to adoption of development of the Northern Uplands market-oriented policies, followed by in an environmentally sound way.

viii Introduction The Northern Uplands of Lao People’s half of the rural households are selling Democratic Republic (PDR) comprises agriculture produce, and engagement the provinces of Phong Saly, Luang in non-farm business enterprises Namtha, Bokeo, Houa Phan, Xieng remains very limited. At the same Khouang Oudomxay, Xayabury, time, agriculture contribution to overall Luang Prabang, and northern gross domestic product (GDP) is Vientiane. While each province in the declining and in 2005/06 accounts for Northern Uplands is highly diverse in about 40 percent as compared to more itself, the Northern Uplands—for a than 50 percent in 2001. Slow number of reasons—stands out as a agricultural growth is leaving an region of common characteristics and increasingly smaller share of national trends that emerge as a significant income to the majority of the Lao development challenge to the population, which remains dependent Government of Lao PDR and its donor on agriculture. partners and therefore merits an The Northern Uplands remains one of assessment and discussion in its own the poorest regions in Lao PDR. Out of right. The Northern Uplands provinces 72 nationally designated poverty account for about 60 percent of the districts, 47 are located in the Northern country’s total land area and for Uplands; and of that subtotal, 32 are approximately half of its rural identified as priority poverty districts. population. They are characterized by During 1993-2003, rural poverty in the a complex topography of mountains, Northern Uplands declined steadily hills, and flatland areas; an ethnically and significantly; this decline was highly diverse population; closely associated with strong comparatively low population agricultural growth and productivity densities; a long history of political gains, which also benefited the poorest tension and instability; an incomplete segments of the rural population.1 By state of public infrastructure; low the mid-2000s, rural poverty levels of basic education and health population still remained at above 40 care; and—at least until recently—an percent or more than 800,000 people— overwhelming reliance on a range of about half of all people living in traditional swidden agriculture systems poverty in Lao PDR. Poverty incidence and forest use practices. and severity, based on consumption Agriculture, poverty, and economy in indicators, remain much higher among the uplands. The Northern Uplands the various ethnic groups who make up remains one of the lagging regions in approximately two-thirds of the mainland Southeast Asia where the Northern Uplands population. The structural transformation from Participatory Poverty Assessment subsistence to commercial agriculture, (Chamberlain 2007) indicates that integration of markets, and many of the rapid and unprecedented development of the rural non-farming changes in livelihood and production sector are only slowly taking place. practices and unfamiliar customs The Northern Uplands is nearly brought from outside the tradition are exclusively agriculture based with in fact causing hardships. And, not to almost 90 percent of rural households involved for most of their time in crop 1 Based on the Lao Expenditures and and livestock production. Less than Consumption Surveys (LECS) of 1992/3, 1997/8 and 2002/3.

1 be overlooked, food security remains a swidden agriculture and livelihood pressing issue. systems toward sedentary and intensive specialized agriculture, The Northern Uplands is centrally commercialization, non-agricultural located between China, Vietnam, and occupation, and off-farm income Thailand and exposed to external development. The Land and Forest economic growth dynamics that have Allocation Program is one key policy also gained a strong momentum during initiative that aims at demarcating clear the past few years. As Lao PDR is boundaries between agriculture and developing its economic and trade forestry land use and replacing relations and transport linkages with its neighbors, the Northern Uplands customary with statutory land use increasingly supplies agriculture rights. Another Government initiative, products to its neighbors to which it the Stabilization of Shifting also serves as a land and production Cultivation Policy, seeks to halt resource base. The accelerating swidden agriculture by 2010. The influence of regional market forces Opium Eradication Program hopes to leads to increases in permanent eliminate this cash crop from the intensive agriculture and changes in importance it has held in rural crop composition away from household incomes for over 150 years. traditional upland rice cultivation to The Village Cluster (Koum Baan) such cash crops as maize, sugar cane, Development Program aims at soy bean, and Job’s tears; and to concentrating scattered upland increasing numbers of livestock. communities in village clusters for Frequent changes in the production improved public service delivery, areas of individual crops across the infrastructure provision, and provinces indicate that farmers are administrative support. Each of these experimenting with different crops in programs and other agriculture response to emerging market signals commercialization policies has and fluctuating prices. Annex A shows progressed considerably over the past the areas of production change in the years. This progress brings policy Northern Uplands between 1995 and outcomes and emerging gaps into 2005 with a clear decrease in upland clearer focus. rice and an increase in all other cash In this policy context, traditional crops. swidden agriculture has been singled out as the main cause of poverty and Transitioning from swidden slow economic development because it agriculture- to market-based is seen to be primarily subsistence development. The Northern Uplands is oriented with little surplus produced not however only exposed to market for the intended commercialization. forces but also constitutes a policy- Swidden agriculture has also been driven environment. It has long been identified as the main driver of upland subject to the determination of the environmental degradation, but in fact Government to fundamentally such other land use priorities as transform its economy and social commercial logging, land conversion structure toward a modern and unified for industrial plantation and socialist society. To achieve this end, commercial agriculture development, the Government has instituted a set of mining, and hydropower upland and agriculture policies that development—which are competing have noticeably advanced the with swidden agriculture for land—are transition from traditional forest-based of more obvious concern with regard

2 to environmental degradation. regard to balancing investments in public and private goods, identifying Policy and markets are driving appropriate land use and tenure transition to new production models. arrangements, and governing private The combination of upland policies sector agri-business development. and market forces is driving the transition from traditional livelihood In this new market environment, a systems to new production models and facilitating role for Government needs the development for coping strategies to be defined that can better support of upland communities for livelihood small-holders in the transition toward security. The push and pull forces at commercialization and market times mutually reinforce and positively integration. The most challenging task influence the transition but often can resulting from the uplands transitions also contradict and restrict upland is how to promote small-holder farmers’ livelihood choices. They are agriculture in sustainable ways, which also often accompanied by unintended helps to maintain upland livelihood side effects. The transition shows two and food security and, at the same principal trajectories. In more remote time, leads to growth in the rural farm areas, where market opportunities are and non-farm sectors for broad-based scarce or not available at all, traditional poverty reduction. farming patterns are being Objective and structure of this report. transformed, nearly exclusively in The transition in the Northern Uplands response to Government policy goals, provides a timely opportunity to often creating significant hardships and engage with the Government of Lao food insecurity for the communities. In PDR in a dialogue on a framework for these cases, new resource boundaries upland agriculture and livelihoods. are too restrictive and do not take the This report Lao People’s Democratic livelihood needs, limitations of Republic: Policy, Market, and production capacities, and knowledge Agriculture Transition in the Northern of upland communities into account. Uplands aims to contribute to such a At the same time, policies do not dialogue by providing (a) a policy- acknowledge the importance of relevant typology of the structural traditional livelihood systems for characteristics and transition patterns institutional stability as well as their of the principal small-holder contribution to ecological and agriculture systems in the Northern production sustainability. Instead, Uplands and (b) recommendations to livelihood traditions appear to be strengthen Government’s facilitation of rapidly abandoned without having an a more sustainable and equitable alternative arrangement identified that upland transition. The report also could take its place. Contrastingly, in provides input into the ongoing areas where markets have emerged dialogue under the umbrella of the along with improved infrastructure and joint Government-Donor Working demand for specific crops and Group on Uplands. marketing opportunities are driving farmers’ production decisions, it Resulting from a successful appears that upland farmers are cooperation of the Ministry of benefiting from this market demand Agriculture and Forestry (MAF), and the current policy framework Agence de Développement de France becomes less restrictive. However, (AFD), and the World Bank, the report some new challenges and policy gaps findings are based on joint field become apparent, for example, with missions and extensive discussions

3 with provincial- and district-level emerging agriculture production authorities in all provinces of the systems in the Northern Uplands as a Northern Uplands. The report also starting point of the report. Chapter III builds upon and complements recent summarizes the Government’s upland analytical work of the World Bank and and agriculture development-related other donors, including the Lao PDR policy framework, and Chapter IV Poverty Assessment Report 2006, provides an overview of the market Rural Issues Paper 2006, and Poverty impacts currently at work in the and Social Impact Assessment 2008 Northern Uplands. Chapter V discusses (forthcoming). The report does not the transition dynamics and pathways attempt to be an exhaustive treatment of individual agricultural production of the uplands development agenda. It systems and outcomes. It also includes does seek to emphasize some new and some considerations on the winners fast-evolving aspects of the uplands, and losers in the upland transition and particularly with regard to agriculture on the sustainability within the development and natural resource emerging production patterns. Chapter management, in a broader policy VI concludes with recommended dialogue context. options for policy adjustments and Following this introduction, Chapter II support interventions to help facilitate sets out a typology of traditional and the transition process.

4 Typology of Northern Uplands Agriculture Production Systems

Classification of agricultural systems, The typology of agricultural systems particularly swidden agriculture designated in this report does not take systems, which have been the most account of the full complexity of common land use system in the upland conditions and goes beyond Northern Uplands in the past, is traditional swidden systems. It complex as the subject of the differentiates production systems more classification is diverse and systems broadly on the basis of use of land are in many cases difficult to compare. available to the household. It identifies It can be based on a variety of criteria, two traditional (Group I and II) and six such as culturally traditional or integral emerging systems (Groups III through versus non-integral; new or partial VIII) and thereby aims at capturing the systems depending on whether farmers main transition trends as basis for a are indigenous people or new settlers; policy-oriented discussion of the duration of cultivation and fallow transformation of livelihoods. The periods; sedentary versus migratory typology, summarized in Table 1 at cultivation patterns; impacts of end of section A, is based on field cultivation on vegetation; and observations and discussion results geographical and local characteristics. with provincial authorities. For Lao PDR, van Gansberghe (2005) A. Traditional Agriculture Systems used the categories of rotational versus pioneering; forest fallow versus Group I – Traditional swidden savannah fallow; and integral versus agriculture. Forest-based swidden partial swiddeners to classify upland agriculture is usually integrated into a farming systems. Typologies that have diverse land use system that includes been used to describe systems in the permanent fields for certain crops in neighboring countries are mainly based the fallow areas, home gardening, on cultivation and length of fallow animal husbandry, and paddy rice periods and on settlement relocation cultivation in river valleys where land patterns, for example, in Thailand is available. Swidden agriculture (Karen Network for Culture and practiced by indigenous users can be Environment, undated) and Yunnan differentiated along initial vegetation Province (Yin Shaoting 2001). Other cover, type of final vegetative cover variables in many of these typologies remaining after users shifted to other include principle crops, crop parcels, and length of the fallow (forest associations and successions, crop- re-growth) period (Fujisaka and others fallow time ratios, head of livestock, 1996). These criteria emphasize the tools and techniques, vegetative cover forest-based nature of this type of of cleared land, climatic and edaphic agriculture and the importance of conditions, land tenure system, level of forest uses such as non-timber forest integration into market economy, products (NTFPs) and hunting.2 ethnic beliefs and traditions, level of conversion from swidden agriculture to sedentary agriculture (Conklin 1957; 2 See Annex B for a brief background van Gansberghe 2005). discussion of the academic and policy debate of swidden agriculture systems.

5 Swidden agriculture can be divided From their appearance and floristic into 3 subsystems: composition, the mature secondary forests are comparable to primary • Natural forest and medium forests; however, given the long fallow lengths (5-10 years toward history of swidden farming in this young secondary forest. This region, they are considered subsystem describes the most secondary nature. The main common form of traditional characteristics of this subsystem swidden agriculture, which is still are similar to the ones described practiced by indigenous above, with minor differences in communities of the various ethnic swidden plot size (smaller plots) groups across the Northern and an even higher importance of Uplands. It is characterized by the NTFP collection and use. dominant production of upland rice intercropped with many other side • Mature secondary forest crops (tubers, beans, fruits); toward agro-forestry with no importance of NTFP collection for fallow period. The conversion of subsistence needs in times of rice mature secondary forests to agro- shortages; hunting; animal forests by individual indigenous husbandry (pigs, poultry); and the users is a rare phenomenon in the near absence of paddy fields. Northern Uplands. Ducourtieux Cultivation practices are often (2000) reports about 10,000 characterized by the use of hand households participated in tools and the absence of pesticide introducing cardamom (Amomum and herbicide use. The final sp.) cultivation in Phong Saly vegetation cover of the swidden within the framework of a rural plots is natural forest vegetation, development project. Since which is quickly and profusely cardamom is a shade-tolerant regenerating in absence of larger species that requires a forest populations of ruminant livestock. interior climate to grow, its The medium fallow length ensures cultivation eventually leads to restoration of soil fertility agro-forests where a dense tree maintaining stable yields; any kind cover (about 70 percent of the of fallow improvements are original cover) remains. uncommon. The increasing In 2008, the area under traditional clearing of young secondary forest, swidden cultivation practices is apparent in many locations, estimated to account for 20-30 percent however, reflects the growing of total cultivated area in the Northern scarcity of mature secondary forest Uplands while about 70-80 percent of available for swidden agriculture. all farming systems are in a state of • Natural forest and long fallow transition showing response to market length (greater than 10 years) dynamics or upland policy toward mature secondary forest. implementation.3 One of the obvious This form of swidden agriculture is indicators is the decline in upland rice less common but still practiced by production, traditionally produced in indigenous communities in Luang swidden agriculture systems. Upland Namtha (e.g., Nam Ha Nature rice cultivation declined from an Reserve), Bokeo, and Phong Saly estimated 140,000 hectares in 1995 to where low population density and large forest areas ensure 3 Based on indicative figures of shifting availability of mature secondary cultivation reduction provided by the forests for swidden agriculture. Provincial Agriculture and Forestry Offices of the 9 upland provinces.

6 less than 70,000 hectares in 2005. and buffalo, and NTFP collection, During the same period, wet season which is not only important for food paddy rice cultivation expanded security but also provides for significantly. Production areas have construction material and for income nearly doubled during the past ten (e.g., sericulture and apiculture). years and in 2005 accounted for two- B. Emerging Production Systems thirds of the total rice production area in the Northern Uplands while upland Emerging production systems describe rice only accounted for about one-third all non-traditional systems where of the production area. However, more either indigenous communities or than 60 percent of all upland rice colonists convert secondary natural cultivation areas of Lao PDR are still forest and shrubland into permanent found in the Northern Uplands. agricultural cropland, plantations, or Traditional swidden farming practices grazing land/pastures. Colonists often can still be found in very remote areas include lowland farmers and private but are likely to be influenced within investors from neighboring countries the next 3-5 years as market access who either rent state land or encroach increases due to improving on land of indigenous communities. infrastructure and implementation of Group III – Fixed rotational the Shifting Cultivation Stabilization cropping. Fixed rotational cropping is Policy progresses and reaches out to emerging as the dominant non- these areas. Figures from Phong Saly traditional agriculture production indicate a reduction of 70 percent system throughout the Northern (from 26,000 hectares down to 7,700 4 Uplands. It represents a ‘stabilized’ hectares) within the last 7 years. form of traditional swidden agriculture Within the timeframe of one and is found on large areas on lower generation, traditional swidden and middle slopes throughout the systems that have shaped the Northern provinces. Fixed rotational cropping Uplands for centuries might disappear has emerged in response to the Land completely. and Forest Allocation Program (LFAP) Group II – Rain fed, wet-season rice that introduced land zoning and in valley bottoms. Traditional rain fed, allocation and fallow access wet-season rice cultivation and restrictions into the traditional systems. gravity-based irrigation of dry-season Each family labor force is generally rice with indigenous varieties, with allotted 3 to 4 permanent plots. Of minimal use of chemical fertilizer and these, the household is supposed to pesticides, and low levels of cultivate only 1 or 2 plots per year and mechanization are found on small scale allow for at least a 2- to 3-year fallow throughout the Northern Uplands. or rotation period. Contrary to the Overall extent of this system is small original intention, farmers often use all due to the limited suitable basin areas their allocated plots at the same time. for this type of land use. Rice Declining yields on one hand and cultivation is part of a broader diverse market opportunities on the other have land use system that often features contributed to the virtual elimination of elements such as home gardens, fish the fallow period with negative cultivation, raising of small livestock impacts on soil fertility (in the absence of mineral fertilizer) accompanied by

4 increased soil erosion as compared to Similar reductions are observed in: Xayabury, traditional swidden agriculture. Fixed Kenthao District, 92 percent reduction; Luang Namtha, Vieng Phouka District, 67 percent rotational cropping is still reduction; Oudomxay, Muang Hun District, 45 characterized by subsistence percent reduction.

7 production and based primarily on sesame. Annual cash cropping upland rice but cash crops (including generally involves the use of hybrid maize, cassava, Job’s tears, ginger, varieties; fertilizer and pesticides; the sesame, beans, and pigeon pea) are burning of crop residues for land being increasingly introduced by preparation; and plowing on steep farmers on small scale. Reduced or slopes (even mechanical plowing with absent fallow periods have on average tractors in southern Xayabury). also caused higher weed infestation As the most prominent of the new and insect and crop disease problems crops, maize production area has and led to higher labor requirements expanded nearly threefold over the past for weeding and, albeit still sporadic, decade from a recorded area of 23,000 application of pesticides. hectares (1995) to more than 66,000 Group IV – Modernized rice-based hectares (2005). The Northern Uplands farming. Modernized rice-based accounts for 75 percent of the increase farming represents a recent in production area in Lao PDR, most development in the wet-season, rice- of which occurred since 2002. based traditional farming system Provincial data shows that this described in Group II. The new system expansion has further accelerated and is characterized by wet and dry season some provinces have seen a doubling rice cultivation with mechanized in maize production area since 2005, plowing, high-yielding varieties, more with Xayabury, Oudomxay, and Bokeo intensive use of mineral fertilizer and having seen the most dramatic pesticides, and supplementary increases in production area. Farmers irrigation schemes (pumps, channels). in Northern Uplands produced an Irrigated dry season rice cultivation has estimated 297,500 tons of maize in been expanded to about 5,400 hectares 2005, compared to only 55,000 tons in across the Northern Uplands. Dry- 2002. In 2006, Xayabury Province season rice is however increasingly alone produced an estimated 147,000 being replaced by cash crops (e.g., tons. Maize is primarily being exported watermelon, maize, and chili). Since to Thailand, China, and Vietnam but the system is modernizing, it often also sold locally to domestic livestock expands to larger plots as compared to feed mills operating in Bokeo (Houay its traditional form and as farmers are Xai), Luang Namtha (Namtha), and beginning to specialize, other land use Houa Phan (Xam Nua) Provinces.5 elements of the traditional form are Many farmers who have adopted cash disappearing. cropping are unfamiliar with the Group V – Annual cash cropping in required agricultural techniques. By mono-cultures. Annual cash cropping applying cultivation practices in large-scale monocultures is inappropriately, in particular the emerging in many areas and application of pesticides,6 and by increasingly replacing upland rice and in some cases even paddy rice (e.g., in 5 Maize yields are reported to be in the range Meung Kham District and Beng of 5 to 9 tons per hectare per year. Production District). Cash-cropping is also costs are high (on average US$175 per hectare) beginning to encroach on young because of high input cost for plowing, seed regenerating forest and on (degraded) purchase, and chemical weeding. Returns to natural forest areas. Dominant crops in labor are reported to be in the range of US$2.25 per day. this system include maize; Job’s tears; 6 Paraquat and Atrazine, which are banned in sugarcane; and, to a lesser extent, rice many European countries, are the main bean (Vigna umbellata), black cowpea herbicides used in maize production areas of (Vigna unguiculata), peanuts, and Southern Xayabury. It is estimated that these pesticides are applied on 86 percent of the

8 recurrently cultivating the same plots papyrifera, different species of fruit with maize with no supplemental trees, and sometimes rubber. In fertilizer application or crop rotation addition, cash cropping is often with legumes, they are promoting combined with raising small livestock increased soil degradation and nutrient and fish. These agro-forestry systems loss and are unlikely to maintain the are characterized by higher current high yields.7 sustainability and lower economic risks as compared to monoculture cash Group VI – Annual and perennial cropping. However, due to lower cash crops in diverse agro-forestry. Annual and perennial cash crops returns and more complex cultivation integrated into diverse agro-forestry and harvesting practices, farmers are systems are applied by some swidden only applying the systems if they are agriculturalist as an alternative to provided with initial financial and technical support, often as part of upland rice cultivation. These systems 8 are based on familiar elements of the donor-financed projects. swidden system, such as small-scale Group VII – Industrial plantations of cultivation, intercropping, and NTFP perennial tree crops. Industrial collection. They feature a diverse mix plantations of rubber and teak—and, to of cash crops in small plot a lesser extent, eaglewood (Aquilaria) arrangements, including ginger, and eucalyptus—are becoming a cassava, pineapple, beans, sesame, common feature of the Northern pigeon pea, lemongrass, cucumber, Uplands. Rubber is the main species vegetables, and domesticated non- among the emerging tree crop timber forest products, together with plantations with 40,000 hectares planted and natural trees. The tree currently established and about component includes teak, Broussonetia 120,000 hectares being targeted for planting in Luang Namtha, Bokeo, maize area in Paklay District and 54 percent in Oudomxay, Xayabury, Phong Saly, Kenthao District. High quantities of these and Vientiane. Farmers often intercrop products (from 3 to 12 liters per hectare for young rubber trees with upland rice, paraquat, 3 kilograms per hectare for atrazine) maize, pineapple, groundnut, and and water (over 1,000 liters with pump spraying) were recorded [Programme de others during the first years after Capitalisation en Appui a al Politique de establishment. As rubber trees grow Developpmenet Rurale – Point d’Application taller and the crown density increases, du Sud du Sayabury (PASS)]. intercropping stops. An important 7 PRONAE-PASS, a partnership between implication of the rubber plantation NASFRI and CIRAD, promotes direct seeding, development for livelihood security is mulch-based conservation (DMC) agriculture and intercropping as alternatives to that a time gap between the end of monoculture cropping. The approaches show intercropping and the beginning of lower yields in the short run but higher labor rubber tapping (about 5 years) occurs productivity and better maintenance of soil when farmers have difficulty in fertility. The DMC approach is based on 3 generating income from the plantation principles: (a) no mechanical treatment of soils land. About 75 percent of the existing and no burning for land preparation, (b) crop plantations are grown under rotation, and (c) maintenance of permanent soil cover. Crop rotations and use of cover crops concession arrangements. Rubber also allow for reduced use of herbicides. The plantations, although only being new systems are slowly adopted by authorized on bare and fallow land, are smallholders and on a small scale due to lack of technological skills, equipment, and credit, and initial high labor inputs (PRONAE: 8 For example, Community-based Rural Development and Implementation of DMC Development Project for Sustainable Food Systems in South Asia – Case studies from the Security in Nga and Xay District, Oudomxay Lao National Agro-Ecology Programme.) Province (a German Agro-Action Project).

9 increasingly encroaching into existing poor and insufficient pasture/fodder natural forest areas. Rubber production management. About 87 percent of rural is also a high-risk venture as compared households in the Northern Uplands to other countries because Lao PDR is engage in large livestock production, outside the optimal range of growing of which about 38 percent sell rubber conditions (due to longer dry livestock. periods, higher elevations, and lower C. Geographical Clusters of temperatures). An example from China Production Systems in Box 1 describes a similar cultivation shift from tropical rainforest to The traditional and emerging industrial plantation—with positive production systems appear in four economic results but longer-term broad geographical clusters of negative results to the environment. subregions across the Northern Group VIII – Intensified production Uplands: of large livestock. Animal husbandry has always been an important element • Western part includes Bokeo, of the rural Lao household economy. Luang Namtha, Oudomxay, Livestock provides draught power for southernmost Phong Saly (Meung cropping and transport (cattle and Khua District), and northernmost buffalo), protein in household diets Xayabury Provinces, (pigs and poultry), and organic manure • Northern part includes Phong to maintain fertility of paddy and other Saly Province (excluding Meung cropping areas (large ruminants). Khua District). Livestock (large animals) represent a • Eastern part includes Luang financial asset to households and is Prabang (except for small parts used in socio-cultural events and along Mekong and lower Nam Ou village ceremonies as sacrifice. rivers), Xieng Khouang, and Houa Livestock is an easily liquidated asset, Phan Provinces. able to be sold in all seasons, in any • Central part includes the condition, and at any stage of maturity. Mekong and lower Nam Ou In remote areas with limited access, corridor in Luang Prabang cattle and buffalo can be walked to Province and the northern part of distant markets. The new trend Vientiane Province (Vang Vieng observable across the Northern and Kasi Districts). Uplands is the intensified production of large livestock, especially cattle These clusters are associated with (with new breeds such as Chinese similar agro-ecological conditions and Yellow); goats (mainly Katjang, elevation, similar farmer responses to common in Southeast Asia); and water market incentives, and outcomes of buffalo. The trend is characterized by priority implementation of certain uncontrolled forest grazing, foraging upland policies. Figure 1 shows with limited supervision, deliberate images of the traditional and emerging and repeated use of fire in forest areas agricultural systems. to induce growth of fresh grasses, and

10 BOX 1 Xishuangbanna: From Tropical Rainforest to Industrial Plantations within 3 Decades

Hevea brasiliensis was introduced into Xishuangbanna, southern Yunnan/China in the late 1950s. At that time, Xishuangbanna was characterized by a high coverage of tropical montane and lowland rainforests (approximately 60 percent) and large swidden agriculture areas for production of upland rice (approximately 50,000 hectares annually). In 1976, rubber plantations covered an area of 21,800 hectares and steadily increased to 57,700 hectares in 1982. After the land allocation in 1983/84, where large areas of land (especially swidden areas) had been allocated to villages, farmers started to plant rubber at small scale on their shifting cultivation lands (less than 1,000 meters above sea level), promoted by the state-owned farms, and the total area of rubber increased to 92,500 hectares in 1992. The emerging practice of renting out village lands to outside and local investors, combined with the influx of migrants from other areas, led to a new wave of rubber development.

By 1997, rubber plantations had doubled again to about 180,000 hectares. Rubber also went up the slopes up to 1,200 meters above sea level enabled by the introduction of new varieties that could stand lower winter temperatures. At the same time, natural forest cover decreased to 28 percent. Starting in 1998, as a response to nationwide flood disasters in 1997, the Government of China started massive efforts to restrict deforestation though several programs: the Natural Forest Protection Program, including a logging ban, and the Sloping Land Conversion Program. The latter program stipulated that fallow lands, which had been allocated in 1983/84 as shifting cultivation lands, needed to be re-classified as forest land if they have a tree cover of over 30 percent with trees greater than 8 centimeters diameter at breast height. The Government also stopped all public investment into rubber plantations. Still, the curbing effect on rubber development was short-lived. As prices for rubber increased, rubber plantations increased to 216,000 hectares in 2003 and an estimated 420,000 hectares in 2007 (Guo Huijin 1993; Zhu Hua 2008).

The impact on rainforest cover and plot size has been tremendous: tropical lowland rainforests have been reduced and fragmented from 2,306 patches with average size of 90.6 hectares in 1976 to 3,668 patches with average size of 18.9 hectares in 2003. In the same period, rubber plantations increased from 1,100 patches with average size of 19.9 hectares to 4,592 patches with average size of 47.1 hectares (Zhu Hua 2008).

A case study by Liu Wenjun (2005) in Menglun Township, Xishuangbanna, showed that the rubber plantations have expanded from 12 to 40 percent of total land area within 15 years. This expansion has generally occurred at the expense of forests and swidden agriculture, which decreased from 48 to 30 percent and 13 to 0.7 percent, respectively. The majority of rubber expansion was in the lowland areas where suitable microclimates and proximity to roads favored the development of rubber industry. Economically, all the villages showed an increased standard of living, the total net income of the township increased from 4 million to 44 million Chinese Yuan over the same period, most notably in the lowland villages. However, the increasing population and improved living standards may continue to place pressure on the environment and increase demand for limited resources, in particular forests.

In conclusion, Xishuangbanna is a model where shifting cultivation has been almost completely replaced by other forms of land use, most notably rubber plantations. This development, induced but not pushed by policies, was mainly due to market demands and private sector investment. The positive effects on living standards of the local population however come at high environmental costs. Long-term impacts also include negative effects on climate (Yoshino 1986), on carbon sequestration (Xiuping Zou and others 2005), and probably on the tourism industry. The heavy use of pesticides, fungicides, and insecticides in rubber plantations is also of serious concern.

The western part features basin and perceived as a policy implementation valley areas for paddy rice cultivation issue by the Provincial Agriculture and and larger areas of comparably lower Forestry Offices (PAFOs) and District elevations (300-800 meters above sea Agriculture and Forestry Offices level) with favorable conditions for (DAFOs) in these provinces. In planting rubber and teak. In general, addition, the transition to alternative the stabilization of swidden agriculture livelihood systems has progressed. A is much advanced and no longer higher forest cover has been retained

Table 1. Typology of Traditional and Emerging Agriculture Production Systems Characteristics Location Group I. Swidden agriculture Mostly in young/medium age secondary forests with medium to long fallow periods. In remote locations, Mainly upland rice but with many other crops (tubers, beans, fruits) as diverse land away from main use system. NTFPs important in times of rice shortage. No pesticide / herbicide use. roads and rivers Final vegetation cover usually natural forest vegetation, which quickly regenerates during fallow periods in absence of large livestock numbers. Long fallows ensure maintenance of soil fertility; stable yields. Fallow improvements not common. Initial vegetation cover Resource user Final vegetation Fallow length Young secondary forest Indigenous Natural forest 5-8 years common communities (medium) Mature secondary Indigenous Natural forest > 8 years forest less common communities (medium to long) Mature secondary Indigenous Agro-forest None forest rare users Group II. Paddy-rice cultivation Rain-fed wet season rice; and gravity-based irrigation during the dry seasons; Small areas in Houa traditional rice varieties, minimal use of chemical fertilizer and pesticides; low Phan levels of mechanization. Group III. Fixed Rotational Cropping Stabilized form of swidden agriculture; 3-4 plot system; often only on lower /middle Throughout Northern slopes. Upland rice but with cash crops on small scale. Nearly complete elimination Uplands along roads of fallow periods; declining yields, beginning market opportunities; negative and rivers impacts on soil fertility and soil erosion; increasing weeding requirements requiring the use of pesticides for weeding. Group IV. Modernized rice-based farming Evolving from traditional systems (Group II); mechanized plowing, high yield Vientiane varieties, mineral fertilizer, pesticides, supplemental irrigation; dry-season rice replaced by cash crops. Group V. Annual cash crops in monocultures Large-scale monocultures replacing upland rice; beginning encroachment into young Maize: Meung Kham, regenerating/natural forest; primarily maize, Job’s tears, sugarcane; to a lesser extent Beng, rice bean, black cowpea, peanuts, sesame, cassava; use of hybrid varieties for maize, Meung Houn, Nalae, fertilizer and pesticides, burning of residues for land preparation, cultivation on Southern Xayabury, steep slopes, sometimes with tractors; often inappropriate application of new Job’s tears: Luang technologies; soil degradation and nutrient loss, decreasing yields; possible Prabang improvement through direct seeding, mulch-based conservation and intercropping Sugarcane: Phong but currently on very small pilot scale. Saly Group VI. Annual/ perennial cash crops in agro- forestry systems Mix of cash crops on small plot arrangements with distinct tree component; Around Oudomxay practiced as alternative to upland rice but based on familiar elements of swidden provincial capital; system (small-scale, intercropping, and NTFP collection); high sustainability and Southern Phong Saly low economic risks; more complex cultivation and harvesting practices; farmers require significant support financially and technically. Group VII. Industrial plantations of perennial crops Small to large plantations of rubber, teak, eaglewood, tea and Eucalyptus, often in Vientiane, Luang concession arrangements; rubber plantations replace existing natural forest, Prabang, Bokeo, encroachment into forest areas; limited intercropping initially possible; uncertain Southern Xayabury, how farmers bridge period before rubber tapping begins.. Oudomxay Group VIII. Intensified production of large livestock Production of cattle and goats (new elements in the Northern Uplands) and buffalo Xieng Khouang, with mainly traditional practices: free forest grazing, foraging with limited Luang Prabang, Houa supervision, deliberate use of fire in forest areas to induce growth of fresh grasses, Phan and poor pasture/fodder management. Provinces

Figure 1. Images of Traditional and Emerging Agriculture Production Systems

Traditional swidden system Traditional rain-fed paddy rice

Fixed “stabilized” rotational agriculture Annual monoculture rice cropping

Rubber plantation development Intensified livestock production

13 during the transition as compared to dominant agricultural production other subregions due to the availability systems are traditional swidden of fertile basin areas for agriculture. agriculture and, more recently, Exceptions are found in the new maize stabilized fixed rotational cropping in districts of Meung Beng and Meung areas of LFAP implementation. Houn in Oudomxay, and the rubber boom areas near Meung Sinh and The eastern part is characterized by Luang Namtha town of Luang Namtha plateau areas with elevations of over Province. Agricultural systems are 1,000 meters above sea level and also characterized by the pre-eminence of by limestone mountain areas and ‘stabilized’ fixed rotational cropping of broader river valley bottoms. upland rice and cash crops and Stabilization of shifting cultivation is industrial tree plantations. Diverse still perceived as an issue and focus of agro-forestry systems are practiced at policy implementation. As a coping small-scale in Oudomxay and Southern strategy to land use restrictions, Phong Saly (Meung Khua) in areas livestock production is a new element where marketing options for specific in its intensified form. Fire is often crops and non-timber forest products used to promote growth of forage in exist because of good road and river previously forested areas. The transport infrastructure and proximity landscape has been dramatically to cross-border markets transformed by fire dynamics, and overgrazing has led to the near The northern part is distinct due to complete removal of natural shrub and high elevations of 800-1,400 meters forest vegetation. Rubber and teak above sea level, virtual absence of plantations are absent. Maize lowland areas for rice paddies, and monocultures dominate in Meung unfavorable conditions for planting Kham District and areas close to the rubber and teak, except in small basin Vietnamese border. areas of Buon Tai and Buon Neua. It is characterized by poor infrastructure; as A small central part is located along a consequence, market dynamics main rivers in tourist centers where emerge only in the more accessible off-farm income plays an important areas. Swidden agriculture as well as role. Here, teak plantations are opium cultivation are still perceived as common. problematic issues by local authorities and are focus of current policy implementation efforts. To date, only 50 percent of the province’s villages have gone through the Land and Forest Allocation Program. Out-migration trends combined with restrictions on land access on previous upland fallows and restrictions in land use are presently leading to larger-scale natural regeneration of fallow lands and young secondary forests.9 The

9 Interview with PAFO & Vice-Governor of Phong Saly.

14 Upland and Agriculture Policy

The Government’s vision for the Lao well as agriculture, forestry, and rural sector is to reduce the disparities fisheries development.11 Aiming to between rural and urban areas by achieve the NSDEP-set goals and enhancing transport and targets, an Elaborated Plan, consisting communications networks and by of 11 national programs and 111 focus improving the living conditions of the projects, details some of the NSDEP rural population in remote areas. A policy directions. This plan was specific element in this strategy is the compiled by Government to implement geographical targeting and the the resolution of the 8th Party prioritization of 47 “very poor” Congress of March 2006. districts across the country, of which The NSDEP and the Elaborated Plan 32 are located in the Northern Uplands, make multiple references to upland mostly remote upland districts with development, agriculture development, poor infrastructure which are eligible as well as rural poverty reduction and for special poverty reduction programs. include a mix of partly duplicating and This approach of geographical sometimes overlapping output targets, targeting clearly reflects the policy statements, and specific sector Government’s recognition of the need interventions and activity proposals. to increase poverty reduction efforts in Three elements however, emerge as remote upland areas and to reduce the main cornerstone of the inequalities between different ethnic Government’s upland development 10 The vision for groups in Lao PDR. approach which envisages a far- the agriculture sector, primarily reaching transformation of agriculture directed at the lowlands of Lao PDR, is and rural resource use and to transform agriculture into a thriving management: sector based on innovative technologies and practices in high • Land and Forest Allocation value-added production and Program processing, catering to domestic and • Stabilization of Shifting international markets. The Government Cultivation Policy has moved forward on upland poverty and agriculture policy with its National • Village Cluster (Koum Baan) Socioeconomic Development Plan and Development Elaborated Plan and other programs These programs and policies re- and interventions. enforce each other and are A. National Socioeconomic implemented at the grassroots level. Development Plan 2006-2010 and The outcomes of the implementation of Elaborated Plan these programs and polices are discussed in Chapter V. The Sixth National Socio-Economic Land and Forest Allocation Program. Development Plan (NSDEP) 2006- Initiated in 1993, the Land and Forest 2010 includes aspects of upland area as Allocation Program was an exercise in

10 The Priority District Approach is reviewed in detail in the Poverty and Social Impact 11 Committee for Planning and Investment, Analysis (World Bank, forthcoming). NSEDP (2006-2010), Vientiane, October 2006.

15 rural land zoning.12 Implementation of cultivation of upland rice—has the LFAP has been largely completed actually led to increased vulnerabilities in the Northern Uplands, except for and rice shortages in a number of Phong Saly where the program has upland areas. Nevertheless, the covered only about half of all rural Government is committed to halt all villages. The major LFAP objectives forms of shifting cultivation by 2010 are to promote sustainable or earlier. management and use of natural Village Cluster (Koum Baan) resources, prompt reduction and Development. The Village Cluster gradual elimination of shifting Development represents the cultivation, and encourage commercial 13 Government’s policy and approach of agriculture production. The LFAP making development services available involves a village-level planning to scattered and remote upland exercise that includes forest and communities that would otherwise not agricultural land use zoning; land be reached with the limited resources suitability assessments; demarcation of at hand. Its long-term development village boundaries; formulation of objective is to improve the provision of management regulations and hand-over public services, including education, of management responsibilities to health, electricity, market access roads, villages; and plot measurement and and communications. Most emerging allocation of permanently used land village cluster areas are located along plots (e.g., paddy fields, gardens, rural roads and highways, and many orchards, plantations, and residential have been provided with improved areas) with temporary land use rights health and educational facilities. In to individuals, villages, and 14 addition, the Village Cluster commercial organizations. Development is also seen as a new way Stabilization of Shifting Cultivation of further decentralizing administrative Policy. The elimination or stabilization support from the district level to the of shifting (swidden) cultivation by grassroots level. The Village Cluster 2010 is among the many targets of the Development has emerged from the NSEDP with the purpose of previous Focal Site Development. In transforming subsistence farming into recent years, the relocation of upland sedentary market-oriented commercial communities closer to road agriculture and improving food infrastructure and other public services security in rural areas. The policy— has been closely associated with the originally aimed at halting pioneering objectives of the Land and Forest shifting cultivation in natural forest Allocation Program and the areas but soon rendered into a Stabilization of Shifting Cultivation complete ban of shifting cultivation Policy. Within the Village Cluster with a strong bias against the Development, the allocation of land continues to be a contentious issue, 12 Initiated under MAF Instruction No. 822/AF, especially as most of fertile arable land Land-Forest Allocation for Management and suited for paddy rice production has Use. for many generations already been 13 Lao Swedish Forestry Program, 2004. occupied, predominantly by ethnic Participatory Land Use Planning and Land lowland Lao. Resettled households Allocation. National Agriculture and Forestry Research Institute (NAFRI). Vientiane. have often not had access to 14 The monitoring and evaluation stage of the agriculture land or paddy areas that are LFAP process has not been implemented. To suited for lowland rice production. date there has been no systematic assessment This has resulted in increasing rice of the outcomes and impacts of the LFAP.

16 shortages. As a result, communities are strengthening transparency in timber often temporarily returning to old sales procedures and promoting value- swidden areas and resorting to upland added domestic processing of timber. rice cultivation. The elements of the upland policy Two other policy objectives are framework as included in the NSDEP relevant to upland agriculture and Elaborated Plan are summarized in development. the Box 2. Industrial tree crop plantations. A B. Agriculture and Forestry Sector number of focus projects promote Strategy – 4 Goals and 13 Measures industrial tree crops, particularly the establishment of rubber plantations, The Ministry of Agriculture and which is often undertaken with support Forestry has formulated 4 Goals and from private firms from Lao and 13 Measures to execute the resolution th neighboring countries, usually through of the 8 Party Congress and achieve contract farming arrangements. Each NSEDP targets under its responsibility. northern province and some districts The goals and measures represent have set area targets for rubber and agriculture and forestry sector strategy other plantation trees. In some and incorporate most above-mentioned provinces, land concessions have been policies, programs, and projects. granted for establishment of rubber and The 4 Goals are: other plantations. Goal 1, Food production/security. Forest management and timber This goal’s targets include achieving industry development. Government an agricultural sector growth of 3.4 stresses the importance of the percent annually; per capita annual country’s forests for rural development food production of 400-500 kilograms and has developed a comprehensive (corresponding to 3.3 million tons of forestry strategy. Specific policy paddy rice); increased food supply in objectives advocate for the the 47 poorest districts to the national maintenance of the natural forest cover average of 350 kilograms per person for rural livelihoods, assurance of per annum; and increased production adequate water supply, and mitigation of meat, eggs, fish, and fresh milk by 5 of natural disasters. The objectives also percent annually, corresponding to an include to ensure a sustainable stream average consumption demand of 40-50 of diverse forest products for domestic kilogram per capita per year. processing, consumption, and exports; and to preserve forestry biodiversity. Goal 2, Commodity production. This This would be met through identifying goal seeks to achieve a steady supply and delineating the national forests of raw materials and agriculture and estate along production, protection, forestry products going to the domestic and conservation forests; completing processing industry and to increase the of mandatory forest inventories and export share of agriculture and forestry management plans prior to the products to 30 percent of total exports authorization of harvesting operations (approximately US$1 billion) by 2010. in production forests; closing forest Goal 3, Stabilization of shifting areas for commercial use until cultivation. This goal seeks to achieve approved management plans are in the elimination of upland shifting place; devolving management cultivation practices as specified under responsibilities to communities; and the NSDEP and Elaborated Plan. It is

Box 2. Policies, Programs, and Interventions of NSDEP and Elaborated Plan for Agriculture and Upland Development

Elaborated Plan - Program 2 • Land allocation and land development for agriculture • Rice production to ensure food security by promoting intensive cultivation in 7 large flat land areas and 14 small flat land areas • Development and management of water and water resources • Expansion and improvement of irrigation systems to ensure their sustainability • Plantation of industrial and commercial crops, such as rice CR 2003, organic coffee, corn, sugar cane, beans, tobaccos, vegetables and fruits, cotton, etc. • Organic agriculture (clear and organic agriculture, pollutant and pesticide free agriculture); good practice; and integrated agriculture • Livestock and poultry for domestic consumption and export • Cattle and goats production for poverty reduction for poor families in uplands • Aquaculture and fish raising • Establishment of centers for livestock breeding, animal food production and fish hatchery • Control of insects and animal decease • Promotion family business and establishment of cooperatives and production groups • Skill development for farmers • Promotion of marketing of agriculture production

Elaborated Plan - Program 3 • Improvement of wood processing factories with promotion to produce finished products for exports • Rehabilitation and development of forest resources for the economic purpose and environmental protection • Promotion of commercial tree plantation, such as teak, agars wood, rubber, eucalyptus, etc. • Harvesting and processing of NTFPs in conjunction with plantation and rehabilitation of such resources • Conservation of forests and biodiversity, such as protected areas and endangered species • Plantation of medicinal trees and plants • Land survey and land allocation

Elaborated Plan - Program 6 • Alternative employment to replace shifting cultivation • Resettlement and allocation of permanent production land to resolve shifting migration of ethnic communities • Improvement of management and use of poverty reduction funds to eradicate poverty in communities (loan by World Bank) • Support government funds for village development and provision of credit for production and service to generate income and to alleviate poverty • Development of the old revolutionary-army base • Promotion and mobilization of all economic sectors and social strata to participate in poverty eradication • Survey and data collection on poverty and to set standard

18 Measure 3, Seed and breed availability. This measure includes improving seed varieties, with seen as the main strategy of poverty emphasis on rice and coffee varieties; reduction in the 47 poorest districts, as improving animal breeding through well as important for improved hybrid breeding; improving grass seed environmental protection. for forage; and enhancing investment, Goal 4, Sustainable forest training, and marketing. management. This goal’s target includes increasing forest cover from Measure 4, Extension and technical the 41.5 percent to 53 percent of the services, and human resources total land area (or from 9 million development. This measure includes hectares to 12 million hectares) by promoting high productivity and low- 2010. Plantations of rubber, cost investment production techniques eucalyptus, teak, and other tree crops and technologies; DAFO capacity will contribute to this goal as part of building and development of technical the MAF reforestation program. staff and establishment of technical and information service centers for The 13 Measures are: village development groups.

Measure 1, Agriculture and forestry Measure 5, Establishment of village sector perspective. This measure development groups linked to sector includes executing the Resolution of development. This measure includes the 8th Party Congress on the implementing the Politburo Order on Agriculture and Forest Sector and the establishment of village cluster enhancing cooperation to support and development groups (koum ban understand responsibilities, ownership, patthana) with the objective of moving and ways of implementing the development toward the grassroots agriculture sector’s development level. priorities from now to 2010, particularly focusing on the process of Measure 6, Organizing production establishing village and development and establishing economic structures groups. from local/ grassroots levels. The measure includes strengthening Measure 2, Survey and allocation of production groups in pilot areas to agriculture and forestry production enable formation of production zones. This measure includes zoning cooperatives; developing cooperative for rice production and increasing services, marketing systems, productivity in irrigated and non- processing services, communications, irrigated areas; zoning for intensive and savings and credit opportunities; agricultural production and and formulating relevant procedures. development of a new cooperative system; reviewing of land/property Measure 7, Irrigation and prevention lease policy; completing forest land of droughts and floods. This measure allocation; and formulating detailed includes allocating irrigated areas for policy and measurements to strictly integrated agricultural development enforce and manage protected areas, zones; implementing integrated watersheds/upstream/water sources agriculture properly; improving and and other areas. expanding reservoir systems to mitigate droughts and floods; maintaining irrigation pumps; and

19 promoting use of energy efficient pursuing the rationalization of pumps. agricultural production patterns in upland areas. At the same time, Measure 8, Increase productivity. poverty reduction, while being an This measure includes supporting more important national goal, is regularly intensive use of agricultural techniques construed in the Government’s policy to increase agricultural and forestry documents as an outcome of the productivity through application of primary national goals of economic fertilizer, compost, improved seeds, growth and transformation, and it is and advanced technology. not the only goal of agricultural development. While the primary Measure 9, Quality control and objective of the agriculture sector disease prevention. This measure aims includes increased food production to improve bio-safety of food for (including promotion of national rice consumption and ensure compliance self-sufficiency) as well as increased with the Association of Southeast availability of agricultural raw Asian Nations (ASEAN) and World materials for processing and export, it Trade Organization (WTO) procedures is likely that there are trade-offs with and principles. poverty reduction goals. Measure 10, Financial mechanisms. Findings also suggest that equity This measure includes improving the considerations have not been the use of assistance provided by primary consideration in policy development partners and internal and implementation. While agriculture external public and private investment. (upland agriculture in particular) has been the main driver in rural poverty Measure 11, Achieving economies of reduction over the past 10 years, scale in production (lowering official data demonstrate a continuous production costs). This measure decline in public expenditure in includes doubling productivity by agriculture, whether measured as a expanding the production of goods percentage of national or agricultural with a comparative advantage; GDP, or in absolute amounts.15 In applying modern technology; using 2000/01 and 2004/05, public energy more efficiently; and expenditure on agriculture averaged developing policies and quality control almost 4.5 percent of agricultural GDP. measures to support production. However, the figure showed a near- consistent downward trend over the Measure 12, Implementation of five years, from over 8 percent at the monitoring and evaluation. start of the period, to one-third of this figure (2.6 percent) by the end of the Measure 13, Decentralization. This analysis period. As a proportion of measure includes instituting a total national GDP, agricultural management hierarchy that supports expenditure fell from 4.3 percent to 1.2 collaboration among the Government, percent, which portrays a worrying people, and economic sectors. decline in the amount of public resources being spent on agriculture C. General Policy Implementation relative to its value added. Issues

Under the framework of the 4 Goals and 13 Measures, the Government is 15 Government of the Lao PDR, Various years, Official Gazette. Special issues I and II.

20 In addition, from an equity perspective, private commercial investments. In the Government’s growth-oriented fact, provinces often adopt an agriculture investment policy directs opportunistic approach to agriculture the bulk of all public expenditure to the development that seeks to take productive lowlands, which are seen as advantage primarily of private sector the vectors of the country’s economic investments into the Northern Uplands; development. This creates significant priorities are adjusted according to disparities between lowlands and investor choices. In addition, uplands. In general the better off regardless of policy intent, actual provinces with lower poverty policy implementation performance is headcounts and a higher Human often determined by the availability of Development Index (HDI) appear adequate numbers of staff. among top recipients of agriculture The policy of creating sedentary public spending, with only few upland livelihoods for ethnic groups, who provinces with low HDI rankings and have only ever practiced shifting high poverty headcount (e.g., Luang cultivation, has been shown to have Namtha and Bokeo) receiving some serious impact on food security. high per capita recurrent agricultural Although the LFAP has attempted to spending. More equitable agricultural introduce more secure land tenure for public expenditure could be expected upland communities, the program has to have a positive impact on poverty resulted in food insecurity for many. reduction in those provinces where The LFAP was implemented too poverty levels remain the highest. rapidly in many areas. As a result of While the 4 Goals and 13 Measures being target-driven, policy provide a general guidance to the implementation has led to PAFO and DAFO and other MAF complications for villagers in the form personnel responsible for of inexperience with traditional implementing agriculture development shifting cultivators in paddy interventions, the provincial production, insufficient consideration implementation progress and of soil and land capability as well as performance varies, indicating that limited availability of paddy land, and central-level control in policy social tensions resulting from implementation is weak. At the relocation of upland communities into provincial level, in spite of a strongly lowland areas. asserted commitment to the national There are also widespread technical agenda and national agricultural misunderstandings and issues in policy, implementation is often selecting adequate means for achieving compromised for logistical and set objectives. Senior administrators in budgetary reasons. Houa Phan Province saw cattle and Provinces and districts generally affirm buffalo grazing in rehabilitating forests that they are working within the as a legitimate method of accelerating framework of the 6th NSEDP and the 4 reforestation. Table 2 summarizes how Goals and 13 Measures. However, different provinces have implemented provincial autonomy enables provinces national policy goals. and districts to put forward their own interventions based upon local perceived needs, but the final configuration is often determined by the availability of donor funding and

Table 2. National Policy Implementation at the Provincial Level Province Northwest Food production Commodity Stop slash & burn Sustainable production forestry Bokeo • Expansion • Expansion • Not • In of irrigation of irrigation perceived as compliance with critical issue policy but using industrial trees to reforest Luang • Focus on • Highest • LFAP • Natural Namtha rice production priority completed but not forests being • Livestock • Contract respected in all converted to raising not a farming as tool to areas industrial trees priority as it promote cash crops • LFAP • Threat of conflicts with tree now lowest rubber invading plantations priority National Biodiveristy Conservation Areas Xayabury • Expansion • Focus on • Shifting • In of irrigation maize mono- cultivation compliance with cropping dominated by policy but using • Some maize production industrial trees to districts aim to • Maize reforest replace maize in moving into forest • Maize light of soil areas moving into forest degradation and • LFA areas low productivity complete, not • Extensive respected logging • 42% forest cover Oudomxay • Expansion • Maize • In • Some of irrigation but becoming a compliance with logging targets have not monocrop policy, • Using been achieved due • Push: • Highest industrial trees to to lack of rubber dominates priority, regulation reforest resources • Lack enforced, but 20% • Weak resources no LFAP; PAFO commitment • Market unsure about • Food problems in some alternatives; security an issue districts opium continues; in some districts and livestock, • Push-pull rubber only leading to alternatives livestock Luang • Expansion • In • Significant • Soils not Prabang of irrigation compliance with deforestation in suitable for forest • Livestock policy northern area of trees in northern promoted only • Teak is province area of province where grazing cash crop • Main • Possible land is available • Rubber tree agricultural only if slash & concessions, using problem in the burn stops fiscal policy to province • Using control • 9 options industrial trees to to solve reforest

22 Table 2. National Policy Implementation at the Provincial Level Province Northwest Food production Commodity Stop slash & burn Sustainable production forestry • Target too high Phong Saly • Limited • In • In • Population land available for compliance with compliance with expansion & food production policy policy, but not demand for land • May be • Rubber, possible to end by for commercial one cause of out- cane, tea 2010 crops yield forest migration • Supporting • 85% encroachment • Rural food security success • Forest households buying • Links to • No land cover equaled food market yield available for 23.55% (2002); • Livestock survival LFAP, 47% 50% by 2010 lack breeding • Contract complete stock farming issues, re- • May be • Livestock negotiate one cause of out- less important agreements migration than rubber in • Improved some districts roads yield agricultural development Vientiane • In • In • In • Using compliance with compliance with compliance with industrial trees to policy policy policy reforest • Irrigation • Vientiane market dominates Houa • In • In • In • In Phanh compliance with compliance with compliance with compliance with policy policy policy policy • Irrigation • NTFPs, • Village • Relocating • Strong maize, tea, beans, cluster villages from focus on livestock fruit but only small • LFAP watersheds • Change volume possible implemented only emphasis from without irrigation when project rice to cash crops • Strong funds are available market pull from • Several China, Vietnam pilot projects led • Good by governor contract farming • Focus on models cash crops Xieng • PAFO • Improved • LFAP not • First Khouang operations pasture yields implemented; only priority of conform to reduced poverty 96 out of 400 provincial provincial through livestock villages complete governor is to development • Limited • No rules, protect strategy: livestock support & no enforcement, economically is high priority recognition of no budget valuable trees • Pasture maize revolution • First development first priority of • New cattle provincial breeds from governor Vietnam

Emerging Market Dynamics and Impacts

Regional market dynamics reinforced China are beginning to shape the by traditional cross-border trade environment for private sector linkages and geographic determinants commercial activities in the Northern of comparative advantage are the Uplands. principal drivers in the transition Ayerwaddi-Chao Phraya-Mekong toward market-oriented agriculture in Economic Cooperation Strategy the Northern Uplands. The penetration (ACMECS). The 2003 plan of action of the market pull into the Northern promotes bilateral trade and Uplands is closely associated with the investment between Thailand and increasing availability of road Cambodia, Lao PDR, Myanmar, and infrastructure and market proximity Vietnam. Investments in the form of while a broader enabling framework contract farming have been the major for expanded investment and trade in vehicle for producing agricultural agriculture has yet to evolve from its products. As part of the strategy, current rudimentary base. The LECS several border areas in Cambodia, survey data of 2002/3 indicate that Myanmar, and Lao PDR, including market development is nascent—25 Bokeo and Xayabury in the Northern percent of all transactions is taking Uplands, have been designated or are place through barter; nearly 60 percent being discussed for the promotion of of household consumption is self- contract farming for Thai companies produced; only 12 percent of the main for a variety of agricultural crops and staple (glutinous rice) is traded livestock. Thailand has also eliminated compared with 60 percent of rice import tariffs for many agricultural traded in Vietnam a decade ago; and crops. the majority of crop-producing or livestock-rearing households do not China-ASEAN Trade in Goods (TIG) sell crops or livestock. However, Agreement. Signed in 2005, the TIG although not reflected in the latest Agreement marks an important step available survey data but supported by toward forming a China-ASEAN Free information from provincial authorities Trade Agreement (CAFTA) by 2010, and field observations, market and with a combined population of 1.8 development and commercialization billion will form the world’s third have considerably accelerated during largest free trade area after the the last five years and are expanding European Union and the North into upland areas. America Free Trade Agreement (NAFTA). Under the TIG Agreement, A. Regional Trade Agreements and China eliminated tariffs for Strategies approximately 600 agricultural raw Besides the progress made in recent material imports from Lao as of years in improving transport and January 1, 2006. China continues to communication infrastructure, free impose a 20 percent tariff on rubber trade agreements among Greater imported from Lao PDR to protect its Mekong Subregion (GMS) member domestic rubber production. While the countries and bilateral and multilateral TIG Agreement and the zero tariff trade and investment initiatives policy for Lao products are not launched by Thailand, Vietnam, and specifically aimed at promoting

24 contract farming, they serve as by the purchaser and a commitment important incentives for Chinese on the part of the company to traders, investors, and agro-processors support the farmer’s production to source agriculture products and raw and to purchase the commodity materials from the Northern Uplands (Eaton and Shepherd 2001). for export. • Land concession is used in In addition, ongoing customs reforms different and sometimes and harmonization of trade regulations inconsistent ways but generally within the GMS are facilitating the refers to arrangements when expansion of cross-border trade and foreign or domestic enterprises investment. The GMS Business Forum are granted leases of large areas has prepared a Customs Code of land for commercial Comparison that summarizes production of cash crops or regulations and procedures for the plantation forestry. imports and exports of each GMS Annex C provides a list of contract country. The GMS member countries farming arrangements in the Northern have adopted the Harmonized Uplands. Government policy, as stated Commodity Description and Customs in the NSDEP, encourages private Coding System that serves as a initiatives, including those by foreign classifying procedure for goods investors and traders from neighboring entering through Customs as imports countries to promote contract farming, and leaving as exports, covering all especially in horticulture and tree commodities that are traded among crops. In the absence of clear GMS member countries. guidelines from the Central B. Contract Farming Arrangements Government, namely the Ministry of and Land Concessions Agriculture and Forestry and the Ministry of Planning and Investment, The emergence of contract farming during the early stages of contract arrangements and land concessions are farming development in the Northern the recent most notable features of the Uplands (beginning in 2003 and on a commercialization of upland larger scale in 2004), provinces and agriculture in the Northern Uplands. districts were required to be innovative Contract farming arrangements and in their dealings with domestic and land concessions can be distinguished foreign investors interested in along the following definitions: contractual arrangements. A number of • Contract farming refers to models have been tested with a agreements between farmers and mixture of results. Only a few models processing and/or marketing firms have emerged that merit further for the production and supply of consideration as standards that may agricultural products under forward meet the needs of local farmers and agreements, frequently at provincial and central authorities predetermined prices. The controlling business and commerce arrangement also invariably under their jurisdictions. involves the purchaser in providing 2-plus-3 Model. The most common a degree of production support and approach used is the ‘2-plus-3 model’ technical advice. The basis of such wherein farmers provide the land and arrangements is the commitment labor to cultivate the crop and the on the part of the farmer to provide commercial enterprise supplies capital a specific commodity in quantities investment (planting material and and at quality standards determined fertilizer), technology transfer to

25 farmers and technicians (training), and management is left in the hands of access to the market. The ‘2-plus-3’ local marketing group leaders, usually model has become a model strongly lead farmers who are known and promoted by MAF policy and gained respected by the community. The even more attention after May 2007 enterprise partner benefits from this when the Prime Minister announced a arrangement by not having to deal moratorium on land concessions. directly with individual farmers and The principal modalities of the ‘2-plus- having harvesting and transport 3’ arrangements are something in organized by local farmers between contract farming representatives. arrangements and land concessions, More recently, the model has been not fitting one or the other definition. criticized for farmers’ lack of The contractual arrangements are participation and their dissatisfaction usually made between provincial or with the arrangements (Vongkhamor district authorities and private firms and others 2007), particularly in the entailing the production of a certain case of rubber planting as farmers in commodity on a certain number of remote areas with limited alternative hectares in a certain area (e.g., income sources cannot afford the district).16 Local authorities facilitate prolonged uncompensated labor input the participation of smallholder during the pre-tapping stage of 7 to 8 producers in the schemes in different years (Weiyi Shi 2008). In addition, ways that range from incentives to field observations indicate that the ‘2- compulsory participation by setting plus-3’ arrangements—free land, production targets. Arrangements cheap labor, and the shared risk of between Chinese companies and local economic failure—can provide huge government in Luang Namtha and subsidies to commercial investors at Oudomxay include negotiated benefit the expense of the smallholder. In this sharing on plantations, with collected way several shortcomings in the Lao rubber being split between enterprise business environment, especially the and smallholder by 50:50, 60:40, or lack of long-term land tenure security, 70:30, etc. depending on the which would be the main limiting arrangement; an example of such an factor for private investments, are arrangement is discussed in Box 3. conveniently overcome. Furthermore, Throughout literature, the ‘2-plus-3’ private investors from neighboring formula is generally assessed as a countries receive even more policy valuable alternative to land incentives and generous subsidies from concessions and as a model that their own governments. The Chinese ensures benefits are divided between government, for example, owing to smallholders and investors in a scarcity of suitable land, encourages reasonable way. Smallholders should rubber planting in the Northern benefit under these arrangements Uplands through the Opium through access to credit, markets, and Replacement Special Fund. technical assistance made available through a company. Village-level

16 Because of the need to raise inputs locally, contract farming arrangements for rubber in Luang Namtha sometimes involves small land concessions on the order of tens of hectares (Vongkhamor and others 2007).

26 Box 3. Contract Farming for Rubber in Namo District, Oudomxay Province

The contract for rubber farming, signed in March 2006 between the Head of Namo District and the director of Ying Jiu Pa Company, is a typical arrangement under the ‘2-plus-3 scheme’. Copies of the contract were distributed among different provincial and district offices as part of the committee that approved the investment plan. The contract stipulates that the company provides seedlings and technical support and purchases the latex when tapping begins. Farmers are obliged to provide land and labor. The 60:40 profit-sharing arrangement is 60 percent for farmers and 40 percent for the company for the rubber as well as the timber once the trees stop producing sufficient latex (usually around 30 years of age). The price for rubber is set at the actual market price, but a floor price of US$750 per ton is guaranteed in the contract. The contract is valid for 30 years with an option for extension of an unspecified length of time.

The majority of farmers interviewed in Namo expressed their dissatisfaction with the profit-sharing arrangement. The unhappy farmers thought that a 70:30 arrangement (70 percent for farmers and 30 percent for the company) would be more appropriate given that the farmers provide the main source of labor throughout the life of the tree. Therefore, many farmers hesitated to enter into the agreement with the company. On the other hand, the head of the District Agricultural and Forestry Extension Office (DAFEO) mentioned that the 60:40 arrangement allowed the company to recover initial investment costs, including the development of a processing factory and feeder roads to the plantations that would potentially provide benefits for other farmers and the district.

Other issues have arisen over the contract. There are discrepancies in the contract about stated rubber farming . in a single village or all of Namo District. Individual contracts for households were not developed. According to the existing contract, the Ying Jiu Pa Company seeks to plant rubber in a total of 6,700 hectares in the district. However, they are only approved to plant on 2,500 hectares during 2006-2009. The contract does not include a map indicating the area, nor an assessment of total land that was found suitable for planting rubber in the district. The contract also states that if the 2,500 hectares are not planted within the time specified (2006-2009), the district authorities have the right to nullify the contract.

Other aspects are unclear. The district government has the right to follow up, examine, and evaluate the environmental impacts of the contract rubber farming without further specifying the agencies nor the process for doing this assessment. So far, there has been no environmental or social impact assessment. The contract also says that the district government has the right to benefit from the investment of the company, without further clarifying what are the benefits. The company is supposed to provide social welfare, and secure health and safety of the company’s workers. Part II, Article 2 of the contract serves to protect the two parties, the district government, and the company; however, protections of farmers’ benefits are not clearly stated in the contract.

Source: Vongkhamor and others 2007.

C. Implementing Contracts and private sector initiatives. The Concessions involvement of such local officials as district extension agents assures Local authorities play a prominent role farmers of long-term technical in the facilitation and management of assistance. At the same time, local such contract farming arrangements. authorities are urging farmers to The liaison function between the participate in the contract farming company and communities, and the schemes as a means to stabilize endorsement by local and provincial shifting cultivation and alleviate officials is particularly critical in poverty. This mix of policy and market isolated and remote areas that have factors coming together in the little experience with market-oriented

27 phenomenon called the ‘rubber boom’ experiences with the contract farming in the Northern Uplands. companies and begun drafting It seems that in the case of maize principles and by-laws for provincial production, the ‘2-plus-3’ producer associations. arrangements tend to be beneficial to A provincial decree was recently smallholders because benefits accrue signed by the provincial governor for after one year and the farmers can opt the establishment of a producer out of the agreements. The agreements association for the sole marketing of also seem to be better facilitated by Jatropha. The association is attached to local authorities through provincial a foreign concession for 300 hectares contract farming associations. In the of Jatropha, which will serve as a case of rubber plantations, the current nucleus plantation. Fines are imposed contract farming arrangements could on sellers and buyers who do not turn out to entrap asset-poor farmers obtain permission of the association to who do not have the means to invest trade Jatropha. Farmers are able to independently in rubber and have no produce sufficient quantities of other choice but to participate in these Jatropha for their own and community schemes. Generally, farmers appear to use, but sale of surplus must be offered be well aware of these problems and to a registered member of the often attempt to avoid participating in association. Creation of the such schemes by investing on their associations is to protect Jatropha, own whenever they are able to do so.17 organic vegetables, and other non- timber forest products from external Provincial contract farming traders. Such iterant traders are associations have been organized by required to form joint ventures with local Lao investors in Houa Phan (and members of the association to ensure Champassak in the south) and fairness to farmers. The institutional registered with provincial authorities. capacity and strength of such Members of the association organize associations has yet to be adequately the contract farming of a selected crop tested. Provincial authorities and Lao (e.g., organic vegetables and Jatropha investors are demonstrating a keen in Houa Phan) and obtain the sole right interest in reducing the risk of having to purchase and market that crop in the raw materials, which they promote, province. The association has a set of sold to iterant Chinese, Thai, and principles and regulations that define Vietnamese traders and collectors who the terms and conditions of contract frequently depend on local Lao farming, roles and responsibilities of middlemen. each party, and the penalties to be imposed in case of evasion of terms. In Village-based farmer marketing Houa Phan, provincial officials, groups have been formed in some including administrators, technicians, locations to facilitate contract farming as well as tax, police, and customs negotiations and purchasing operations officials and district chiefs, have with Lao and foreign enterprises. recently reviewed lessons learned from Investors from Thailand have launched a maize promotion program in lowland

17 areas of Khammouane Province in As reported in the Vientiane Times on central Lao PDR. Facilitated by the November 5, 2007: “Oudomxay rubber plantations fall short (…) Some farmers have agriculture and cooperatives office in not shown enough responsibility because they neighboring Nakhon Phanom have planted other crops on the land for their Province, Thailand, the intervention own food.”

28 has organized farmers into marketing Land concessions and lease groups to produce maize for the arrangements for plantations. company. Similar initiatives are Concessions are typically granted by planned for growing maize in provincial authorities with little Oudomxay and Xayabury Provinces in involvement and monitoring from the the Northern Uplands and for organic Central Government level. Only few farming of soybean, cardamom, and foreign investors and land broom grass in Bokeo, Luang Namtha, concessionaires receive their and Oudomxay by other foreign authorization for operating from enterprises. Central Government authorities. Concessionaires usually use their own Experience with marketing groups is processing and transport equipment, mixed and their organization has not and often import labor from outside. always succeeded. An example is Ban Concessions have become Na Yang, a Tai Lue ethnic village in controversial because of conflicts over Nam Bok District, Luang Prabang, land use rights and land access. Large- where several Chinese and Lao- scale land concessions consisting of Chinese joint ventures have promoted areas over 1,000 hectares are found maize, white sesame, groundnuts, and throughout Lao PDR but Chinese mustard for export to China. predominantly in central and southern Each of these initiatives, organized Lao, including Khammouane, through farmer marketing groups, has Savannakhet, and Champassak failed. The most frequent reason given Provinces; and to a much lesser extent is that the contracting firm did not in the Northern Uplands in Oudomxay, return to purchase the produce even Luang Prabang, and Xieng Khouang. though, in some cases, the firms had provided seed and small quantities of In some rubber plantations in the chemical fertilizer on credit. Northern Uplands, foreign or Lao enterprises are renting land from Role of local banks. Given the weak farmers and hiring farmers as laborers. institutional capacity of the Lao Farmers may benefit from rental fees banking, finance, and credit systems, for land and, if labor is provided, also banks currently play only a minor role from a daily wage. Provincial officials in contract farming in Lao PDR. In however report that in many plantation Vientiane Province and Vientiane areas, Lao labor is often not available Capital City, and other peri-urban to undertake the work of collecting the areas around major Lao towns, the latex. As a consequence, Chinese Agricultural Promotion Bank has been investors have imported workers from active in providing short-term China to collect and process the raw production credit to farmers producing rubber.18 crops for agro-processing facilities. In A similar situation exists in addition, between 1995 and 2003, some watermelon and vegetables smallholder farmers and investors in plantations in Luang Namtha (Muang tree plantations were eligible to access Sing) were there is a shortage of Lao credit from the Agricultural Promotion labor and Chinese labor is imported. Bank to establish tree plantations Land rental arrangements in the through the Lao-Asian Development Northern Uplands extend over long Bank (ADB) Tree Plantation Project. periods of time, usually 20 years, and

18 Discussions with provincial officials in Luang Namtha and Oudomxay on March 3-5, 2007.

29 concessionaires can generally expect to latex processing, but only a small earn significantly more than what is number of such joint venture being paid in land rental fees. Land arrangements is registered with rental fees are paid in Lao kip, while provincial authorities. Generally, the latex is traded in Chinese Yuan. Chinese partner guarantees the market for the produce but not the price. The Some concessions are operating as Lao partner benefits from a share of nucleus estates with technical outreach the income generated. The Chinese programs to farmers in nearby villages. partner benefits from secure and steady Generally, an estimated 40 percent of raw material supply and control over the raw materials required by the the pricing arrangements but is usually concessionaire (for processing or to required to provide all capital meet other contract obligations) are investment. produced on the concession land. The remaining portion is often purchased D. Provincial Market Pulls And from middlemen with quotas or Development Dynamics directly from farmers. Although the concessionaire usually do not provide Cross-border trade in the Northern credit, technical assistance, or other Uplands has become a critical factor in support to farmers, traders with quotas provincial economic development from the concessionaire and processing since about 2003. Regional and companies will extend credit in cash domestic traders and agri-businesses and/or in kind as an advance on the increasingly take advantage of the purchase of the crop. The major benefit strategic position of the Northern to smallholders cultivating the same Uplands as an important production crop as the concessionaire lies in base for agricultural products in gaining market access so long as their demand by the expanding markets in product meets minimum standards China, Thailand, and Vietnam and are specified by the concessionaire. The sourcing food crops, agricultural raw concessionaire benefits from reliable materials, livestock, and non-timber sources of raw material in close forest products and other niche proximity to the plantation, which can products. This trend that is taking place be blended with produce from the across the northern provinces is concession. reflected in increasing diversification away from upland rice and farming Joint ventures. The formation of joint specialization in a limited number of venture companies represents marketable cash crops. The most arrangements that allow investors to visible changes include the dramatic obtain some level of control over land reduction in upland rice production to be used for production. Being part (Figure 2)—indicative of the reduction of a joint venture company, the Lao of swidden farming in response to the shareholder is generally allowed to Stabilization of Shifting Cultivation operate the land for the joint venture. Policy—and the expansion of maize A number of Chinese and Lao production areas (Figure 3) and rubber individuals have formed such joint plantations over large parts of the ventures for rubber cultivation and Northern Uplands.

30 Figure 2. Reduction in Uplands Rice Production Areas

40000 35000 30000 s e

r 25000 1995 a

t 20000 c 2005

e 15000

H 10000 5000 0 i y a y o g n r g l h a e n a u n sa t x k a p b a g m o b a a u n a m B a u y h o N o r o a k h d P H X g g u g n P n O n ie a a X u u L L Provinces

Figure 3. Changes in Maize Production Areas by Province

35000 30000

s 25000 1995 e r 20000 a

t 2005

c 15000 e

H 10000 2007 5000 0 i y a y o g n r g l h a e n a u n sa t x k a p b a g m o b a a u n a m B a u y h o N o r o a k h d P H X g g u g n P n O n ie a a X u u L L Provinces

Provincial authorities are responding to main production areas concentrated in these trade dynamics in different three districts—Ton Pheung, Huay degrees but in general seek to use them Xay, and Pha Oudom. Expanded maize to complement upland policy production is primarily in response to implementation. demand from the Thai market, which Bokeo Province. Recent builds on traditional trade links and investments in road construction new border crossings, and has emerged upgrading (Route No. 3) have as the dominant driver in promoting improved the transportation links commercialized agriculture. Bokeo has between Bokeo, on the border with promoted this expansion by exempting northern Thailand and southern China imported seeds from local taxes and by and Thailand, and facilitated trade and organizing farmers into maize investment. During 2007, 13,000 producer groups that are registered at hectares of maize were cultivated, up the DAFO level. Thai companies as from 6,400 hectares in 2005, with the well as Lao traders are purchasing

31 maize directly from farmers, and the provincial authorities. While other market has been able to absorb the provinces consistently articulate expanded production without any promoting food security, improving marketing problems. In addition to rice production, and promoting land traders from Thailand, Thai agri- allocation and forest protection as business enterprises are investing priorities in line with national policy directly through various contract goals and targets, Luang Namtha is farming schemes in the province. deviating from this trend by directing Improvements and expansion in its agriculture strategy exclusively irrigation infrastructure, albeit small in toward supplying to Chinese cross- scale, have further helped to improve border markets. the environment for farmers to One result of this strategy is that Luang diversify production into non-rice Namtha has become one of the centers crops, particularly maize but also of rubber production in the Northern soybeans and groundnuts. Rubber in Uplands. As of mid-2007 Bokeo is only of minor importance approximately 18,800 hectares of compared to other provinces as the rubber plantations have been planted, demand pull from Thailand is less of which about 6,600 hectares were strong than from China. As reported by established in 2007 alone. Provincial the National Agriculture and Forestry administration collects an annual tax of Research Institute (NAFRI 2006), the 3-6 Chinese Yuan per rubber tree and province has a target of 15,000 requires potential investors to construct hectares of rubber of which only 700 roads to those areas where concessions hectares have been planted to date. are being granted or where the firms Although individual farmers are intend to invest.19 beginning to plant rubber, no Besides rubber, the provincial concessions for rubber plantation authorities are actively promoting the development have been granted to production of maize, tobacco, peanuts, date. sugar cane, rubber, cassava, Jatropha, Luang Namtha Province. Although organic vegetables, and livestock. As some agricultural areas of Luang of mid-2007, 14 enterprises were Namtha have access to the Mekong registered with the Provincial and market outlets in Thailand and Department of Planning and Myanmar, upland agriculture Investment and authorized to carry out development is being shaped by the contract farming operations. All of province’s proximity to southern these enterprises are either Chinese or China. The northern border districts of Lao-Chinese joint ventures. Two land Namtha and Muang Sing represent the concessions have been granted totaling most developed areas in Luang approximately 1,600 hectares, of Namtha, and good transportation and which 1,200 is for cultivating communications infrastructure Citronella grass (Cymbopogon facilitates access to Chinese markets as marginatus; C. citratus) and 414 is for well as penetration of Chinese producing rubber. entrepreneurs into the province. As a result, the production and supply of a small number of commercial crops to 19Lee Sing Ko Company (China) has the Chinese market has become the constructed a market access road in remote highest development priority of the part of Nalae District, where it has established a rubber plantation.

32 According to provincial authorities, the similar to Luang Namtha.20 Principal remaining poverty areas, including the crops of the province are maize, districts of Viengphoukha, Nalae, rubber, and cassava. In 2007, 21,000 Long, and Xiengkok, have so far been hectares of maize were planted. With a largely detached from the unfolding provincial target of 30,000 hectares of dynamics. Luang Namtha therefore rubber, 6,000 hectares were planted pursues an active strategy to connect prior to 2007 and 2,000 hectares in these districts to the vibrant northern 2007. In 2007, Oudomxay exported border districts. A plan to upgrade the 100,000 tons of cassava to China, road to Long and Xiengkok Districts 30,000 tons to Thailand, and 20,000 will link both towns more closely to tons to Vietnam. The strategic location Mouang Singh and the China border of Oudomxay facilitates market links and promote the production of to China as well as Thailand. The commercial crops. In addition, the principal crop producing areas are in completion of Route 3 will link Beng, Houn, and Pak Beng Districts, Viengphoukha more closely to the located along the recently (2004) provincial town and likely foster trade upgraded Route 2W, from where in the directions of both China agricultural produce is transported to (through Mouang Singh and Boten) China by truck through Xay and Naa and Thailand (through Ban Houei Moh, and Ban Meo Jai Districts to the Xay). Phou Lak Kham traditional border Of some importance in northern Luang crossing. Access to Thai markets is Namtha, cassava production is being through Pak Beng District on the promoted by traders from China. A Mekong River where transport is by Chinese-Lao joint venture is boat upstream to Chiangrai Province. establishing a plantation of 1,000 Some produce is transported over land hectares with a target of producing to the Thai border into Nan Province. 22,000 tons of cassava, which is Market pull from Thailand and expected to yield 9,000 tons of chips Vietnam is expected to increase further for export to China. The longer-term with infrastructure improvements plan is to cultivate 6,000 hectares of planned over the next 3 years, which cassava in the province, with an will facilitate links to central outreach contract farming program to Oudomxay. In addition, local demand smallholder farmers. In addition, for soybeans, maize, cassava, and other Luang Namtha, along with Phong Saly, crops is expected to develop in has seen an expansion of sugar cane response to recent Thai investments in while other provinces have reduced their sugar cane production areas. 20 Oudomxay’s colorful history includes being Much of the sugar cane produced is a center for the illicit drug trade during the Lao being sold to processors in northern civil war (1965-1975) and for a short period Thailand and China (Yunnan) and to following the conflict. It was a base for Vietnamese traders. Chinese military and civilian technical assistance to Lao revolutionaries during the Oudomxay Province. Oudomxay, civil war and the start off point for two major located close to the Chinese border at strategic military roads, namely Lao national Routes 1 and 6 linking southern Yunnan, the junction of Lao national Routes 1, China, to Viet Nam (via Xam Neua), and 2, and 4, is an emerging agriculture national Route 2, linking Yunnan to the trade hub in the Northern Uplands, Mekong River at Pak Beng District, and aimed at northern Thailand. Prior to 1975, Muang Xay was a district of Luang Prabang Province.

33 a livestock feed mill at Tha Ngon less rigid.21 Provincial authorities District. acknowledge that it will not be possible to halt all shifting cultivation Twenty-seven Chinese, Thai, and other by 2010. foreign investment companies are known to operate in Oudomxay under Hand in hand with the Stabilization of concession and contract farming Shifting Cultivation Policy and as arrangements. Of these, 19 are Lao or market opportunities are seen to Chinese firms or Lao-Chinese joint emerge, provincial authorities are ventures and are registered with the promoting the production of selected Oudomxay Provincial Department of cash crops in upland areas. Rubber is Planning and Investment. Most of becoming more prominent as the these firms are cultivating rubber on province simultaneously seeks to meet nucleus plantations with outreach market demand and to increase forest programs to upland farmers. Some of cover at 21 percent to 50 percent by the 19 firms and the remaining 8 firms 2010 by replanting degraded secondary operate contract farming or buyer forest areas with rubber. To date, 8,000 programs for commercialized crops, hectares of rubber plantations have including soybeans, mushrooms, been established, most of which have cardamom, tea, maize, cassava, castor been planted during the last five years. beans, orchids, and Eucalyptus trees. Several village clusters have been Some firms promote domesticated designated by authorities to produce NTFP production of while others just exclusively rubber. purchase non-timber forest products. Other important emerging cash crops Phong Saly Province. Phong Saly is a include maize (4,300 hectares mountainous and remote province in harvested in 2006), sesame, pigeon the northernmost part of Lao PDR. It is peas, watermelon, fruits and populated almost entirely by ethnic vegetables, tea (880 hectares), and minority groups and remains as one of domesticated non-timber forest the poorest provinces in the Northern products, namely galangal and Uplands. Provincial authorities pursue cardamom. activities to alleviate poverty and Road and transport infrastructure in the promote the replacement of swidden province remain poor. Few roads are farming, including irrigation paved, and those not paved are development for paddy rice to improve impassable during the wet season. food security; importation of improved Although the road from the Chinese hybrid rice varieties from China and border at Ban Pakha to Phong Saly (68 Vietnam; and promotion of livestock. kilometers) is paved and maintained, Swidden practices have been reduced the 100-kilometer road from Ban Sin from an estimated area of 26,000 Xay through Boun Tai District to Ban hectares a few years ago to about 7,700 Yo, Boun Nua District—the principal hectares in 2007. The enforcement of (and only) link between Phong Saly the Stabilization of Shifting and the rest of Lao PDR—is difficult Cultivation Policy has reportedly led to to travel in both the wet and dry out-migration of upland communities seasons. As a result, market pull (estimated by local authorities to be in the range of 1,000 to 1,200 people annually) to other locations and 21 These areas include Ban Nam Thouam, Nam provinces where policy enforcement is Bak District, Luang Prabang Province; and Muang Sing District, Luang Namtha Province.

34 factors are not reaching as deep into many years, the southern districts have Phong Saly as in other places although been a center of cotton production for China and Vietnam are important the Thai market. Reduced cotton yields destinations for agricultural products. due to insect infestations, requiring the Market pull from China is strongest in need for costly insecticides, and northern areas of Phong Saly, albeit declining demand from Thailand have with poorer penetration as compared to resulted in a shift away from cotton to Luang Namtha and Oudomxay. In maize in recent years. Xayabury has southern Phong Saly (Khoua and May now become one of the largest maize- Districts), market forces from Vietnam producing provinces in the Northern are more prominent. Coincidentally, Uplands—with 147,000 tons being the northern and southern areas are harvested in 2007 as compared to only also ethnically different, with the 5,600 tons in 1995—supplying maize northern areas being predominately of nearly exclusively to markets in the Phou Noy ethnic group and Thailand. Provincial targets for rubber southern areas being predominantly are in the range of 50,000 hectares by Khamou. 2010, of which less than 100 hectares To date, Phong Saly has granted three had been planted as of late 2006. Two land concessions to firms seeking to concessions have been granted. invest in rubber plantations, ranging For the northern districts, which are from 2,000 to 14,000 hectares poorly connected to the Thai markets, (although plantations have only been ensuring food (rice) security remains a partly established). The priority in combination with the concessionaires are required to assist promotion of livestock raising. Upland the provincial government in the agricultural development in the expansion of paddy areas and to northern districts, which were finance the upgrading, expansion, and administered as a special security installation of irrigation systems (and region in the 1980-90s due to political other rural infrastructure) in exchange instability, is also constrained by for investment and trade privileges. isolation from other areas of the This approach is not unique to Phong province and low production of food Saly and is also applied in Luang and agricultural products. Government Namtha Province (e.g., for road plans to improve road infrastructure construction to Nalae District) and may lead to further penetration of Thai Houa Phanh Province (e.g., for village traders into these upland areas in the schools). future. Xayabury Province. Xayabury’s long Luang Prabang Province. The city of land border with Thailand combined Luang Prabang, a UNESCO World with traditional border crossings Heritage site, receives nearly one strengthens the Thai market as the million visitors per year. Tourism dominant pull factor in agriculture infrastructure has increased greatly in commercialization. However, striking recent years as has the frequency of differences exist between the four scheduled flights throughout the southern districts of Xayabury—Kaen Greater Mekong Subregion. These Thao, Boten, Paklay, and factors have created a market for Thongmyxay— and the four northern quality food and agricultural products. mountainous districts of Khob, In and around Luang Prabang, the Xienghon, Ngeun, and Hongsa. For response to this increased demand is

35 visible with farmers expanding fruit Prabang shares a border with Vietnam, and vegetable gardens and processing the border area is remote and of traditional foods for Western and mountainous on both sides of the Asian tourists. Upland areas away frontier, and only one traditional from the city are however much less border crossing point is open at a integrated into this market. mountain pass at Na Son. The road to Luang Prabang has been subject to Na Son is not an all-weather road widespread deforestation through making access limited. The market pull excessive logging in the past. Forest from Vietnam is therefore constrained cover has been reduced to 18.2 by poor infrastructure and few traders percent, the lowest forest cover of any willing to pay the high transaction province in Lao PDR.22 At the same costs from travel and transport to time, the perception remains that Luang Prabang. swidden agriculture is a serious Luang Prabang, along with Houaphan, problem in this province with an is the main production center for estimated 16,000 hectares under soybean. Total cultivation area has swidden farming in 2007. In an attempt more than doubled during the past ten to increase forest cover, tree crops are years from about 3,700 hectares to being promoted by provincial 8,100 hectares, and all expansion in authorities, including teak Lao PDR has taken place in the (approximately 22,600 hectares Northern Uplands. Soybeans are planted to date) and rubber. Two land primarily produced for the China, concessions for rubber plantations Thailand, and Vietnam markets, where have been granted totaling 25,000 demand for soybean is strong and hectares, of which 4,000 hectares have growing.23 already been established. The Xieng Khouang Province. Xieng provincial target has been set at 30,000 Khouang is characterized by different hectares. In addition to upland rice agro- ecological zones but dominated being the largest crop in the Northern by 200,000 hectares of denuded hills, Uplands (21,000 hectares in 2005), the result of centuries of livestock other important cash crops include grazing. Paddy rice production prevails maize, sweet potato, soybean, on 20,000 hectares of lowland areas, groundnut, and domesticated non- but maize production has been timber forest products. expanding rapidly since 2005. Eastern The markets of Luang Prabang and Xieng Khouang begins to resemble Vientiane constitute the dominant pull southern Xayabury with maize factor for agriculture dominating the landscape along the commercialization in upland areas in major highways and extending into this province. Specifically, livestock is upland areas. In 2006, an estimated being produced in the uplands for 9,000 hectares of maize were markets in Luang Prabang, Vientiane harvested, which increased to 11,000 Province, and Vientiane Capital. hectares in 2007 compared to only Principal markets for livestock also 2,000 hectares in 2004. Xieng exist in Vietnam through Xieng Khouang also has the highest reported Khouang Province. Although Luang

22 Northern Regional Development Strategy 23 In 2003, Thailand imported 1.7 million tons (Committee for Planning and Investment & of soybeans with an estimated value of Asian Development Bank, March 2004). US$458 million.

36 number of cattle in the Northern PAFO has set a target of establishing Uplands. 30,000 hectares of improved pasture Xieng Khouang has long historical by 2010, which appears to be links with Vietnam. The markets in unrealistic given the current progress Vietnam— which are much closer than in developing forage supply. Before Vientiane (400 kilometers) and Luang 2007, there were 700 hectares of Prabang (250 kilometers)—are the pasture land in the province, increasing main destinations for maize and to only about 1,200 by 2007. livestock produced in the province. Houa Phan Province. Houa Phan is Lowland and upland farmers are one of the most remote and difficult responding vigorously to the demand regions to access despite Route 6 for maize. Vietnamese traders are linking the province to Xieng Khouang active throughout the maize growing and the rest of the country. Detached areas, providing seed on credit to from the Mekong watershed, Houa farmers and returning at harvest time Phan is located closer to Hanoi than to to purchase the maize on the basis of Vientiane. It remains separated from informal contracts. With regard to markets in Thailand and China, livestock, several livestock trading making it, like Xieng Khouang, almost networks exist, most which are entirely dependent on the demand of dominated by the Hmong ethnic group Vietnamese markets. that has links to members of the same Farmers have been responding to this ethnic group in Vietnam. The strong demand by growing maize, soybeans, cross-border ‘ethnic commercial sesame, pumpkin, mungbean, tea, non- network’ of this group facilitates most timber forest products, and livestock. of the trade in livestock with Vietnam, Houa Phan has some importance as a most of which remains unrecorded. producer of cotton; but this is more in The province however faces serious response to local demand of the denudation of its hillsides and is traditional weaving industries in Xam experiencing an increasing shortage of Neua and Xam Tai Districts, renowned grazing areas exacerbated by poorly for their traditional silk and cotton developed knowledge for improving textile products. Although Houa Phan pasture land. is the poorest province in the north, it The provincial agricultural is self-sufficient in rice. Due to its development strategy neither takes into mountainous conditions and isolation account the vibrant maize economy in from other rice producing areas, it is the province nor facilitates contractual likely that upland rice production will arrangements between farmers and remain unchanged in the medium term, traders. The strategy also does not remaining between 13,000 and 15,000 provide extension support to address hectares, which is about one-half of the soil degradation issues related to area reported in 1990 and 1985, intensive maize production (which also respectively. Although production of applies to other provinces). It solely maize increased moderately between prioritizes livestock (cattle and 1995 (3,000 hectares) and 2005 (4,000 buffalo) production; promotion of hectares), other cash crops are likely to ecotourism (linked to the Plain of continue increasing in response to Jars); and the mining of minerals (gold stronger demand pull from Vietnam. and copper). In support of the Similarly, the cultivation of soybeans, expansion of livestock production, the also with strong demand from

37 Vietnamese agro-processors, is likely enterprises, farmers; community to continue expanding, already leaders (village chiefs), and district increasing by some 685 hectares (or agriculture officials. The system some 40 percent) between 2003 and includes measures for enforcement of 2005. contract obligations if producers and/or The provincial leadership is well aware buyers do not meet contract of the development challenges. Poverty requirements. By registering buyers alleviation, phase-out of swidden with district officials on either side of agriculture, and promotion of the border, non-performing partners agricultural commercialization remain can be pursued and fined according to the priorities of line authorities. The the contract. Stabilization of Shifting Cultivation Vientiane Province. Upland Policy is being implemented but with agriculture in the north of Vientiane some flexibility with regard to length Province, which is similar to its of cultivation and fallow periods, neighboring provinces in the north, primarily because productive land is benefits from good communications scarce in the province, which in part is and transportation infrastructure that characterized by limestone geology, link it to Vientiane Capital about three mountainous landscapes, and narrow hours to the south. The large urban river valleys. Maize and livestock market of the capital provides production are the dominating marketing opportunities for a wide production trends and are actively variety of food and agriculture encouraged by the PAFO, which is products. The demand pull from the more cautious than in other provinces Vientiane market is more influential due to the negative impacts of maize than from the Thai market and includes mono-cropping. Promoted as strategy the food processing facilities located in to raise poor farmers’ incomes, and around Vientiane. Agricultural livestock production is also considered crops being produced include a means to enable rehabilitation of vegetables, mungbean, peanuts, and fallow forest land. Upland degradation maize. The trend is for the area is primarily being attributed to swidden cultivated in upland rice, sugar cane, practices while impacts of livestock on and tobacco to decrease, while landscape-level dynamics appear to be vegetables and maize are increasing poorly understood. (some 17,500 tons of maize was 24 Several contract farming arrangements produced on 4,110 hectares in 2005). It is expected that maize production between Lao producers and will continue to expand in response to Vietnamese traders are operating in the pull from the nearby Thai market Houa Phan, and the provincial as well as from the re-opened livestock government is taking an active role in feed factory at Thangon District, their management. In Vieng Xay Vientiane Province. Soybean District close to the Vietnamese production (only 380 hectares were border, where contract farming is most harvested in 2005) is also expected to prevalent, arrangements require the (a) increase in response to an increase in registration of Vietnamese and Lao feed mill demand. traders and enterprises (involved in contract farming) with Lao and Vietnamese district authorities; and (b) 24 Agricultural Statistics, 30 years, 1976-2005 registration of contracts among traders, (Ministry of Agriculture and Forestry, Lao PDR, April 2006).

38 About 60 percent of owned farmland is the Ministry of Agriculture and cultivated, the majority of which is Forestry, remains focused on pursuing devoted to vegetables. Survey results production targets instead of redefining show an increasing importance of its role a facilitator and negotiator. vegetables in the cropping systems Government is also trying to provide since the area allocated to vegetables services to farmers that the private has grown from a mere 448 hectares in sector is already providing. As an 1995, to nearly 12,000 hectares by outcome, the current and future 2005.25 Farms are located usually near distribution of benefits, which are all-weather roads with an approximate created in these arrangements, is distance of 1.4 kilometers and about presently not well documented or 3.1 kilometers away from the nearest understood, and the long-term input market. This increase in implications for poverty alleviation vegetable production is in response to (especially for disadvantaged groups); increased food consumption by a the environment; and issues, such as rapidly growing local population in in- and out-migration, are generally both Vientiane Capital and Vientiane unclear. Province and the large influx of tourists, an estimated 2 million annually. In addition, several food processing facilities have been established in Vientiane Capital and Vientiane Province that require a consistent supply of high-quality vegetables for processing and export to Thai, Japanese, Korean, and European markets. E. Concluding Remarks

As shown, the market pull in the Northern Uplands is increasingly supported and subsidized in a number of different ways through opportunistic approaches at the local level, while a regulatory framework to govern private sector investment within the Government’s poverty alleviation and agriculture commercialization framework is virtually absent. Existing policies focus on regulating smallholder livelihoods and market participation while no policies govern commercial private sector investment activities. At the same time, the Government, particularly the role of

25 Agricultural Statistics, 30 years, 1976-2005 (Ministry of Agriculture and Forestry, Lao PDR, April 2006).

Table 3. Production of Selected Crops in the Northern Uplands, 2005 and 1995 Crop production (1,000 tons, rounded) Province Rice Soybean Maize Peanut Sugar Cotton Upland Lowland cane Phong Saly 2005 10.7 33.5 0.29 9.17 0.50 21.1 0.19 1995 28.5 12.3 0.63 4.00 1.03 0.63 0.07 Luang Namtha 2005 12.8 47.6 0.04 7.55 0.02 54.3 0.00 1995 22.7 20.3 0.10 1.26 0.06 10.5 0.09 Oudomxay 2005 35.1 47.0 0.44 70.87 1.21 6.50 0.04 1995 42.5 27.8 0.53 6.58 0.86 3.58 0.40 Bokeo 2005 8.6 52.7 0.38 30.1 0.64 0.00 0.02 1995 12.9 24.8 0.16 1.27 0.08 1.63 0.10 Luang Prabang 2005 39.6 52.0 4.70 38.1 2.21 0.60 0.17 1995 66.4 22.9 0.18 6.62 0.87 2.46 0.60 Houa Phan 2005 25.2 53.1 2.75 17.35 0.76 7.80 0.36 1995 28.1 29.2 0.80 4.50 0.68 7.00 0.45 Xayabury 2005 31.4 108.6 0.24 92.6 4.99 2.95 0.07 1995 25.4 62.0 0.26 5.63 2.40 8.13 6.00 Xieng Khouang 2005 15.2 64.0 0.49 30.28 1.06 0.00 0.00 1995 13.5 32.9 0.13 8.71 0.33 7.38 0.04 Vientiane 2005 2.8 187.3 0.45 17.53 1.68 5.80 0.07 1995 7.8 75.9 0.02 1.83 0.32 2.95 0.30 Northern Uplands 2005 181.4 645.8 9.78 313.55 13.07 99.05 0.92 1995 247.8 308.1 2.81 91.07 6.63 44.26 8.05 Lao PDR 2005 214.8 2,082.1 11.10 372.56 26.99 196.10 2.00 1995 296.1 1,071.3 4.84 50.38 8.44 62.33 8.80 Source:, Agricultural Statistics, Year Book, 1975-2005 (Ministry of Agriculture and Forestry, Department of Planning,

40 Transition Outcomes: Livelihoods and Sustainability Between 2001 and 2005, more than upland rice farming systems and, often 1.09 million hectares of arable land simultaneously, the intensified and 3.6 million hectares of forestry production of large ruminants. These land were allocated to about 420,000 two strategies have resulted in the households in 7,125 villages with the accelerated and permanent conversion objective “to reduce the practice of of previous fallow land and young shifting cultivation while ensuring secondary forests into permanent sedentary highland and lowland cropping and grazing land. Also in cultivation to reduce poverty among response to the upland policies, the ethnic people.” During the same farmers have shortened or abanadoned period, shifting cultivation practices fallow and regeneration periods on the were reduced from 118,900 hectares in cultivated agriculture land and 2001 to 29,400 hectares in 2005, intensified cropping on smaller areas mainly in the Northern Uplands, and concentrated around settlements. the number of households practicing Although some former fallow land shifting cultivation was reduced from distant from settlements is thus more than 140,000 in 2000 to less than allowed to regenerate back into natural 45,000 in 2005.26 forest, areas now under permanent cultivation show signs of soil A. Coping Strategies and Transition degradation and declining yields. Dynamics in Upland Production Field observations indicate that the Systems intensification of annual cash cropping Traditional swidden agriculture has on smaller plots, the expansion of been disappearing in the Northern industrial tree plantations, and Uplands over the past years (Figures 4 intensified livestock production are and 5); the ongoing reduction in area, generally not reducing pressure on the where this type of land use is still upland environment and the intended being practiced, is a direct response to introduction of sustainable land use the existing policy framework. With practices, following the elimination of significant policy implementation swidden agriculture, is not happening. progress, swidden practices have been In fact, the shift from extensive agro- giving way to new permanent forestry land use patterns to intensive agriculture and other land uses, which permanent agriculture on sloping lands are still evolving. Upland farmers have raises concerns about land degradation responded with different coping and sustainability in the longer term. strategies to accommodate the In areas where good infrastructure restrictions posed by Government facilitates temporary migration, policies. And, where possible, the farmers often pursue off-farm income- farmers have simultaneously generating opportunities when farm responded to opportunities brought labor requirements are low. Out- about by regional market demand. migration and off-farm employment The two main coping strategies could lead to an initial appearing across the Northern Uplands include the introduction of annual and perennial cash crops into previous

26 Data from Department of Forestry.

Figure 4. Reduction of Swidden Agriculture in the Northern Uplands 2000-2005

35,000 30,000 Phongsaly Luang Namtha 25,000

s Oudomxay e

r 20,000 a

t Bokeo c 15,000 e

H Luang Prabang 10,000 Xayaboury 5,000 Huaphane - Xiengkhuang 2000 2001 2002 2003 2004 2005 Vientiane Year

Source: Department of Forestry Ministry of Agriculture and Forestry.

Figure 5. Decrease in Upland Households Practicing Swidden Agriculture

s 50,000 d l Phongsaly o n h

e 40,000 e

d Luang Namtha s d e u i r o

u Oudomxay w

t 30,000 H l S u

d Bokeo g c i n n r i a 20,000 l g c Luang Prabang i p t A U c a f 10,000 Xayaboury r o p . Huaphane o N - Xiengkhuang 2000 2001 2002 2003 2004 2005 Vientiane Year

Source: Department of Forestry Ministry of Agriculture and Forestry. regeneration of fallow land and The following discussion attempts to secondary forest, but these areas are capture some responses of farmers to beginning to be claimed by colonists policies and transition dynamics along (often through fencing of land) and the typology of agriculture systems being transformed into industrial presented in Chapter II. The transition plantations (e.g., Vientiane). The dynamics of different uplands resulting decrease in population production systems are summarized at density reported by local authorities in the end of this section in Table 5. some areas will most likely lead to Traditional swidden agriculture natural regeneration of fallow and systems (Group I) continue to be secondary forest areas into permanent practiced over approximately 20-30 forest (e.g., in Phong Saly). percent of the most remote parts of the

42 Northern Uplands. While market pull Land Law article 17, Determination of factors in these areas are of nearly no Scope of Agricultural Land Use relevance yet, the transition is about to Rights, illustrates the schematic LFAP be set in motion through continued approach. The state authorizes policy implementation. individual and household long-term Implementation of the push framework and efficient land use in conformity is possible through political party and with plans and objectives determined administrative structures, which are for the specific area. In fact, the LFAP much less dependent on road reduces land availability through infrastructure and population density restricting farmers’ access to forest and can reach areas with poor or no areas by zoning the village land into infrastructure access. In addition, there agricultural and forestry land is presently no apparent market categories. Each household labor force demand for products from these remote is allotted usually 3-4 plots of a total swidden agriculture systems, including area, not exceeding 3 hectares of which non-timber forest products (with the household is supposed to cultivate opium probably being the only only 1 or 2 plots per year and allow for exception), which reinforces market at least a 2- to 3-year fallow period.27 isolation and prevents upland Contrary to the original intention, communities from exploring coping or farmers often use all their allocated alternative livelihood strategies (Box land at the same time and for 4). permanent cultivation. Box 5 provides a case study in Vietnam of land and The farming practices are embedded production development based on the into a complex system of traditions, values and culture of a village customary tenure, lifestyle, rituals and community. perceptions, gender roles, and community social interactions. Households can also be allocated forest Consequently, the impact of policies land.28 Fallow areas are identified as expands to socio-cultural systems and degraded or destroyed forest rather entire livelihoods, often resulting in than as a phase in an agricultural cycle. hardship and suffering and raising Since land abandoned for five years or serious concerns about food security. more is reclassified as regeneration The Land and Forest Allocation forest, there is additional pressure not Program is the primary policy vehicle to allow forests to regenerate and through which the traditional systems shorten the swidden agriculture cycle are impacted and therefore needs (Thomas 2005: 18-23). specific attention if policy outcomes are to be evaluated. Targeting LFAP objectives, the Land Law of 1997 specifies the promotion of sustainable management and use of natural resources and of commercial agricultural production; and the prompt 27 Land Law article 17 states household land reduction and gradual elimination of allocation per labor force: 1 hectare for rice shifting cultivation. These objectives cultivation, 3 hectares for commercial crops, 3 are based on the recognition that clear hectares for fruit-trees orchards, and 15 hectares for livestock forage production. and secure land rights would provide 28 Land Law article 21 states household incentive to cultivators to make allocation per labor force of forest land productive investments in their land. (deforested land or degrading land) of 3 hectares.

43 Box 4 The Low-Market Demand for Non-Timber Forest Products

The potential of non-timber forest products (NTFP) to provide substantial and sustainable income is limited. Non-timber forest products in Lao PDR are a ‘safety net’ in supporting basic needs of upland farmers, providing food in times of rice shortages, especially for swidden agriculturalists, and contributing to rural cash income. Foppes and Ketphanh (2004) and Yokoyama (2004) describe the role of non-timber forest products for the livelihoods of Lao upland communities both in terms of subsistence use and cash income. Upland farmers spend more time per year on gathering non-timber forest products than in swidden agriculture. However, the collection or cultivation of non-timber forest products is not seen as an alternative to swidden agriculture because both are closely related and part of the same local knowledge systems. Swidden agriculture creates a mosaic of vegetation types that are essential for the availability of most non-timber forest products. A study of 232 households in Phong Saly shows that income from non-timber forest products remained stable or slightly declining from 1996 to 2005 over different income groups. All households were faced with income reduction due to elimination of opium cultivation and able to compensate this income loss only through cash crops, livestock, and off-farm income. This illustrates that most non-timber forest products do not have potential for cash income development and employment generation.a There are limited non-timber forest products with economic potential, such as broom grass (Thyrsanolaema maxima), sweet palm fruits (Arenga westerhouttii), paper mulberry (Broussonetia papyrifera), benzoin (Styrax tonkinensis), peuak meuak (Boehmeria malabarica), eaglewood (Aquilaria sp.), bitter bamboo (Indosasa chinensis), and cardamom (Amomum sp.). But there are important limitations in developing these products as enterprises, including market accessibility and transaction costs in remote areas and limited capacities. Where benefits have accrued, more powerful actors tend to appropriate them. The factors that limit development of forest products are the very same structural and political/economic conditions that have marginalized rural populations. After early enthusiasm over NTFP potential for poverty alleviation and conservation, there is a mounting body of literature and case studies that question the prospects of NTFP commercialization. A study of 61 cases in Asia, Africa, and Latin America implies that selling products from unmanaged natural forests have helped lift people out of poverty at times (Ruiz-Perez and others 2004a). Belcher and others (2005) conclude that “it is simplistic, and often wrong, to assume that because an NTFP is important to the poor, efforts to develop it will help the poor.” In general, NTFP management remains a highly unpredictable occupation for local forest-dependent communities (Michon 2005: 20-6). NTFP markets are often fluctuating and thin, meaning that a small reduction in supply has a large effect on quantity marketed (Ndoye 2005: 14-9). One way to limit the effect of thin markets is to improve the supply through domestication methods, which is happening in Lao PDR for most of the main non- timber forest products with potential mentioned above. This might however involve the risk of excluding poor people who have collected these products from the wild. Other issues include the problems of sustainable harvesting rates of non-timber forest products (aggravated by fluctuating markets that cause opportunistic harvesting practices); lack of community control over resources; counterproductive accumulation of local, national, and international regulations for management and harvesting; non-transparent systems of fees and taxes; and lack of market information. Even in existing NTFP markets, some of the common poverty-related issues prevail. Low returns are usually obtained by producers/harvesters in comparison to those of intermediaries and trading specialists. a Results of an impact assessment of the Phong Saly Development Project on rural livelihood in the District, IRAM, 2006, provided by Agence de Développement de France.

The LFAP concept and policy Swidden techniques, foraging approach to permanent agriculture in activities, hunting, and gathering are the Northern Uplands is based on either underestimated or simply lowland notions and uses of land. ignored in their importance for upland Paddy cultivation, gardens, orchards, livelihoods. It is important to note that and plantations are acknowledged as the LFAP temporary land use the only land uses that deserve titling. certificates are issued to upland

44 farmers only if they meet the the Northern Uplands have almost ‘permanent criteria’ of land uses, and completed the first round of the LFAP upland farmers have little or no choice activities and results are presently but to comply with the land use being reviewed within Government. restrictions and to change their The slowest progress is being observed production system. in Phong Saly Province with LFAP implementation in about 50 percent of The LFAP implementation is already the upland villages so far (Figure 6). far advanced in the Northern Uplands. Most of the provincial governments in

Box 5 Community-Based Development among the Black Thai in Northwestern Vietnam

A 1999 case study from Vietnam by T. Sikor and Dao Minh Truong shows that agricultural development has been shaped by traditional village institutions and rules that express customary ways of production and social behavior in the communities. Some village institutions reflect national policy, while others differ significantly from it. These institutions have expressed the underlying and specific values and culture of the village communities. Village tenure institutions have shaped formal land allocation. Households were usually allocated all the upland fields they had worked before. Village institutions also continued to re-allocate paddy fields every 5 years to adjust for changes in labor capacity in contrast to the long-term allocation stipulated by the state. Land allocation did not have much effect on land tenure within the villages. It also did not produce the land registry desired by the state because actual land distribution is much more fluid and flexible than allocation presumes. For example, the boundaries between adjacent plots tend to vary between the years as the households re-negotiate every year. Households also exchange or divide plots without reporting the changes. Village rules, not land use certificates, thus regulate land tenure and shape household land holdings within the villages. Land allocation has however led to a clear demarcation of boundaries between villages and was considered a positive move as it excluded outsiders. Village institutions also continued to guide the use of forest resources in the villages. The traditionally applied categories differ from the state-issued classification system. However, villages have received forest protection contracts from the state and managed to re-distribute the benefits of the financially attractive protection contracts among themselves. Not only agricultural output increased rapidly but it was also distributed in a relatively equal manner among households. Differentiation among households has not changed because today as in the past, village institutions make household wealth largely dependent on labor capacity.

Implementation of the Stabilization of in remote locations because it is well Shifting Cultivation Policy is generally understood by local authorities that advanced as well. However, some there is currently no alternative to provinces are experimenting with livelihood and food security. different approaches to implementation Fixed rotational cropping systems of the policy as the imposed (Group III) and intensified restrictions are being increasingly production of large livestock (Group recognized has hardships for upland VIII) are emerging forms of land use communities. For example, in Luang widespread throughout the Northern Prabang, a village is declared ‘free of Uplands. Both systems are response shifting cultivation’ if 70 percent of its phenomena to the policy push-factor households have ‘stabilized’ their framework in the first place. Fixed cultivation patterns and thus some rotational cropping meets the LFAP continuation of swidden farming is requirements and has often led to the acceptable. In Phong Saly, swidden nearly complete elimination of the agriculture will be allowed to continue fallow periods with more negative

45 impacts on soil fertility and erosion as compared to the traditional swidden

Figure 6. Progress of LFAP in the Northern Uplands P

A 1000 F L 800 h t i 600 2005 w d e s t

e 400 Total Villages e l g a p

l 200 l i m v o 0 f c o

r ly a y o g ry e g e e h n n n n a t xa ke a u a a a b s o i g m m o b b h u t n a o B ra a p h n m a k e o N d P y u g i u h g u a n V P n g X H e N O n i a a X u u L L Provinces

Source: Department of Forestry. agriculture system. Intensified Stabilization of Shifting Cultivation livestock production, especially the Policy. These impacts also need to be raising of cattle and goats, is an ideal taken into consideration when strategy for upland farmers to expanded livestock production is being circumvent the farming restrictions promoted. Livestock production is now posed by the Stabilization of Shifting increasingly being driven by domestic Cultivation Policy. Free grazing and regional market demand. In livestock can access land that is no 2002/3, about 87 percent of rural longer accessible for swidden farming households in the Northern Uplands and has been classified as regeneration engaged in large livestock production, forest. As large ruminants can be but key constraints to grazed on land even outside village commercialization remain when boundaries, it is an effective way to considering animal diseases, lack of utilize land for productive purposes vaccination programs, and lack of despite the restrictions put forward by high-quality feed resources.29 formal land zoning. Modernized rice-based agriculture While it is fully recognized that (Group IV), annual cash crop livestock has always been an important production in monocultures (Group asset to the upland household and an V), and industrial plantations of important element in the household perennial crops (Group VII) represent economy, the major increases in market-oriented farmer production livestock numbers in the Northern decisions. The market pull, reinforced Uplands—although difficult to by the Government’s agriculture estimate because of the informal commercialization efforts, is driving elements of the sector—can be seen in the expansion of these production the context of the swidden land use systems. Cash cropping and tree restrictions posed by the upland plantation development appear to policies. The environmental impacts of the now widespread trend of former 29 Review of the Livestock Sector in the Lao fallow becoming grazing land are People’s’ Democratic Republic (International direct outcomes of LFAP and the Livestock Research Institute 2002).

47 experience a much higher tolerance of discuss and allocate clusters of farming local authorities with regard to land on an annual basis to groups of expanding into forestland categories as households. These clusters are shifting compared with upland rice cultivation; around within the village boundaries and the systems are also allocated using the total available area more land under the LFAP. Moreover, (approximately 1,500 hectares), except plantations of rubber, teak, eucalyptus, the community forest area (112.4 eaglewood, and others are contributing hectares). Within these clusters, the to the Government’s goal of replanting households have generally 3 to 4 plots 500,000 hectares of forest nationwide assigned. Between 2005 and 2007, by 2020. several villagers rented plots from the While most of the emerging cash crop neighboring village, but the number of systems throughout the Northern cultivated plots outside the village Uplands are monocultures,30 cash boundary are decreasing. Institutional mechanisms are still used in the cropping in diverse agro-forestry village, and farmers discuss and agree systems (Group VI) and modernized rice-based agriculture (Group IV) in on plot locations. valley bottoms tend to reduce pressure B. Winners and Losers in the on uplands and lead to a higher forest Uplands Transformation cover in the surrounding areas. However, both systems are small in As policy implementation outcomes scale compared to the now dominant become more apparent, it is important crop monocultures and livestock to gain a better understanding of the production. types and groups of households that tend to gain and lose in the transition A case study from Luang Prabang of production and livelihood systems. illustrates that out-migration, reduction In the absence of a sufficiently detailed of swidden agriculture, introduction of and up-to-date database, this section is cash crops, and intensification of based on some theoretical deliberations cultivation on a few plots are on likely household development paths simultaneously occurring in Samton 32 based on asset endowments. Village (Table 4).31 While shifting Describing the asset base of rural cultivation areas are being reduced and households and understanding how household are leaving the village, assets and their mix contribute to upland rice is slowly being replaced by performance of different livelihood other crops, such as maize and cassava. strategies could be useful in discussing However, upland rice remains the policy implementation adjustments and primary staple, accounting for 89 support options to households with percent of the total land area. The certain common characteristics. distribution of the shifting cultivation areas shows that villagers obviously Household asset portfolio. In general, the household asset portfolio 30 Only maize monoculture production faces determines which livelihood strategy some restrictions through policy regulations the household will choose in the (Prime Ministerial decree on application of transition and whether the household conservation agriculture), which are weakly can successfully apply this strategy. Of enforced. 31 JICA project FORCOM (Namura and others 2007), On Patterns of Shifting Cultivation in 32 See comparable studies in Nicaragua (World Samton Village, Viengkham District, Luang Bank 2004) and in Honduras (Jansen and Prabang Province. others 2006).

48 Table 4. Basic Information on Shifting Cultivation in Samton Village 2005-2007 2005 2006 2007 Total area of shifting cultivation (ha) 152.4 110.6 111.4 Upland rice area (ha) 142.3 108.4 99.2 Other crops area (ha) 10.1 2.2 12.2 Average shifting cultivation area per household 1.7 1.4 1.4 Total number of households 88 81 80 No. of households practicing shifting cultivation 82 73 76 No. of shifting cultivation plots 127 96 109 No. of upland rice plots 96 90 80 No. of other crop plots 31 6 29 particular importance in the portfolio is includes the level of remoteness of household location, which will upland households with Type-A determine the likelihood and costs of indicating high population density and transacting in markets. In addition, a market access; and Type-E indicating household’s human, physical, and low population density and poor social capital are important market access. The same descending determinants of market participation. levels are applied to financial, The institutional environment also physical, and social capital, and similar plays an important role. Traditional levels applied to natural capital (high village and community institutions are to low security and stability) and able to govern household land human capital (conducive to non- holdings, even within the formal conducive). process of land zoning and allocation, In the uplands transition, natural by regulating access to land and other capital of households is primarily resources, re-negotiating plot determined through the push-factor boundaries, mediating in land disputes, framework. The Land and Forest and decision making in benefit re- Allocation Program might decrease distribution. access to land, the Stabilization of Households can be grouped along Shifting Cultivation Policy might these asset components, as illustrated reduce long-term quality of crop land, in Table 6. The proposed livelihood and the Village Cluster Development framework (DFID 1999) includes the can lead to changes in the size of land following asset types: (a) geographic holdings and land tenure and determinants of comparative advantage insecurity. Household types A, B, and (including population density, road E are characterized by stable access to density, and market access) (b) natural and sufficient quality of land combined capital; (c) human capital; (d) financial with secure tenure, while households C capital; (e) physical capital; and (f) and D experience restrictions in land social capital. access, reduced quality of land, and increasing insecurity of tenure Determined by a descending scale, the depending on the institutional household types are designated as environment. type-A through type-E. Referring to Table 6, comparative advantage

49 Table 5. Transition Dynamics of Different Uplands Production Systems Pull and push factors Poverty impacts and social issues Environmental outcomes Traditional systems I. Swidden farming Pull factor generally weak due to remoteness; current crops not Food security concerns in areas where Low impact: Traditional swidden attractive for markets; small income generation from wild NTFPs, push is starting or increasing and at the agriculture is still sustainable form timber, and wildlife. Push factor by restricting land access through same time the pull factor is negligible and of upland agriculture in many LFAP. Different provincial implementation practices leading to thus not providing alternative income- locations where population adapted phasing-out schemes. generating opportunities. densities are low. II. Paddy-based rice Pull and push not relevant. This system not perceived as a problem and Good market access makes diversified Low impact: little pressure on cultivation no specific policies apply. agricultural production possible. Access uplands leading to a higher forest only by lowland ethnic groups. cover in the surrounding area. Emerging systems III. Fixed rotational Strong push against swidden agriculture by restricting land access, The success of coping strategies depend Declining soil fertility and yields, cropping (mainly of LFAP, Village Cluster Development, etc. Pull and push factors both mainly on assets of individual increased erosion. Problems with upland rice) promote introduction of cash crops other than upland rice. Extent of households, functioning community, and high weed infestation lead to use of diversification depends on market access and lower transaction costs. land availability. herbicides. Push factor aims at area reduction whereas market pulls for an increase in total area. IV. Modernized rice Pull and push factors coincide: market demand for rice on one hand, Transition to the intended ‘modern’ Low impact: little pressure on based agriculture in irrigation and extension support on the other hand. agriculture is well under way. Access uplands leading to a higher forest valley bottoms only by lowland ethnic groups. cover in the surrounding area. V. Annual cash crops in Strong pull for cash crops mainly as a function of infrastructure Initial high returns and improved Mostly negative on plot scale. Still monocultures (market access). Policy push through commercialization goals. First livelihoods for most farmers. limited at landscape level with few attempts to introduce technological innovations such as conservation Long-term economic risks. exceptions. agriculture (Prime Ministerial decree). VI. Annual and Systems emerge in areas where diverse pull factors occur and Evidence of several success stories, Positive. Diverse agro-forestry perennial cash crops in farmers/traders have different markets to chose. Push is exerted mostly especially with Khmu farmers. However, systems with a higher diverse agro-forestry through donor projects that provide initial financial and extension not all households can sustain their sustainability. systems support (German Agro-Action model). livelihoods in this way. VII. Industrial Pull and push coincide. Foreign companies are interested in land Low impact yet due to long-term benefits. Negative on plot scale and smaller plantations concessions and ‘2-plus-3’ contractual arrangements. At the same time, Will lead to strong economic watershed level. Serious of perennial crops push for tree planting to comply with policy to increase forest cover. differentiation between winners and landscape-level changes would Industrial plantations of these species are classified as forest. Emerging losers. only occur if in-migration of labor push to balance the rubber boom by introducing fiscal policy and takes place at large scale. ceilings (Bokeo, Luang Namtha, Oudomxay Proviences) VIII. Intensified Initially, a response to push factors, now pull and push strongly Positive: helps farmers to cope with the Negative at plot and landscape production of large coincide due to high domestic and regional market demands for meat. restriction of land access (through free level. Overgrazing leads to serious livestock At the same time, livestock raising is promoted by PAFOs and DAFOs grazing practices) and by using income land degradation and as an alternative to swidden agriculture, and by donor projects as a from livestock sale for buying rice. savannazation. poverty reduction measure.

50 Table 6. Household Types with a Mix of Assets Comparative Natural Human Financial Physical Social capital Household advantage a capital b capital c capital d capitale f type A High High, stable, Conducive High High High secure B Medium/high Medium, Neutral Medium/High Medium Medium stable, secure C Medium Medium/high, Conducive / Medium Medium Medium decreasing, not secure or conducive insecure D Low/medium Medium/high, Not Low/Medium Medium Medium decreasing, conducive insecure E Low Medium/high, Not Low Low Low stable, secure conducive a Population density, roads, market access. b Land, tenure security. c Household size, composition, skills, ethnicity. d Cash, credit, savings, livestock. e Machinery, equipment. f Village organizations, producer organizations.

Production decisions are also depended Figure 7 illustrates possible trajectories on a household’s human capital.33 of income and livelihood security Knowledge and skills rather than development (including income from formal education determine production subsistence production) in the uplands and livelihood decisions as the transition. household usually undertakes the The principal outcomes in terms of familiar. For example, the collection of income and livelihood security for the non-timber forest products is based on 5 types of households are thus as specific indigenous knowledge of follows: ethnic groups. The ethnicity of a household strongly influences the Type A and B households will likely perceptions and views of a household. benefit in the transition to a market- Assets that might have been very oriented agriculture sector or at least beneficial in the past may render are unlikely to experience livelihood obstructive in the new context. security problems. Type C households can be either winners or loser. Those are households that are facing restrictions in land access and crop production but have opportunities of generating alternative 33 Literate households are 9 percent more incomes either in the farm or non-farm likely to make crop sales and 4 percent more sectors. Success is likely to depend on likely to own a non-farm business. Wealthier households are significantly more likely to sell functioning community institutions. crops and are also more likely to own a non- Type D households are likely to lose in farm business. Ethnic Lao households are 6 the transition simply because they are percent more likely to sell crops and also more likely to own a non-farm business (World lacking market opportunities to cope Bank, 2006 Linking Farmers to Markets – with restrictions by the push factor. In Background Paper by Hill, R.V. and other words, they represent a group of Christiansen, L.

51 households where the Government’s to the old location to cultivate the objectives of commercialized original plots; (c) out-migration to agriculture do not materialize. It is other areas or provinces. primarily this group of households that Type E households, which are just ‘left shows different response phenomena alone’ without push and pull factors, to policy restrictions, including the (a) will probably not change in terms of shortening of rotations for upland rice income; however, as soon as they are production, with emerging use of reached by the push factor, their herbicides for increased weeding unfavorable asset endowment will requirements; (b) splitting up of the cause them to transit into type-D household into a group that lives in the households. village cluster and a group that returns

Figure 7. Different Income Development of Households Types Household type Strength of pull and Income development push factors A: Increasing incomes B: Increasing stable incomes C: Increasing/ decreasing incomes D: Decreasing Incomes E: Stable incomes

Note to Figure 7. The push factor, represented by the black rectangle, is of constant strength for all households of type A to D. It only decreases in strength in very remote locations (i.e., type-E, the 20-30 percent of upland areas where the LFAP has not yet been implemented). Only household A, B and C are able to benefit from market opportunities (decreasing strength of the pull factor indicated by an orange triangle) while those opportunities are negligible in remote areas with low to medium population density and weak infrastructure.

A case study conducted in Phong Saly significantly increased income during Province on household income this period. Households, which development between 1996 and 2005, intensified upland rice production but following the implementation of the diversified only little into cash crops, Land and Forest Allocation Program were able to maintain stable incomes. and Stabilization of Shifting Those households that produced Cultivation Policy, confirms the above comparably higher amounts of upland generic livelihood trajectories.34 rice and opium in areas away from Households that switched to off-farm markets were not able to maintain labor and annual cash crop production previous incomes and compensate for the losses incurred through the shifting 34 Results of an impact assessment of the cultivation stabilization and opium Phong Saly Development Project on rural eradication programs, even through livelihood in the District, IRAM, 2006, other livelihood activities. provided by Agence de Développement de France.

52 Transition dynamics also need to be unsustainable livelihoods in the long- evaluated in view of upland food term: security concerns. The World Food Sustainable livelihoods are Program’s first country-wide food characterized by a sustainable use of 35 concluded that security study of 2006 natural resources, environmental chronic malnutrition in Lao PDR stability, and broad-based income remains at an alarmingly high level in increases for the rural population. rural areas and has not decreased during the past decade. One out of Unsustainable livelihoods are every two children in rural areas is characterized by unsustainable use of chronically malnourished, affecting not natural resources, environmental only their physical development but degradation, widening economic and also their cognitive capacity. Thirteen social differentiation of households, percent of the rural households have and the emergence of ‘problem areas,’ either poor or borderline food which will require continued support consumption and two-thirds of the by the Government of Lao or donors, upland households have an asset for example, in the form of future portfolio that makes them vulnerable to landscape rehabilitation programs. shocks. The study also reveals that Regarding the livelihood outcomes of ethnic groups that comprise the the new agricultural production majority of the upland population are systems that are shaping the Northern the most disadvantaged and food Uplands, fixed rotational cropping insecure. (Group III); annual cash crops in In conclusion, households practicing monocultures (Group V), and traditional farming systems are more intensified production of large likely to be negatively influenced by livestock (VIII) as currently practiced the push-factor framework while are likely to lead to unsustainable households engaging in fixed development patterns. However, rotational cropping and intensified several positive examples of livestock production can be either sustainable livelihood development winners or losers in the transition. exist as well albeit on a very small Households that practice other scale. Agro-forestry models of emerging systems generally benefit in Oudomxay, local community the transformation. Box 6 summarizes involvement in eco-tourism in Luang a similar transformation experience in Namtha, and careful cash cropping in Vietnam during a 1990s period of Bokeo show that in-country experience forest preservation and management. exists for the development of As in this example, whether short- sustainable livelihoods and that term, improved income generation can farmers who are provided with a lead to sustainable livelihoods in the choice, combined with initial and long term is a question further extended financial input, are likely to discussed below. adapt more sustainable livelihood strategies, with a development C. Sustainability Aspects of Upland outcome in line with the sustainable Livelihood Strategies livelihoods framework. The coping strategies reflected in the The development outcome of industrial typology of production systems can plantations of perennial crops (Group either lead to sustainable or VII) depends on scale—the larger the scale the more likely to have negative 35 World Food Program, draft report.

53 environmental impacts. As Groups III, only weakly enforced. Falling prices in V, and VI are the most widespread accord with lower yields on declining strategies emerging as a response to soils will likely cause farmers to the current mix of policy push and switch from annual to perennial crops market pull factors, the present (i.e., from maize to rubber, a trend that livelihood development in Lao PDR has already started in southern does appear to be not sustainable in the Xayabury). In those parts of the long-term. Figure 8 gives a Northern Uplands where higher visualization of the two main altitudes do not allow for the growing development trajectories. of rubber trees after the soil is depleted, livestock pastures and further D. Environmental Outcomes of the degradation or future costly Upland Transformation reforestation programs are the more The Northern Uplands of Lao PDR likely scenarios. The application of remains an ecologically, relatively conservation agriculture practices intact region as compared to would help farmers to achieve a more neighboring countries. However, balanced use of the upland soils, but so throughout the Northern Uplands far such technologies are applied at landscape-level trends have been very limited pilot scale. observed that indicate the uplands Land degradation through intensified ecosystems and natural landscapes are production of large livestock. becoming less resilient and more Numbers of ruminant livestock vulnerable as a result of the (buffalo, cattle, and goat) in the transformation process. Northern Uplands were estimated at Soil degradation through permanent 758,800 head in 2004, down from annual cropping. Farming soil 829,100 head in 1996 but up from degradation is occurring in most 550,000 head in 2001. The estimated maize-growing areas, as well as areas average annual increase between 1980 of fixed rotational cropping of upland and 2000 was 0.75 percent for buffalo, rice, in the absence of sensible crop 5 percent for cattle, and 8 percent for rotations using either nitrogen-fixing goats, representing a significant legumes or mineral fertilizers. As increase of livestock numbers, in particular for cattle and goats, in line permanent cultivation on plain areas 36 and lower slopes is expanding into with field impressions. higher and upper slope areas, soil degradation dynamics are likely to increase. Since most cash crops cannot be cultivated in steep limestone mountain areas, there are marked 36 Participatory Livestock Development differences in the landscape between Project (PLDP), Asia Development Bank, soil mountain (phu) and limestone 2006--The first comprehensive agricultural mountain (phu ba) areas, with the latter census was conducted in 1998/99. Before that being more densely forested. Market time, only estimates were collected by District development (pull factor) and and Provincial Agriculture and Forestry production costs will determine Offices, which often had to meet specified whether annual cropping areas are targets. It is likely that these figures were inflated. Conversely, data collected in the further expanding into forest areas or agricultural census may underestimate actual remain stable provided that the numbers as farmers may have under-reported restrictions (push factor) continue to be livestock numbers for a variety of reasons, such as fear of taxation.

54 Box 6 Transformation Experiences from Vietnam

Until the early 1990s, Vietnam pursued a program of socialist transformation, attempting a radical break with traditional forms of social organization and natural resources management in rural areas. In the 1960s the state nationalized forest land and established a system of state forest enterprises in northern Vietnam. Forest resources became state property. Local demands on forest resources turned into threats to forest preservation and management. Protecting the forest from encroachment by local people became the major goal of state forest authorities. State policy thus separated local people from the forest, as it has happened in other countries in Southeast Asia.

The transformation of rural resource management was far-reaching as well. The collectivization campaigns around 1960 implanted agricultural producer cooperatives into the villages of northern Vietnam. Local relations and institutions among people gave way to a centrally conceived scheme of rational land management. Cooperatives replaced communities, as state forests substituted for local forests. Village institutions regulating agricultural production and socio-cultural life were to disappear, just as local forest use had to cease. State forest management was only part of a larger attempt of transforming the use of rural resources and traditional social structures in the highlands. The transformation of social structures and resource use also included massive programs of resettlement and sedentarization. Between the late 1960s and early 1990s, the Vietnamese government resettled around five million people from lowland provinces into the uplands. The settlers were to expand Vietnam’s cultivated area and exploit natural resources in upland areas, which were perceived as “under-utilized.”

The Fixed Cultivation and Sedentarization Program had the objective of settling pioneering swiddeners by providing permanent settlements either in the same area or in more fertile, more accessible, non-catchment areas at lower altitudes. The program covered 1.9 million highland cultivators between its establishment in 1968 and 1990. In addition, the Government envisioned state forest and agricultural enterprises to play important roles in regional development in the highlands.

The transformative approach to managing rural resources brought about a drastic decline in Vietnam’s forest resources. In 1991, the Government classified 10 out of 19 million hectares of designated forest land as ‘barren’ because it was not covered with trees. For the whole country, the annual loss of forest had been reported as 110,000 hectares in the late 1980s. Furthermore, major Government policies and programs, including the Doi Moi economic reforms drove agriculture transition in Vietnam’s Northern Uplands. Starting in 1982, land use rights for previously collectivized paddy fields and plots of sloping lands were allocated to individual households to intensify agricultural production. In the given policy and market environment, farmers shifted from traditional to ‘modern’ production systems within less than a decade, causing widespread problems with massive erosion and land degradation (e.g., in the Northwestern Song Da watershed, which feeds Vietnam’s largest hydropower plant, the Hoa Binh dam).

Beginning around 1993, forest land allocation and large-scale tree plantation programs were implemented in response to the deforestation trend and unsustainable land use patterns. Although reforestation efforts have been impressive, plantations have much lower biodiversity values than the natural forest they have replaced. In addition, farmers yet again had to develop new production systems to sustain or increase the income they could generate from shrinking agricultural land accessible, with fruit tree orchards, fish ponds, and intensified livestock production systems emerging. While a considerable part of the upland population has benefited in terms of income and sustainable livelihoods, ethnic communities in mountainous areas, in particular the Hmong, still rely on swidden agriculture and remain the poorest segment of the population in Northern Vietnam.

Source: T. Sikor and U. Apel, Discussion paper prepared with support of the Asia Forest Network, 1998.

55 Figure 8. Livelihoods Framework in Upland Areas of Northern Lao PDR

Policy and Institutional Environment

Vulnerability context Livelihood assets Push & Pull Factors Development Outcome A: ƒ Shocks ƒ Human Regional markets Unsustainable Livelihoods ƒ Seasonality ƒ Natural Domestic markets ƒ Unsustainable use of NR ƒ Climate change ƒ Financial ƒ Environmental Degradation ƒ Market fluctuation ƒ Physical Influence Government policies ƒ Average income increase but ƒ Overlapping land-use ƒ Social & & provincial priorities poorest are further (logging, ƒ Comparative impoverished Access hydropower) advantage Project support (ODA) ƒ "Problem areas" which need Farmers’ further ODA strategies

Development Outcome B: Sustainable Livelihoods ƒ Sustainable use of NR ƒ Environmental stability ƒ Slow, but broad-based income increase ƒ Increased well-being ƒ Independent development

56 Government and donor partners grass- and shrublands. Grazing in generally assess livestock as highly natural forests, combined with the use positive for poverty reduction and as of fire, is leading to a long-term an alternative to swidden agriculture. change in its floristic composition Negative impacts are considered toward drought- and fire-resistant insignificant and localized and are species and to open forest and restricted to water contamination from shrublands. confined pen areas and the nutrient Serious landscape-level degradation depletion under cut-and-carry systems, through overgrazing is occurring in both of which have mitigating large parts of Xieng Khouang, Luang measures to prevent any negative Prabang, and Houa Phan where the environmental impact. Other density of ruminant livestock is researchers (e.g., considerably higher than in other areas Phimphachanhvongsond and others of the Northern Uplands. Uncontrolled 2004: 129-138), recognizing the free grazing and foraging with limited problems of livestock intensification supervision is the common practice. without appropriate technologies, are Additional fodder production is limited convinced however that livestock and only practiced on piloted scales. A intensification is a pathway out of new trend is that farmers deliberately poverty. The overall outcome is that use forest fire to induce fresh grass livestock production is heavily growth every year. This will ultimately promoted across the Northern Uplands. lead to fire successions and open Field observations revealed a grazing landscapes with Imperata and widespread but inaccurate view of shrub associations, including sparse PAFO and DAFO staff. They believe trees of species that are adapted to that ruminant grazing increases forest regular fire (Pinus spp., Schima cover. This view probably stems from wallichii). After the fire disturbance observations that grazing on fallow regime becomes established, the new areas that are regenerating more slowly system becomes dependent on this because of intensive swidden regime and increasingly difficult to agriculture of the past can have an rehabilitate (e.g., through initial positive effect on the afforestation). recruitment of trees by removing their Overgrazing is by no means limited to grass and shrub competitors. However, grazing systems and is also likely to the pioneering species that are usually become a problem under mixed occurring are fire- and drought- farming systems (Box 7). Grazing resistant species. Grazing will inhibit lands in the Northern Uplands are the further succession toward natural located in comparably dryer areas and forest plant communities and will often nutritionally marginal by nature. create an open landscape with sparse Here, overgrazing removes protective trees or—depending on the grazing vegetation and compacts soils making intensity and natural conditions— them vulnerable to water and wind

57 erosion, which further depletes the reduction of natural forest areas and nutritionally richer upper layers. Over their replacement with industrial long periods of time, selective grazing plantations, agricultural cash crops, of the more palatable plants in and pastures, as well as forest combination with the deliberate use or degradation through logging is accidental occurrence of fire, the accelerating in large parts of the landscape completely changes in terms Northern Uplands. Significant of vegetative composition and cover. landscape-level changes are likely to The best example in Northern Lao is be seen in the decades to come. the pine savannah forests on the Plain Compared to neighboring countries, of Jars, an outcome of overgrazing. the scale of transformation is smaller, but locally it is significant. Most of the Transformation of natural forests into existing forest in the Northern Uplands industrial tree plantations. The

Box 7 A Global Perspective

In a global perspective, inappropriate grazing—or overgrazing—is the major cause of land degradation and desertification. This is well-known and well-documented for arid and semi-arid grazing systems. But this process also occurs in humid and sub-humid grazing systems as well as in temperate and tropical highland systems. The introduction of domestic livestock can have a dramatic effect on ecosystems.

ƒ In North America, the grasslands that once dominated the central areas have been greatly reduced through overgrazing, agricultural development, and fire suppression. These grasslands are the primary agricultural land in North America. Only about 1 percent of the original prairie ecosystem is still intact (Barbour and Christensen 1993). ƒ In the Middle East, overgrazing by goats, sheep, cattle, and camels is one of the principal causes of desertification in the region. ƒ In Central and Northern Asia, over-grazing is a serious threat in semiarid regions, where most of the pasture has been degraded and lost to erosion. ƒ In South America, huge areas of the cerrado have been devastated in the last decade by cattle ranching and mechanized agriculture. In 1990, an estimated 56 percent of the original two million square-kilometers was in managed use and 37 percent under cultivation (Dias 1990: 583-640). ƒ In Africa, large herds of cattle and goats are maintained, and their grazing has a major impact in many areas of woodland, wooded grassland, shrubland, and grassland. Restrictions of movement of animals, along with increases in numbers, have led to severe environmental degradation in some areas. Successful tsetse fly eradication campaigns, such as in the Zambezi Valley, have led to uncontrolled settlement and introduction of domestic cattle, causing the rapid degradation of previously almost untouched vegetation. ƒ On small islands, overgrazing can be a major threat to the survival of native ecosystems. For example, overgrazing is the second most important threat in some parts of Gran Canaria on the Canary Islands, and particularly on the island of Fuerteventura, where original forest landscape has been reduced to desert over the centuries.

The global livestock sector generates more greenhouse gas emissions measured in carbon dioxide (CO2) equivalent than transport. When emissions from land use and land use change are included, the livestock sector accounts for 9 percent of CO2 deriving from human-related activities, but produces a much larger share of even more harmful greenhouse gases. It generates 65 percent of human-related nitrous oxide, which has 296 times the global warming potential (GWP) of CO2. Most of this comes from manure. It also accounts for 37 percent of all human-induced methane emissions, which is largely produced by the digestive system of ruminants, and 64 percent of ammonia, which contributes significantly to acid rain (FAO 2006).

58 is composed of natural forest plant Table 7 summarizes policy communities. The percentage of implementation weaknesses and gaps. plantations and thus of non-natural As discussed, these outcomes extend forest will increase in the future. The over economic (e.g., livelihood Forest Strategy 2020 set the target of insecurity, high-risk production 500,000 hectares of plantations until strategies); environmental (e.g., 2020 for which only a few species, increasingly unsustainable land use); such as rubber, teak, Aquilaria, and socio-cultural and institutional eucalyptus, and probably Pinus, will issues (e.g., loss of traditional probably be used. institutions and governance mechanisms). Some of the outcomes, Landscape transformation through such as those resulting from intensive other macro-scale land use priorities. maize mono-cropping, are affecting the Besides smallholder activities, other individual farm level; some occur at macro-scale development priorities the watershed level, such as industrial have environmental impact at tree plantation development, and some landscape level. Among these, most have even landscape-level notably hydropower development is implications, such as the intensified high on the agenda of the Government production of ruminant livestock. of Lao PDR. By 2020, Lao PDR envisages energy generation with an The current policy framework installed capacity of 30,000 represented by the 4 Goals and 13 megawatts. The figure includes 8,675 Measures is promoting agriculture megawatts to be generated by 29 major commercialization and market hydropower projects being built or integration while its broader upland proposed along the Mekong River and and rural development-related its tributaries.37 The schemes in the elements have primarily restricting Northern Uplands will lead to the effects on upland communities and inundation of valuable arable and their livelihood strategies. The success fertile land on which intensive and of promoting commercial agriculture permanent agricultural production primarily depends on the strength of would be possible. the market pull factor, which is a function of access to market E. Synthesis on Policy Outcomes and infrastructure. The stronger this market Policy Gaps pull, the less restrictive is the policy The Government’s upland and push-factor framework—reflecting an agriculture policy goals are being inherent contradiction in the policies in increasingly achieved but that remote upland farmers face more implementation practices have led to a restrictions with regard to their number of significant unintended and livelihood opportunities and transition often negative outcomes, which are not options while only those farmer well recognized or yet addressed. households with market access tend to benefit from the policies. 37 Vientiane Times, January 12, 2008.

59 Equally important, the upland and rural sensitive to those of the Lao society development policies are in striking who live in remote areas with limited contrast with the NGPES-formulated market access and few alternatives for goals of poverty-reduction and pro- ensuring food security and generating poor growth. A key conclusion is that income other than traditional swidden the current policy framework in its agriculture. implementation is not sufficiently

Table 7. Policy Implementation Weaknesses and Policy Gaps MAF Policy Goals & Policy implementation weaknesses Emerging policy gaps related programs Goal 1. Food ƒ Based on lowland perceptions ƒ Contradiction with Goal 3 production; Food and ‘green revolution models’ ƒ Contribution of swidden security ƒ Narrow technical focus (soil agriculture to food security in suitability, crop varieties, yields) poverty districts neglected ƒ Weak extension services ƒ Contradiction to restriction in ƒ No pro-poor implementation land access for upland rice mechanisms in place production ƒ Poor design and maintenance ƒ Cash crop promotion not of irrigation schemes leading to food security Goal 2. Commodity ƒ Negligence of promotion of ƒ Not feasible in areas with weak production; smallholder agriculture and infrastructure Commercialization reliance on concessions ƒ Leads to monocultures (not to ƒ No policy framework in place the desired diversification) to facilitate/balance market ƒ Leads to lower forest cover and ƒ Lacking market information fragmentation of natural forest systems ƒ Risk management (market ƒ Little attention to quality fluctuations, market failures) control ƒ Potential of NTFP ƒ Organic agriculture not overestimated sufficiently promoted Goal 3. Stabilization of ƒ Too rapid and poorly tailored ƒ Unintended side effects such as shifting cultivation; to needs of ethnic communities weakening of social institutions Land and forest in upland areas at grassroots level allocation; ƒ Implemented with poor ƒ Promotion of single technical Permanent occupation participation at village level solutions (e.g., livestock) leading (Village Cluster ƒ Differing priorities in provinces to less sustainable land use and Development) leading to different outcomes environmental degradation ƒ Little regard for socio-cultural ƒ Scarce income-generating implications alternatives in remote areas ƒ No pro-poor sensitivity ƒ Period of higher land tenure ƒ Little flexibility for alternative insecurity by replacing livelihood strategies customary with statutory rights Goal 4. Sustainable ƒ Continued operation of timber ƒ Need for improved community- forest management; quota system based forest management Watershed ƒ Illegal logging not adequately ƒ Contradiction with other management addressed development priorities (e.g., ƒ Focus on plantation forestry vs. mining and hydropower) natural forest management ƒ Higher forest cover goals but lower diversity and ecosystem integrity accepted

60 Livelihood Development: Policy and Support Options

asset bases of the poor are lacking. This final chapter discusses options for supporting a successful transitional While investments in such single assets framework in the Northern Uplands in as road infrastructure or rural four key areas: electrification remain critically important for regional integration and ƒ Fostering integrated rural commercialization, these investments development approaches, need to be complemented by ƒ Enhancing the policy framework, geographically targeted and integrated ƒ Defining the role of government in support for rural livelihood the transition, and development in marginal areas. Investments would help build and ƒ Managing environmental improve household assets and enable outcomes. upland communities to better A. Integrated Rural Development participate in overall upland Approaches development. Such support would include investments in small-scale, How to provide livelihood support to community-based rural infrastructure; disadvantaged communities in agricultural technologies that are marginal areas. adapted to livelihood needs but also to There is a strong rationale for changing production and market Government intervention in the conditions; health and sanitation; and Uplands to provide disadvantaged education. With regard to the emerging communities in poor and marginal production systems, tailored support in environments with support in the form new production technologies for fixed of demand-driven integrated rural rotational cropping, upland and development approaches. The Uplands intensified rice cultivation, cash are becoming increasingly cropping, and livestock raising need to heterogeneous and economically be provided. This support could come, dissimilar in the transition, with some for example, through investments in areas advancing and others being left agriculture extension to promote the behind. Because of the current adoption of sustainable production and inequalities in households’ assets, grazing practices; improvements in the policy and market-based reforms alone delivery of livestock services, market cannot quickly level the playing field support services (price information, between the asset poor and those who grading, post-harvest management, possess the complementary assets tc.), and also through institutional necessary to exploit economic development such as promoting farmer opportunity. Some growth-oriented groups and marketing associations. investments can bypass poor The appropriate roles of the public and households and deepen inequalities if private sectors in providing access to more targeted interventions to build the assets should be carefully considered.

61 B. Policy Framework Cultivation Policy. On the other hand, policies could be formulated in ways How to make the upland and that distinguish between individual agriculture policy framework pro- production systems, market access poor sensitive and ensure broad-based conditions, and remoteness level of agriculture growth and sustainability upland communities as well as market in the Northern Uplands. participants. Policies should not only With regard to traditional farming focus on smallholder producers but practices, upland environmental also include private commercial degradation, and upland poverty, a investors if overall poverty reduction careful and open policy assessment of and rural development objectives are to whether these underlying assumptions be achieved. are adequate and relevant would be an While there is certainly a need for important step toward making the more effective participatory extension upland and agriculture policy approaches and improved framework less restrictive for upland technologies, technical issues are livelihoods and more pro-poor presently given too much attention for sensitive. A useful assessment should direct government intervention (e.g., build on evidence and local analysis of land suitability, soil experiences with traditional land use fertility, seed varieties, crop selection, practices and their livelihood and food irrigation structures, etc.) while at the security benefits, socio-cultural and same time the creation of an enabling ethnic conditions, and ecological environment for livelihood security is appropriateness in the upland not given the needed attention. environment of Lao PDR. Although technology investments A revised upland and agriculture could lead to improved productivity policy framework would distinguish and diversification into higher-return between the different levels of activities for some, support for intervention. On the one hand, policy agriculture production alone is not interventions could be tailored to sufficient for sustainable poverty location-specific characteristics; for reduction in upland areas. example, in places where market Finally, there is a need for applied and opportunities are not available, upland problem-oriented policy research communities should not be subjected within the Government and other to the same extent of land use organizations in Lao PDR. In view of restrictions as those who have the above, building Government policy opportunities for alternative income research and evaluation capacity— generation outside traditional beyond measuring output targets—is agricultural practices. This would probably one of the most immediate require a more careful and flexible priorities. sequencing of policy implementation, especially in the case of the LFAP and the Stabilization of Shifting

62 C. Role of Government in the context that the Government is Transition obligated to redefine its role: from one of being a central planner and macro How to provide public services more and micro supervisor, to one of being a effectively and facilitate private sector facilitator, monitor, and guide. investments in support of sustainable A clearer picture and definition of the upland development. Government’s own program is a Defining the 4 Goals and 13 Measures prerequisite for potential programmatic and the individual programs and funding support from the State budget, activities that are to be implemented through domestic sources and the (and need funding) at central, donor community. With clearer provincial, and district levels could operational definition of the 4 Goals help to develop a better sense of the and 13 Measures, Government’s key public and private sector elements in responsibility to support this framework, for example, with implementation of the programs with regard to public infrastructure appropriate expenditure policies investments in relation to the becomes more focused. Government’s regulatory and Investments in infrastructure are likely facilitator roles. It also includes the to emerge as key priorities for need for understanding the overall Government intervention. Improved fiscal implications with regard to road access would have a positive investments and recurrent costs and impact on market participation and operational budgets under 4 Goals and poverty reduction. It has been 13 Measures. demonstrated that the magnitude of the The role of government in the upland pull factor in the Uplands is mainly a agricultural development process is function of road and river likely to become increasingly more infrastructure. Roads and other market- important in light of the more complex related infrastructure have direct and nature of the market. Prior to the 6th indirect influence on household and 7th Party Congresses, agricultural economic decisions and livelihood development focused on national and strategies. It is imperative that these local food security and meeting the investment priorities are reflected in immediate needs of the Lao people. the 4 Goals and 13 Measures and fiscal The market was clearly identified as a implications are assessed. Other domestic market and the needs of that support options, in relation to market market were determined to be staple infrastructure, would include market foods in the Lao diet: rice, meat, and information systems, training in vegetables. Subsequent to adoption of entrepreneurship, micro-credits, market-oriented policies, followed by education, among others. globalization, trade liberalization, and The provision of secure land tenure economic modernization, producers and land titling is an upcoming issue in began to respond to market signals Lao PDR. The increasing awareness of from different sources, mostly outside land scarcity is only now emerging in of Lao, but still nearby. It is in this

63 the transition from a predominantly especially important in determining subsistence economy to a market whether there is additional potential for economy, where a market-oriented livestock in mixed farming systems tenure system based on property rights that produce forage in sufficient is desired and necessary. Similarly, quantities or whether livestock serves promoting an enabling environment for as mainly a security system and one of farmer-to-business arrangements is the dominant coping strategies of needed. Study of various contract farmers facing the shifting cultivation farming arrangements should be ban. In case of a livestock-based undertaken for the purpose of security system, negative outcomes identifying the scheme that provides result from overgrazing by ruminant maximum benefits to the producers livestock. Short-term technical while not dissuading the investors. solutions pasture management, cut- Although an assortment of and-carry systems, forage production, arrangements could be acceptable, vaccination, and stall feeding need to each should describe the situation for be adapted by farmers into their which it is most suitable and most traditional livestock management inclusive. Inexperienced and largely systems. This would require a illiterate farmers (particularly women participatory research and extension and ethnic minority groups) should be approach with committed and provided with detailed explanations of informed follow-up and responsiveness the terms and conditions of the to farmers needs. In relation to cash- arrangements, a critical point as crop monocultures, avoiding negative “agrarian policy in Lao moves long-term impacts on the environment vulnerable rural people toward a fuller and local economy would require integration.” improving enforcement of existing restrictions and regulations (direct D. Environmental Outcomes seeding, mulch-based conservation How to manage environmental agriculture; tractor plowing; forest outcomes and mitigate negative protection; among others) and impacts of the transition. promoting direct seeding, mulch-based conservation agriculture and Managing the environmental outcomes diversification through large-scale of the transition process requires program support. Government attention. Four areas stand out: impact of intensified livestock Avoiding the negative environmental development, cash crop monocultures, impacts of large-scale rubber large-scale rubber plantation plantations would require introducing development, and community-based ceilings and fiscal policy that would resource management. These can be set incentives for a more addressed in the context of integrated environmentally sound cultivation of watershed management. Specifically, rubber (e.g., protection of ecological the long-term sustainable potential for valuable streams, rivers, and creeks). livestock development in the Uplands Lack of macro land use planning and should be carefully assessed. This is regulations has been a major problem

64 for an environmentally sound establishment of rubber plantations. Clear regulations should be formulated and enforced. Initial efforts have been made in Luang Namtha, Oudomxay, and Luang Prabang toward this measure; initiatives self-started by each of the provinces. Community management of natural forests, especially the sustainable production of valuable timber, has a good potential for development of the Northern Uplands in an environmentally more sound way. Information gaps for managing environmental outcomes of the transition include rates, locations, and types of deforestation, and land degradation; and monitoring and evaluation of the environmental impacts of policies.

65 ANNEX A. PRODUCTION CHANGE FOR MAJOR CROPS AND CATTLE IN NORTHERN UPLANDS, 1995 AND 2005

1,000 hectares 1,000 head Province Wet season rice Upland rice Maize Soybean Rubber Cattle (targets) 1995 2005 1995 2005 1995 2005 2007 1995 2005 2007 1995 2005 Phong Saly 5.5 9.0 20.7 5.5 2.0 2.1 4.3 1.3 0.3 8.0 17.3 20

Luang Namtha 5.8 12.7 13.4 6.7 0.45 1.7 1.9 0.1 0.0 13.0 21.2 24 (20.0) Oudomxay 7.5 11.7 26.0 15.3 4.39 15.7 21 0.4 0.3 9.0 41.6 29 (2007) (30.0) Bokeo 7.1 12.8 7.2 3.9 0.67 6.4 13 0.1 0.3 0.7 27.8 26 (2007) (15.0) Luang Prabang 8.4 13.8 37.2 2.6 4.98 8.8 12.5 0.3 4.1 4.0 34.1 39 (30.0) Houa Phan 8.1 11.5 15.3 13.6 3.01 4.0 6.5 1.0 2.4 ? 30.0 47

Xayabury 18.0 25.0 14.0 15.0 2.35 20.1 29.6 0.3 0.2 0.06 57.6 65 (50.0) Xieng Khouang 11.9 16.8 8.3 7.0 4.84 6.9 11.0 0.2 0.5 74.9 89 (2007) Northern Uplands 72.3 113.3 142.1 69.6 22.7 65.7 99.8 3.7 8.1 304.5 339 (2006/7) Lao PDR 367.3 569.8 179 105.2 28.3 86.0 113.8 5.8 9.5 1,145.9 1,272 Sources: Agriculture Statistics Yearbook 1975-2005; and Yearly Statistical Report, 1975-2005 (Ministry of Agriculture and Forestry, Department of Planning); and consultations with provincial authorities.

66 ANNEX B. SWIDDEN AGRICULTURE SYSTEMS – MISCONCEPTIONS AND EMPIRICAL EVIDENCE

Traditional forest-based swidden In a long-term case study in three agriculture is the focus of intense villages in northern Lao PDR, debate in the context of upland Seidenberg and others (2003) report a agriculture and agro-forestry deforestation rate of only 1 percent development.38 Swidden agriculture on over 10 years (1989-1999) where the forested land is generally characterized deforestation rate reflects shorter as destructive and wasteful and seen as fallow periods in swidden systems of a major cause for deforestation leading secondary forests rather than to soil erosion and ultimately to encroachment on mature forest. In environmental degradation. It is also comparison, the annual deforestation often stated that increasing population rate for all of Lao is estimated to be pressure leads to more frequent 0.45 percent. Fox and others (2000) cultivation cycles and shorter fallow suggest that deforestation, referring to periods resulting in lower soil fertility a permanent change in land cover from and yields and barren land or marginal forest to non-forest, is not taking place grassland successions and ultimately in to the extent previously suggested in the collapse of the production system. swidden agriculture areas in the northern mountain regions of Vietnam. Sustainability and diversity. Swidden Supporting this view, Leisz and others agriculture systems can represent (undated) in a case study in the Ca highly sophisticated and productive River Basin in Northern Vietnam, uses of forest land and might indeed be suggest that remote sensing and digital the only sustainable form of agriculture image processing with broad yet devised for tropical rainforest classifications fail to capture the habitats (Kleinman and others 1995). Comparisons between rice yields in differences between the agricultural lowlands and swidden fields are system and the forest, especially for misleading, as they do not take into land cover classes associated with the account the many other crops exploitation of the forest, degraded associated with swidden upland rice forest, bamboo, shrub, grass, and cultivation (Ducourtieux 2004: 71-94). farmland. Mertz (2002) reviewed 330 Swidden agriculture is typically part of studies regarding the widely accepted a broader portfolio that also includes correlation between shortened fallow collection of non-timber forest periods and yield decline. His results products, hunting, agro-forestry, home question whether a correlation exists gardening, and wage labor (Dove and and concludes that gloomy “collapse” Rhee 2004). And it produces relatively scenarios are not justified. Kuniyasu high returns per unit of labor (Conklin (2002) supports this result in a case 1957), which gives farmers time to study from the Jinuo mountains in engage in a number of livelihood Xishuangbanna where swidden activities simultaneously. farming systems still work with much shorter fallow periods. In conclusion, the majority of scientific research on swidden agriculture 38 See for example Dove 1983, Dove and Rhee systems over the past 50 years points 2004, Fox and others 2000, Hayes 1997, to its relatively high environmental Laungaramsri 2005, Mertz 2002, Saenmi and Tillmann 2006. sustainability and resilience,

67 importance for food security, high especially important within the formal returns to labor, and species process of land zoning and allocation enrichment and biodiversity by shaping equitable household land conservation. holdings, regulating access to land, renegotiating plot boundaries, Community-based access to mediating in land disputes, and making resources. Swidden agriculture is decisions on benefit redistribution. usually perceived in the context of open access to forest resources without Subsistence versus market clear rights to the resource or control participation. Swidden agriculturalists mechanisms. Indigenous people—to are generally perceived to be whom traditional swidden subsistence based on upland rice and agriculturalist usually belong—do cut-off from markets and view land not as a commodity but commercialization. However, swidden often as an endowment with sacred agriculturalists, in addition to planting meanings, embedded in social relations subsistence food crops, typically also and fundamental to the definition of a plant or collect market-oriented cash peoples’ existence and identity (Davis crops and, as a result, are often 1993). The customary practice of connected to the market economy. swidden agriculture is based on what Historically, the best example is could be termed ‘community property opium, which has been an important rights,’ which are usually differentiated crop in swidden systems for the last along individual, gender, family, 150 years. With its favorable bulk- lineage, and community lines value and easy storage, opium was an (Laungaramsri 2005). ideal cash crop in remote areas such as the Northern Uplands (Epprecht 2000). Swidden fields are typically worked by Foppes and Ketphanh (2004: 181-93) individual households and/or by report significant annual household reciprocal work groups, and its yields cash incomes from selling non-timber are owned and consumed privately and forest products ranging from US$69- individually by each household (Dove 127, averaging 45 percent of 1993). In the customary system, household cash incomes. In a case household rights to swidden fields as study on swidden farmers in Samlang, well as to fallow land are Ducourtieux (2004: 71-94) reports a circumscribed by community rules and solid economic performance with opinions. Several regulations ensure average family incomes over 15.6 equity among households and attest to million Lao Kip (US$1,490) per year, the complexity and flexibility of including the market value of self- ownership versus usufruct rights (e.g., consumed produce. Monetary income an individual household of one lineage is about 13 percent and does not that is in need of land may request primarily stem from swidden another lineage in charge to allow use agriculture, but from collecting non- of the land). For centuries community timber forest products, hunting and institutions have developed specific fishing. rules that govern access to land. Functioning institutions are thus

68 ANNEX C. CONTRACT FARMING ARRANGEMENTS IN THE NORTHERN UPLANDS

Name Nationality Activity Area (ha) Years Total investment (US$) Oudomxay Province Siphan Salika Rubber Lao Rubber plantation, provide rubber seedlings to local 10,000 15 1,000,000 Development producers New Over Technology Lao Promote Eucalyptus plantations, gather NTFPs from local 40 2,000,000 Natural Resource Import- people, semi-processed wood for export Export Co., Ltd. Maize Dryer Factory Lao Promote maize raising, gather and dry for export 1,476,600 Davone Agriculture Lao Provide crop seed, gather NTFPs & agricultural products 15 350,000 Development Import- from farmers Export Somechanh-Chanpheng Lao Rubber planting, provide rubber seedling 100,000 Rubber Jianfong Rubber Chinese Rubber plantation, rubber processing for export 6,700 M. Houn 15 4,500,000 Development Co., Ltd. 6,000 M. Beng Oudomxay Jinling Botanical Chinese Orchid planting for export 15 990,000 Medicine Chernyian Laos-China Co., Chinese Castor-oil planting and gathering for export 15 500,000 Ltd. Laos-China Jiantaly Rubber Chinese Establish rubber research plots, provide rubber seedlings, 2,000 40 2,000,000 Development and gather latex for processing and export Sino-Lao Rubber Co., Ltd. Chinese Establish rubber research plots, provide rubber seedlings, 5,000 30 1,000,000 and gather latex for processing and export Moxie Co., Ltd. Chinese Promote maize growing, gather for processing and export 30 2,480,000 Laos-China Yingjingpa Chinese Establish rubber research plots, provide rubber seedlings, 2,500 30 3,000,000 Rubber Co., Ltd. and gather latex for processing and export Laos-China Herngsin Chinese Promote maize growing, gather for processing and export 15 3,000,000 Development Co., Ltd. Chongxay Rubber Co., Ltd. Chinese Establish rubber research plots, provide rubber seedlings, 2,000 30 3,000,000 and gather latex for processing and export Ha Oudom Import-Export Viet Nam Mushroom raising for export, import agricultural machinery 15 200,000

69 Name Nationality Activity Area (ha) Years Total investment (US$) Co., Ltd. Fouthor Agriculture Viet Nam Import crop seed, agricultural machinery, gather agriculture 10 295,000 Development Co., Ltd. products and NTFPs for export Kuangwing Agriculture Viet Nam Provide crop seedlings, gather agriculture products and 15 300,000 Development Import- NTFPs for export Export Co., Ltd. Pakbeng Tea Malaysia Promote tea growing, gather tea leaves for processing and 15 700,000 export. Natural Products America Promote organic soybeans and corn; operate a corn-drying 5 International facility Lao Farmers’ Products Lao Promote farmers with rice, tea, and pineapple; and purchase those productions for full processing, purchase mark nord & tamarind Lao Food State Enterprise Lao Purchase NTFPs from farmers (Mulberry bark, peuak meuak, and bloom grass) Mr. Khamlar (exporter) Lao Purchase NTFPs from farmers (Mulberry bark, peuak meuak, mark kha, and bloom grass) Pasong Trading Lao Purchase peuak meuak, bamboo shoot, and bloom grass Mr. Arthang (exporter) Lao Purchase peuak meuak and bamboo shoot for export Kuangving Company Lao Purchase cardamom, peuak meuak, bamboo shoots, mak kha, and broom grass Fou Thor Company China Purchase cardamom, peuak meuak, bamboo shoots, mak kha, and broom grass Banlouphon Company Lao Purchase cardamom, peuak meuak, bamboo shoots, mak kha, & broom grass Luang Namtha Province Friend of the Upland Farmer USA Promote corn and soybeans for trading and for milling into livestock feed, promotion and processing of NTFPs and cardamom, integrated fish and poultry raising Zenhua Rubber China Rubber for export to China 500 ha (est.) 6,000 tons Flour Lao China China Grow cassava 214 ha No contracts

70 Name Nationality Activity Area (ha) Years Total investment (US$) Natural Rubber of Yunnan China Produce rubber 1,500 ha total Individual Chinese investors China Grow watermelon, pumpkins, bananas, and sugar cane 230 ha (with Lao partners) Mr. Mae Sa China Produce rubber Sino-Lao Rubber Co., Ltd. China-Lao Produce rubber 5,500 ha Seunly Company from China Produce rubber 2,000 Mengla, China Xieng Khoung Province Lao Sericulture Company Lao Promote mulberry leaf production, promote weaving, purchase silk thread from villagers for textile production Sengpheth Winery Lao Purchase fruit from farmers, process fruit for wine and conserves and jams Bokeo Province Natural Products USA Promote corn and organic soybeans for trading and for International Company milling into livestock feed Houa Phan Province Superbee Network Singapore Beekeeping & honey production (withdrawn in 2005) Agroforex France Benzoin Outhaithany Grow and process red tea at Jatropha plantation; establish a provincial organic products association for Jatropha and red tea farmers, export tea to France

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