Thai contract farming deal to boost Lao agribusiness
Thai contract farming deal to boost Lao agribusiness
The outlook for agribusiness in Laos improved this week after the Ministry of Industry and Commerce signed an agreement with Thailand on contract farming, according to a Lao business representative.
President of the Lao National Chamber of Commerce and Industry, Mr Kissana Vongsay, made the comment on Wednesday after Lao Minister of Industry and Commerce Dr Nam Vinhaket and Thai Foreign Minister Surapong Tovichakchaikul signed an MOU on contract farming.
Under the deal, Thailand will open its doors to Lao agricultural products, which will encourage Thai businesses to partner with Lao farmers to grow crops in Thailand.
However, Mr Kissana said it would take some time for the two countries to put the MOU into practice as they will need to discuss details such as quantities, pricing, stockpiling and the delivery of produce.
The deal will boost Thai investment in Lao agribusiness, which will be a significant boost to businesses operating in the field. Thailand needs a large supply of crops as raw materials to supply its food processing industry.
Laos has huge potential for development in the agriculture sector thanks to its plentiful fertile land and the fact that most people in the country are farmers. The government encourages farmers to grow cash crops as they believe this will help them to generate more income and alleviate their poverty.
One of the main challenges for Lao agribusiness is to source the necessary funding, technology and markets.
Thai businesses have provided financial support, technical advice and ready markets for Lao farmers for a number of cash crops, particularly sweetcorn.
Another challenge going forward for Thai businesses and Lao farmers is the uncertain policies of the Thai government. On several occasions, the Thai government has banned the import of agricultural produce from Laos to protect its own farmers.
Sweetcorn growers in Xayaboury province suffered after Thailand banned the import of the crop. Some farmers had to sell their sweetcorn for a low price just so they could get enough money to pay off their bank loans.
Some farmers are reluctant to grow more crops fearing the uncertain nature of markets.
Lao officials say this latest deal will create confidence among both Thai investors and Lao farmers in joining forces to grow crops for the Thai market, and the boost it will bring to agribusiness in Laos.
vientiane times
