Slow improvement of agriculture industry drives food price rise
Slow improvement of agriculture industry drives food price rise
The slow development of Laos' agriculture industry is one of the main factors driving the rising price of food and economists are urging the government to take serious action to speed up the advancement of the sector.
Slower agricultural development over the past five years has led to the supply of food being insufficient to meet rising demand due to an inflow of foreign investment and migrant workers, according to a report from the Ministry of Planning and Investment.
In the 2012/2013 fiscal year, the agriculture sector grew only 3.1 percent employing more than 70 percent of the Lao population.
The government plans to speed up the growth of the sector to 3.3 percent this fiscal year, which will see it account for 24 percent of GDP.
Officials said despite the government launching a campaign to encourage commercial agriculture, most Lao farmers still produce food mainly for their own consumption and many have no desire to improve their production efficiency.
The price of food has continued to increase over the past few years thanks to rising demand.
The government has introduced a number of measures to keep prices low but they have not been effective, according to a report from the National Statistics Bureau.
The Cons umer Price Index of food and non-alcoholic drinks showed prices were 12 percent higher last December than they were in December 2012, with the prices of vegetables, pork and beef the main driving factors.
Officials and economists have said the rising price of food is unsurprising as supply has not kept up with demand. As long as the majority of Lao farmers produce food solely for their own consumption the supply of food will be insufficient, they have said.
The number of foreign migrants in Laos is increasing due to foreign investment. Most migrants come to Laos for business reasons and have high purchasing power, causing prices to increase and negatively affecting local residents with low disposable incomes.
“Only rich people can afford a native Lao chicken as they cost more than 70,000 kip,” one of the observers said.
Dr Mana Southichak, a senior economist, said agricultural development was in need of an injection of cash as most bank loans have been given to construction businesses and large investment projects.
He said that the government should establish mechanisms to channel more credit to small and medium agricultural enterprises to increase output, meet consumption demand and put downward pressure on food prices in Laos.
vientiane times
