Lao PDR: Sustainable Natural Resources Management and ...

Documents Produced under Grant

Project Number: 37579-032 October 2014

Lao PDR: Sustainable Natural Resources

Management and Productivity Enhancement Project

Banana, Sweet Potato and Peanut Value Chain Development

in Champasak, Salavanh, and Savannakhet Provinces

Prepared by the Ministry of Agriculture and Forestry for the Asian Development Bank.

This is a document of the borrower. The views expressed herein do not necessarily represent those of ADB's Board of Directors, Management, or staff, and may be preliminary in nature. Your attention is directed to the “terms of use” section of this website. In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Banana, Sweet Potato, and Peanut Value Chain Study

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Lao People’s Democratic Republic Peace Independence Democracy Unity Prosperity

Banana, Sweet Potato, and Peanut Value Chain Development

In Champasak, Salavanh, and Savannakhet Provinces

Sustainable Natural Resource Management and Productivity and Enhancement Project

October 2014

Lao People’s Democratic Republic Peace Independence Democracy Unity Prosperity

Champasak Province Champasak Provincial Agriculture and Forestry Office (PAFO)

FEASIBILITY STUDY REPORT

Subproject: Integrated Cattle Raising for Commercialization of Cattle in Pathoumphone, Sukhuma, Khong, and Mounlapamoune Districts of Champasak Province

Category: Poverty Reduction


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ACRONYMS AND ABBREVIATIONS

ADB – Asian Development Bank

ANR – agriculture and natural resources

CD & G – Community Development and Gender

DAFO – District Agriculture and Forestry Office

GIS – Geographic information system

GoL – Government of Lao People’s Democratic Republic

IFAD – International Fund for Agricultural Development

Lao PDR – Lao People’s Democratic Republic

MAF – Ministry of Agriculture and Forestry

PAFO – Provincial Agriculture and Forestry Office

PAM – Project Administration Manual

PPMES – Project performance monitoring and evaluation system

PPO – Provincial Project Office

SNRMPEP – Sustainable Natural Resource Management and Productivity Enhancement Project

TA – Technical assistance

THB – Thai Baht

US$ – United State Dollar


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ACKNOWLEDGEMENT I would like to express my special thanks to SNRMPEP and PPDs and consultants and local line government agencies that had kindly assited in the arrangement of the field visits and the secondary information of their selected project sites.

Although I could not mention the names of all people who helped to make this field study possible, I am in debt for their help with arrangements for the meetings and to all farmer groups, agricultural product collectors, traders and buyers who have given their valuable time and information to me.

This field study was carried out in a limited time and there are errors in this report. I would take the full responsibility for these errors.

Orawan Ananvoranich, Ph.D.


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TABLE OF CONTENTS

ACRONYMS AND ABBREVIATIONS ........................................................... 2

ACKNOWLEDGEMENT .................................................................................. 3

CHAPTER I. SUMMARY DESCRIPTION ............................................. 15

I.1. SUBPROJECT NAME & LOCATION ................................................................................ 15

I.2. OBJECTIVES OF THE STUDY ........................................................................................ 15

I.3. COMPONENTS OF THE STUDY ..................................................................................... 16

I.4. OWNER/ INVESTOR/ FUNCTIONAL MANAGERS ........................................................... 16

I.5. PROJECT MANAGEMENT ............................................................................................. 17

I.6. SUBPROJECT IMPLEMENTATION PERIOD ..................................................................... 17

I.7. O&M AGENCY ........................................................................................................... 18

I.8. TARGET BENEFICIARIES ............................................................................................. 18

I.9. REPORT OF THE VALUE CHAIN STUDY ......................................................................... 19

CHAPTER II. BACKGROUND INFORMATION ................................... 20

II.1. DATA COLLECTION .................................................................................................... 20

II.2. DEMOGRAPHIC INFORMATION .................................................................................... 20

II.3. LINKAGE TO EXISTING INFRASTRUCTURE IN THE SELECTED PROVINCES ..................... 23

II.3.1. Summary ....................................................................................................................... 23

II.3.2. Production of Temporary and Permanent Crops ........................................................... 23

II.3.3. Selected Agricultural Infrastructure .............................................................................. 26

II.3.4. Type of Services and Organisations at Village Level ................................................... 29

II.3.5. Linkage to Financial Support ........................................................................................ 29

II.3.6. Market Linkage ............................................................................................................. 30

II.3.7. Linkage to Information ................................................................................................. 32

II.3.8. Constraints .................................................................................................................... 33

II.4. INFORMATION OF THE THREE PROVINCES AND SELECTED AREAS .............................. 34

II.4.1. Champasak province ..................................................................................................... 34

II.4.2. Salavanh province ......................................................................................................... 36

II.4.3. Savannakhet province ................................................................................................... 40

II.5. THAILAND IMPORT STATISTICS OF BANANA, SWEET POTATO, AND PEANUT ............. 44

II.5.1. Importation of banana into Thailand ............................................................................. 44

II.5.2. Importation of sweet potato into Thailand .................................................................... 46

II.5.3. Importation of Peanut into Thailand ............................................................................. 47

II.6. VARIETIES OF BANANA, SWEET POTATO, AND PEANUT IN THAILAND ....................... 50


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II.6.1. Varieties of Banana Available for Commercial in Thailand ......................................... 50

II.6.2. Varieties of Sweet Potato available in Thailand ........................................................... 54

II.6.3. Varieties of Peanut Available for Commercial in Thailand .......................................... 56

CHAPTER III. FIELD SURVEY ................................................................. 61

III.1. FIELD VISITS IN THAILAND ..................................................................................... 61

III.1.1. Banana at Talad Thai Agricultural Wholesale Market.................................................. 63

III.1.2. Sweet Potato at Talad Thai Agricultural Wholesale Market......................................... 67

III.1.3. Peanut at Talad Thai Agricultural Wholesale Market ................................................... 70

III.1.4. Supermarkets, Trade Fairs, and Shops at Don Muang Airport ..................................... 73

III.1.5. Local markets in Thailand ............................................................................................. 79

III.1.6. Charoensri Wholesale Market in Ubonrachthani .......................................................... 83

III.1.7. Ban Kha Khome Women Group in Ubonrachthani ...................................................... 90

III.1.8. Khangsapeu Market in Ubonrachthani.......................................................................... 91

III.1.9. Warinchumrarp Market in Ubonrachthani .................................................................... 93

III.1.10. Kanthoraluk Market in Sisakhet ............................................................................... 95

III.1.11. Field Visit to Phichit on Japanese Sweet Potato ....................................................... 97

III.1.12. Bangkrathum District of Phitsanulok province ......................................................... 98

III.1.13. Wat Phra Sri Rattanamahathat Market in Phitsanulok ............................................ 105

III.1.14. Pakchong Research Station, Nakornrachasima ....................................................... 108

III.1.15. Department of Physics, Silpakorn University, Nakornpathom ............................... 111

III.1.16. Institute of Nutrition, Mahidol University, Nakornpathom .................................... 116

III.2. FIELD VISITS IN LAO PDR .................................................................................... 117

III.2.1. Markets in Vientiane ................................................................................................... 117

III.2.2. Vientiane: Khua Din Market ....................................................................................... 118

III.2.3. Champasak Province: Banana ..................................................................................... 120

III.2.4. Champasak Province, Bachieng District: Peanut ........................................................ 123

III.2.5. Champasak: Pakse New Market................................................................................. 123

III.2.6. Salavanh Province: Banana ......................................................................................... 129

III.2.7. Salavanh Province: Sweet Potato ................................................................................ 131

III.2.8. Salavanh Province: Peanut .......................................................................................... 133

III.2.9. Savannakhet Province, Nong District: Banana ........................................................... 137

III.2.10. Savannakhet Province, Sepone District: Banana .................................................... 140

III.2.11. Savannakhet Province, Xaiphouthong District: Peanut .......................................... 144

III.2.12. Snack Market in the Three Target Provinces .......................................................... 148

CHAPTER IV. VALUE CHAIN ANALYSES .......................................... 151

IV.1. VALUE CHAIN OF AGRICULTURAL PRODUCTS ...................................................... 151

IV.1.1. SWOT Analysis .......................................................................................................... 155


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IV.2. STAKEHOLDERS’ ROLES AND RESPONSIBILITIES .................................................. 158

IV.2.1. Agricultural input suppliers ........................................................................................ 158

IV.2.2. Producers of Agricultural Products ............................................................................. 159

IV.2.3. Agricultural Product Collectors/Brokers ..................................................................... 159

IV.2.4. Buyers and Brokers of Agricultural Products ............................................................. 160

IV.2.5. Wholesalers and Traders ............................................................................................. 160

IV.2.6. Retailers ...................................................................................................................... 161

IV.2.7. Other Service Providers in the Value Chain ............................................................... 162

IV.2.8. Local Line Government Agencies .............................................................................. 162

IV.3. FLOWS OF AGRICULTURAL PRODUCTS ................................................................. 163

IV.4. BORDER TRADE BETWEEN LAO PDR AND THAILAND .......................................... 164

IV.4.1. Border Crossing Points ............................................................................................... 164

IV.5. COSTS AND EXPENSES RELATED TO SELECTED PRODUCTS ................................... 166

IV.5.1. Cost of Products in the Value Chain ........................................................................... 166

IV.5.2. Expense involved in Exporting Products to Thailand ................................................. 168

IV.5.3. Import duties ............................................................................................................... 169

IV.6. TRADE OF BANANA, SWEET POTATO, AND PEANUT ............................................. 169

IV.6.1. Banana ......................................................................................................................... 169

IV.6.2. Sweet Potato ................................................................................................................ 173

IV.6.3. Peanut .......................................................................................................................... 173

IV.7. OTHER FINDINGS FROM THE FIELD VISITS ............................................................ 175

IV.7.1. Limited Market Linkage ............................................................................................. 175

IV.7.2. Market Information ..................................................................................................... 176

IV.7.3. Post-harvest Management and Quality Issue .............................................................. 176

IV.7.4. Images of Agricultural Products from Lao PDR ......................................................... 176

IV.7.5. Technical Cooperation with Other Institutes .............................................................. 177

IV.7.6. Public Private Partnerships ......................................................................................... 177

IV.7.7. Capacity Building for Stakeholders in the Value Chain ............................................. 178

IV.7.8. Contract Farming Agreements .................................................................................... 178

IV.7.9. Farmer Group Formation ............................................................................................ 180

CHAPTER V. CONCLUSION AND RECOMMENDATIONS ............ 181

V.1. CONCLUSION ............................................................................................................ 181

V.2. RECOMMENDATIONS ................................................................................................ 185

V.2.1. Value Chain Development of Banana ......................................................................... 185

V.2.2. Value Chain Development for Sweet Potato .............................................................. 190

V.2.3. Value Chain Development of Peanut .......................................................................... 193

V.3. FINANCIAL AND NON FINANCIAL BENEFITS ............................................................... 197


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V.3.1. Financial benefits ........................................................................................................ 197

V.3.2. Other non-quantified benefit of the Project: ............................................................... 198

V.4. ENVIRONMENTAL IMPACTS ...................................................................................... 199

V.5. VULNERABLE GROUPS .............................................................................................. 199

V.6. ETHNIC MINORITY GROUP ......................................................................................... 199

V.7. FINANCING PLAN ...................................................................................................... 200

V.8. IMPLEMENTATION ARRANGEMENTS ......................................................................... 202

V.8.1. Government agencies .................................................................................................. 202

V.8.2. Private Partners ........................................................................................................... 203

V.8.3. Smallholder Farmers/Producer Groups ....................................................................... 204

V.9. CONSULTANT REQUIREMENTS .................................................................................. 204

ANNEXES ......................................................................................................................... 206

ANNEX I. LEARNING FROM THAYANG AGRICULTURAL COPERATIVE ON EXPORTING BANANA TO JAPAN ............................................................................................................................ 207

ANNEX II. LEARNING FROM A THAI COMPANY EXPORTING KHAI BANANA TO CHINA ....... 212

ANNEX III. USEFUL INFORMATION ..................................................................................... 213

ANNEX IV. IMPLEMENTATION SCHEDULE FOR VALUE CHAIN DEVELOPMENT OF SELECTED PRODUCTS ........................................................................................................................... 215

ANNEX V. MONITORING FRAMEWORK ............................................................................... 216

REFERENCE…. ............................................................................................. 218


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LIST OF TABLES Table 1.Number of households by village type and province, 2010/11 .................................. 20

Table 2. Farm population by sex and age (2010/2011) .......................................................... 21

Table 3 Number of households by farm/non-farm and land type, 2010/11 ............................. 22

Table 4. Characteristics of land holdings (2010/11) ................................................................ 22

Table 5. Number of farm households by household size (2010/11) ....................................... 23

Table 6 Total areas of cultivation and number of growers of selected crops .......................... 24

Table 7. Production areas and numbers of growers of peanut and banana (2010/11) ............. 25

Table 8. Farm households using farm machinery by type of machine ................................... 25

Table 9. Farm households by use of outside labour and type of payment (2010/11) .............. 26

Table 10. Selected infrastructure by province, village type, and land type (2011) ................ 26

Table 11. Source of electricity (2011) .................................................................................... 27

Table 12. Source of household water (2011) ........................................................................ 27

Table 13. Type of Irrigation facilities in rural villages by irrigation type (2011) ................... 28

Table 14. Selected agricultural characteristics of rural villages (2011) ................................... 28

Table 15. Selected village services and organizations (2011) ................................................ 29

Table 16. Farm households with credit and source of credits (2010/11) ................................ 30

Table 17. Type of credit facilities in rural villages (2011) .................................................... 30

Table 18. Sale of farm produces as percentage of farm households ....................................... 31

Table 19. Marketing of agriculture produce in rural villages (2011) ..................................... 31

Table 20. Agricultural infrastructure in rural villages by type of infrastructure (2011) .......... 32

Table 21. Farm households by sources of agricultural information (2010/11)........................ 33

Table 22. Constraints and problems faced by famers in rural village (2011) .......................... 33

Table 23. Production areas of target villages in Bachieng Chaleunsouk ................................. 35

Table 24. Cultivation areas in selected Khum Ban in Bachieng district of Champasak ........ 36

Table 25. Some main information of Bachieng district in Champasak .................................. 36

Table 26. Target villages in Lao Ngyam district of Salavanh province .................................. 38

Table 27. General information of Lao Ngyam district in Salavanh province ........................ 38

Table 28. Production of banana in Salavanh province ........................................................... 39

Table 29. Production and trade of banana of Salavanh ........................................................... 39

Table 30. Production and trade of sweet potato ...................................................................... 40

Table 31. Production and trade of peanut ................................................................................ 40

Table 32. Name of target villages in Sepone, Nong, and Xaiphouthong districts ................... 43

Table 33. Some main information of the selected districts in Savannakhet (2012) ................ 43


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Table 34. Import of bananas, including plantains, fresh or dried (HS 0803) into Thailand .... 45

Table 35. Average Price of Banana Imported into Thailand ................................................... 45

Table 36. Sweet potatoes, fresh or dried (HS 071420) ............................................................ 46

Table 37. Average price per kilogram of sweet potato imported into Thailand ...................... 47

Table 38. Peanut, not roasted or otherwise cooked, whether or not shelled or broken .......... 48

Table 39. Average price per kilogram of peanut imported into Thailand .............................. 49

Table 40. Import and export of peanut between Thailand and ASEAN countries .................. 50

Table 41. Varieties of sweet potato by harvest time ............................................................... 54

Table 42. Studies on sweet potatoes by Mae Jo University in 2005....................................... 54

Table 43. Varieties of sweet potato and their characteristics .................................................. 55

Table 44. Varieties of peanut in Thailand ............................................................................... 56

Table 45. Wholesale prices of banana by type and size at Talad Thai Market ....................... 63

Table 46. Average wholesale prices of banana at Talad Simummuang in 2013 .................... 65

Table 47. Average prices (baht/kg) of sweet potato at Simummuang Market in 2013 ........... 68

Table 48. Average prices of sweet potato at Talad Thai Market in 2013 ................................ 69

Table 49. Comparisons of prices of sweet potatoes in Laos and Thai markets ....................... 70

Table 50 Average daily wholesale prices of peanut at Simummuang Market in 2013 .......... 71

Table 51. Level of subsidy and economic indicators by size of dried banana producers ..... 113

Table 52. Comparison of economic indicators before and after using solar greenhouse dryer................................................................................................................................................ 113

Table 53. SWOT Analysis for value chain development ..................................................... 156

Table 54. Selling and buying prices of the three selected produces ..................................... 167

Table 55. Expenses in exporting agricultural products to Thailand (2013) .......................... 169

Table 56. Contract farming models and defining characteristics .......................................... 179

Table 57. Total cultivation areas in the targeted villages ..................................................... 182

Table 58. Proposals to move toward more value added banana products ............................ 188

Table 59. Proposals to move toward more value added sweet potato products .................... 192

Table 60. Proposals to move toward more value added sweet potato products .................. 196


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LIST OF FIGURES Figure 1. Map of project areas in Bachieng district of Champasak ......................................... 34

Figure 2. Map of project areas in Lao Ngyam district of Salavanh Province .......................... 37

Figure 3. Project area in Nong district of Salavanh province .................................................. 41

Figure 4. Project area in Sepone district of Savannakhet province ......................................... 42

Figure 5. Project area in Xaiphouthong district of Savannakhet ............................................. 42

Figure 6. Average prices (baht/kg) of sweet potato imported into Thailand ........................... 47

Figure 7. Importation of peanut into Thailand by quantity ..................................................... 48

Figure 8. Average prices of peanut imported into Thailand ................................................... 49

Figure 9. Import and export of peanut between Thailand and Asian countries ..................... 50

Figure 10. Some varieties for commercial production of banana in Thailand........................ 53

Figure 11. Samples of sweet potato available in Thai market ................................................. 55

Figure 12. Peanut from Myanmar at Simummuang market .................................................... 56

Figure 13. Suggested peanut varieties in Thailand ................................................................. 57

Figure 14. Varieties for fresh peanut ...................................................................................... 58

Figure 15. Seeds of peanut varieties ........................................................................................ 58

Figure 16. Varieties for medium size seeds ............................................................................ 59

Figure 17. Details of selected peanut varieties ........................................................................ 60

Figure 18. Samples of Peanut from Khon Kean Field Crops Research Centre ...................... 60

Figure 19. Logistics of fresh produces in Thailand: from farmers to consumers ................... 62

Figure 20. Talad Thai’s Wholesale prices of banana by type and size in 2013 ....................... 64

Figure 21. Average wholesale prices of banana in Thai market in 2013 ................................ 66

Figure 22. Banana at Talad Thai Wholesale Market, Pathumthani ........................................ 67

Figure 23. Sweet potato sold at Talad Thai Market ................................................................ 67

Figure 24. Average prices of sweet potato at Simummuang Market in 2013......................... 69

Figure 25. Average wholesale prices of raw peanut by variety in 2013 ................................. 71

Figure 26. Average wholesale prices of boiled peanut (baht/kg) by variety in 2013 ............. 72

Figure 27. Fresh peanut at Talad Thai market ........................................................................ 72

Figure 28. Peanut at Talad Thai Wholesale Market ................................................................ 73

Figure 29. Banana at Tops supermarkets in Bangkok ............................................................. 74

Figure 30. Various types of banana sold at Tops Supermarket .............................................. 74

Figure 31. Japanese sweet potato and sweet potato bread ...................................................... 75

Figure 32. Processed banana products .................................................................................... 75

Figure 33. Thai products available at trade fairs organised in Thailand ................................. 78


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Figure 34. Processed banana products selling at Don Muang Airport ................................... 79

Figure 35. Locally produced Japanese sweet potato selling at the Royal Project shop .......... 79

Figure 36. Locally produced banana and sweet potato at Phichit market .............................. 80

Figure 37. Peanut and Khai banana at Nongbuachaiyawarn market ...................................... 81

Figure 38. Bananas at Rachawat Market in Bangkok .............................................................. 82

Figure 39. Sweet Potatoes at Rachawat Market in Bangkok ................................................... 82

Figure 40. Peanut at Rachawat Market in Bangkok ............................................................... 83

Figure 41. Shops selling banana at Charoensri Wholesale Market ......................................... 83

Figure 42. Prematurely cut and over ripped banana from Laos ............................................... 84

Figure 43. Fruits being broken or bruised during transportation ............................................. 84

Figure 44. Namwa banana from Laos at Charoensri Market ................................................... 85

Figure 45. Lower quality banana selling at discount prices.................................................... 85

Figure 46. Workers downloaded banana from the middle of the truck .................................. 86

Figure 47. Downloading Sepone banana onto customer’s van ................................................ 86

Figure 48. Banana from Sepone at Charoensri Market, Ubonrachthani ................................. 87

Figure 49. Sweet Potato from Laos arriving at Chongmek Border Crossing ......................... 87

Figure 50. Washed and repacked sweet potato arrived at Charoensri Market ........................ 88

Figure 51. Shops selling sweet potato at Charoensri market .................................................. 88

Figure 52. Shops at Charoensri Market selling fresh peanut .................................................. 89

Figure 53. Peanut rejected from a buyer in Bangkok and returned to a Thai trader ............... 89

Figure 54. Kha Khome women group produces sand roasted peanut..................................... 90

Figure 55. Sand roasted peanut of Kha Khome Women Group .............................................. 91

Figure 56. Khangsapeu Market in Ubonrachthani .................................................................. 92

Figure 57. Snacks from banana and sweet potato at Khangsapeu .......................................... 92

Figure 58. Banana at Tesban 1 Market in Warinchumrarp ..................................................... 93

Figure 59. Sweet potato and banana at Warinchumrarp Market in Ubon .............................. 93

Figure 60. Peanut products from Raitip and repacked sizes ................................................... 95

Figure 61. Various retail peanut package sizes at Warinchumrarp Market ............................ 95

Figure 62. Fresh procures stalls at Kanthoraluk market .......................................................... 96

Figure 63. Products from Charoensri Market arriving at Kanthoraluk market ....................... 96

Figure 64. Locally grown banana at Kanthoraluk market ...................................................... 96

Figure 65. Kanthoraluk sweet potato ....................................................................................... 96

Figure 66. Locally produced peanut at Kanthoraluk market ................................................... 97

Figure 67. Peanut rejected and returned by buyers ................................................................. 97

Figure 68. Preparation of plots for Japanese sweet potato...................................................... 98


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Figure 69. Japanese sweet potato at the Agricultural Knowledge Dissemination Group ....... 98

Figure 70. Bangkrathum Solar Dried Banana Women Group ................................................. 99

Figure 71. Members working for the group ............................................................................ 99

Figure 72. Mrs. Tuenta’s solar greenhouse dryer ................................................................. 101

Figure 73. Drying banana inside the solar greenhouse ......................................................... 101

Figure 74. Banana inside of the solar greenhouse dryer ....................................................... 102

Figure 75. Solar dried banana before packing ...................................................................... 102

Figure 76. Flattened dried banana are packed in .................................................................. 102

Figure 77. Leader of Community Learning Centre of Ban Klongkalon ................................ 103

Figure 78. Bananas bought from a supplier in Phitsanulok .................................................. 103

Figure 79. Solar greenhouse dryer and dried bananas .......................................................... 104

Figure 80. Processed dried banana products by Rai Wimolwanich....................................... 106

Figure 81. Banana products selling at shops at Wat Yai ....................................................... 108

Figure 82. Packchong 50 developed by Pakchong Research Station ................................... 109

Figure 83. Side-loading solar tunnel dryers at the Department of Physics ........................... 115

Figure 84. The Greenhouse dryers at the Department of Physics, Silpakorn University ...... 115

Figure 85. Books on Solar Crop Dryers by the Department of Physics ............................... 116

Figure 86. Cooked banana, sweet potato, and peanut in Vientiane ....................................... 117

Figure 87. Process products by street food vendors in Vientiane ......................................... 117

Figure 88. Processed banana and sweet potato at Phimphone supermarket .......................... 118

Figure 89. Banana at Khua Din Market ................................................................................ 119

Figure 90. Sweet potato at Khua Din Market ........................................................................ 119

Figure 91. Locally made processed products at Vientiane airport ......................................... 119

Figure 92. Thai products at a shop at Vientiane Airport ....................................................... 120

Figure 93. Meetings in Kengkia, Bachieng district .............................................................. 120

Figure 94. Banana and banana gardens in Bachieng areas ................................................... 120

Figure 95. Banana garden in Kangkia which has been infected ............................................ 121

Figure 96. Erionota thrax thrax Linn. Found in Kengkia ...................................................... 122

Figure 97. Peanut in Kengkia, Bachieng district .................................................................. 123

Figure 98. Banana fruits, flowers, and leaves at Pakse market .............................................. 125

Figure 99. Vendors selling banana products .......................................................................... 125

Figure 100. Cooked banana, sweet potato, and peanut at Pakse market ............................... 126

Figure 101. Fresh peanut at Pakse market ............................................................................ 127

Figure 102. Vendors of boiled peanut at Pakse market ........................................................ 128

Figure 103. Peanut products at Pakse market ....................................................................... 128


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Figure 104. Banana gardens affected by epidemic outbreaks............................................... 129

Figure 105. Erionota thrax thrax Linn. Found in Lao Ngyam............................................... 130

Figure 106. Odoiporous logicollis Marshall found in Lao Ngyam banana gardens .............. 130

Figure 107. Pheaoseptoria leaf spot in Lao Ngyam .............................................................. 130

Figure 108. Banana from Lao Ngyam ................................................................................... 131

Figure 109. Sweet potato in Lao Ngyam .............................................................................. 131

Figure 110. Information board at a collecting point in Lao Ngyam ..................................... 132

Figure 111. Transfer of sweet potato from growers to collectors ......................................... 133

Figure 112. Cultivation plots of peanut and sweet potato in Lao Ngyam ............................. 134

Figure 113. Mr.Supoj and Mr. Nawin visiting Lao Ngyam ................................................... 134

Figure 114. Peanut growers in Lao Ngyam ........................................................................... 135

Figure 115. Milled peanut and sorting process at Lao Ngyam ............................................. 136

Figure 116. Thai peanut trader at collection centre close to Wangtao border crossing ......... 137

Figure 117. Peanut loading onto a truck for Thai customer ................................................. 137

Figure 118. Meeting with Villagers in Nong District ............................................................ 138

Figure 119. Banana gardens in Nong district......................................................................... 139

Figure 120. Roads connecting a selected village to Nong district ......................................... 139

Figure 121. Uploading of banana from Sepone for Thai market .......................................... 141

Figure 122. Another producer waiting for a trader to collect banana ................................... 141

Figure 123. Mr. Khalum’s banana garden ............................................................................. 143

Figure 124. Banana at Mr. Khalum’s house ......................................................................... 143

Figure 125. A meeting with banana producers in Sepone .................................................... 143

Figure 126. Peanut in Xiaphouthong district ......................................................................... 144

Figure 127. Newly harvested peanut in Xaiphouthong ........................................................ 145

Figure 128. Samples of peanut seeds in Xaiphouthong ........................................................ 145

Figure 129. Storage and drying space for peanut in Khanthachan, Xaiphouthong .............. 146

Figure 130. Peanut cultivation area in Xaiphouthong .......................................................... 146

Figure 131. Pulley system to transport goods ........................................................................ 147

Figure 132. Uploading products from Thailand at Lao Makhood ........................................ 147

Figure 133. Khao Khob and crispy rice curl from Savannakhet ............................................ 149

Figure 134. Locally produced snacks at Pakse market ......................................................... 149

Figure 135. Snacks imported from China, Vietnam, and Thailand ....................................... 150

Figure 136. Value Chain Developed by Porter (1985) ......................................................... 151

Figure 137. Key processes and inputs of value chain of agricultural products .................... 152

Figure 138. Stages of commodity chain analysis................................................................... 154


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Figure 139. Small farmer heterogeneity ................................................................................ 154

Figure 140. Main players in the flow of agricultural products ............................................. 163

Figure 141. Concerns of key players in the value chain ........................................................ 164

Figure 142. East-West Economic Corridor ............................................................................ 165

Figure 143. Border crossing points and locations of potential Thai buyers .......................... 166

Figure 144. Number of loadings in transporting fresh produces to Thai market .................. 171

Figure 145. Proposed model for value chain development of banana ................................... 187

Figure 146. Proposed model for value chain development of sweet potato ......................... 191

Figure 147. Proposed model for value chain development of peanut.................................... 195


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Banana, Sweet Potato, and Peanut Value Chain Development

CHAPTER I. SUMMARY DESCRIPTION

I.1. Subproject name & location

Subproject: Banana, Sweet Potato and Peanut Value Chain Development

Location: Bachieng district of Champasak province, Lao Ngyam District of Salavanh province, and Xaiphouthong and Sepone districts of Savannakhet province of Lao PDR.

I.2. Objectives of the Study

1. The objective of the smallholder banana, sweet potato and peanut value chain study is to present a clear, concise analysis of the smallholder banana, sweet potato and peanut sector. This analysis will be based on thorough research and will be the basis for presentation of a set of practical recommendations to government policy makers and industry players on development of joint strategies to improve the performance and profitability of the smallholder banana, sweet potato and peanut sector at all points on the value chain.

2. Banana, sweet potato and peanut are not new crops and farmers of Lao PDR grow them for the self-consumption and at some scale to supply local market to a limited extent. A special type of banana called as “Kyuae Nam” or “Kyuae Namwa” in Thai has been exported to Thailand and Vietnam for processing and consumer consumption. Salavanh and Champasak including Sepone, and Nong in Savannakhet provinces are major producers of banana. While the studies in Salavanh and Champasak provinces were carried out on the three products, the studies in Savannakhet were focused only on banana and peanut.

3. Smallholders who produce banana, sweet potato and peanut obtain a marginally profit from their crops. There are various factors identified by the Project such as:

o Lack of availability of quality varieties of banana, sweet potato and peanut; o Out-dated agronomic practices or poor quality production practices; o Lack of knowledge to improve quality of banana, sweet potato and peanut; o Poor technical back-up from extension services; o Lack of access to credit to improve production; o Lack of quality control measure; o Limited access to market information and market requirements; o Lack of processing facilities to create more value added products; o Lack of market linkages; o Dominant position of buyers in farm gate price setting; o Limited understanding of the roles of various players in a value chain flow model

and profit margins of various players in the value chain – such as collectors, brokers, buyers, wholesalers, processors, and retailers;


Page 16

o Constraints in opportunities to: - improve competitiveness of Lao smallholders; - increase market share of Lao smallholder in both domestic and export

markets; - develop public-private partnerships between smallholder growers, private

sector, industry players and Government; - increase employment in the smallholder sector; - understand general market information on:

(i) consumer tastes and market opportunities; (ii) opportunities for niche markets for smallholders; and (iii) development of new more value added products.

I.3. Components of the Study

4. The components in the value chain study are:

Component 1: Value chain study of banana in Champasak, Salavanh, and Savannakhet provinces

Component 2: Value chain study of sweet potato in Champasak and Salavanh provinces

Component 3: Value chain study of peanut in Champasak, Salavanh, and Savannakhet provinces

5. Information from the three components should provide details on current data and information related to the three products in the selected areas and in Thailand which has been selected as the main market in the current analyses, value chain analysis for value chain development, and recommendations.

6. PPOs and local line government agencies selected districts and villages in this study in line with the IFAD-ADB Project and national policies. There are 31 selected villages in 14 Khum Bans in the three provinces.

I.4. Owner/ Investor/ Functional Managers

7. The project involves various stakeholders: Owner: District Agriculture and Forestry Offices (DAFOs) of the selected districts of the three provinces in this project. Other local agencies who may jointly be the owner of the project on processing and exportation parts are the Department of Industry and Commerce and (DIC) the Women Association. Investor for project and facilities for the operation: SNRMPEP and the Provincial Agriculture and Forestry Office (PAFO) of Champasak, Salavanh, and Savannakhet. Provincial PAFOs are the functional executing agency, the District DAFOs are the state management agency and the O&M responsibility is delegated to the cooperation of line agencies of the selected districts in the three provinces. Functional Manager: The business components and implementations of various stages of the operations in the value chain should involve relevant stakeholders such as


Page 17

producer groups, agricultural product collectors, traders, brokers, business agents, processors, and service providers such as shipping companies, and forwarding agents, and buyers, if possible. Business operation: Business operation should be run by private partners or consortium of investor of the project who are interested to invest in the production, logistic, processing, and distribution of the fresh and processed products to potential markets. These private partners should work closely with producer groups in the selected areas with the aims of running on-going business operations with sufficient profits for long term and with fair treatments to all stakeholders in the value chain.

I.5. Project Management

8. Provincial PAFOs/PPOs of Champasak, Salavanh and Savannakhet provinces who are the investors have the responsibilities for implementations of the project.

9. The selected villages’ DAFOs: are the direct management agencies of the subproject under the overall management of the DAFOs. The coordinator of DAFOs and DIC will be responsible for daily inspection and management of all project activities. The DAFOs will also liaise with Departments/Management Companies/district and Kumb Ban authorities and producer groups responsible for post-handover management – on project design, pre-handover design inspections, and preparation of the O&M plan.

10. The components and activities in the value chain may exceed the scope of work of DAFO and PAFO. Some considerations should be placed on mutual involvements of the Department of Industry and Commerce (DIC) and also the Department of Transportation, and the Customs Department.

11. This value chain development should focus on the public private partnership as most of business activities should be carried out by participants in the private sector such as smallholder farmers, producer cooperatives, brokers, agricultural product collectors, traders and other service providers in the target areas. The government agencies should provide promotional, advisory, supporting, and facilitating roles rather than running business operations by themselves.

I.6. Subproject implementation period

12. The subproject will be started from January 2014 to the end of December, 2015. In which, the introduction of new production technologies, and the rehabilitation of the collecting points or collection centers, semi-processing plants take place in the first 10 months of the implementation period. It is estimated that the construction is started in March 2014 and completed by July, 2014; the supporting for revolving fund for the input arrangement and for demonstrations will start from January, 2014 to September, 2015. Implementation schedule of subproject is present in Annex IV. It is likely that this development project will be supported and funded beyond the end of 2015 by funding from another development project or loan.


Page 18

I.7. O&M agency

13. The DAFOs of the selected districts will be responsible for operation and maintenance of the completed facilities. PAFOs of Champasak, Salavanh, and Savannakhet will be responsible for the operation and maintenance of the collecting points or collection centers and the regularly monitoring of processing facilities in their responsible areas.

14. Committee of beneficiary Khum Bans and the private sector will be responsible for the participatory supervisory board to take part in monitoring of the construction from design stage to completion, and O&M activities.

15. Roles of beneficiaries: Farmer groups in selected areas will participate and improve the quality and productivity of the chosen products—banana, sweet potato, and peanut for commercialisation production for local and regional markets; adopt new practices of production and post-harvest management development from using proper seeds and other propagation material introduced by the subprojects, soil preparation, compost making, and crop rotation etc.

16. Community enterprises setting up by the Project and the Supervisory Board will take responsibility to manage the revolving funds for various activities and also establish the linkages with the commercial banks for the financial activities for the commercialization of fresh banana, sweet potato, and peanut, processed products, and by-productions, and overall outputs with supports from designated line agencies in the selected areas. Community enterprises or cooperatives in the target areas and private partners will take part in the value addition and marketing of the agricultural products.

17. The private sector will work closely with farmer groups and collectors of agricultural products on trade and processing of their selected crops. Their investment which may be partially subsidised by the project should provide fair and mutual benefits to all stakeholders in the value chain. The private companies who become partners in the Project should support producer groups in market access and provide information on specification, market information, food safety measures, market linkages and the collaboration is based on sustainable development and for self-financed business operations in the long run.

I.8. Target Beneficiaries

18. Smallholder farmers of the selected agriculture products in targeted villages are expected to get direct benefits from the subproject; moreover, there are thousands of people in the neighbor villages who will be getting indirect benefits through transactions, exchanges, integration of production and processing activities. The subproject beneficiaries will earn more income from the value chain development and should hence be able to get good health and good education to improve their livelihoods.

19. It is expected that the value chain development will create more local employments especially for women in the food processing facilities in which this IFAD-ADB Development Project supports.


Page 19

20. Local traders/brokers, agricultural product collectors, other services providers such as shipping agents, transportation service providers will also benefit from their participation in the value chain.

21. Apart from revolving funds for agricultural inputs, people in the target villages and neighbouring villages and districts can benefit from increasing demands for agricultural products as raw materials in the processing plants and obtain spillover effects on improvements in new technologies introduced by this Project in production, post-harvest and processing methods, storage management, logistic management, product processing, as well as access to market and information.

I.9. Report of the value chain study

22. Chapter I presents a summary description of the IFAD-ADB project. Chapter II provides background information on the three provinces in this projects as well as statistics which are related to the selected products in the three provinces and in Thailand. Chapter III presents information from the field surveys in Thailand and in the selected areas in Lao PDR at various points in the value chain. Findings from interviews with stakeholders and players in Lao PDR and in Thailand provide information on current states of the three products, and trade of these three products to Thailand which has been selected as the main market. Chapter IV provides details on value chain analysis of the three products which would lead to conclusion and recommendations in Chapter V.

23. This report covers the three selected products as they many similar characteristics and commons problems in the value chain development. It does not give details on cost of machinery or equipment. If the public and private sectors have agreed on what interventions or measures they want to employ in the Project, estimated cost of investment can be calculated and arranged accordingly.

24. The three PPOs should work collaborately in setting priorites and cluster of activites or implementations which could be shared in order that resources in the Project can be used efficiently.


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CHAPTER II. BACKGROUND INFORMATION

II.1. Data Collection

25. The target areas for the IFAD-ADB Project for the value chain study of banana, sweet potato, and peanut are in Champasak, Salavanh, and Savannakhet provinces. Most of the statistical information of the three province used in this study came from secondary information and the Agricultural Statistics Year Books by the Department of Planning of the Ministry of Agriculture and Forestry, the Annual Statistics 2012 of the Lao Statistic Bureau of the Ministry of Planning and Investment, the Lao Census of Agriculture 2010/2011 Highlights of the Steering Committee for the Agricultural Census, the Agricultural Census Office, Department of Planning of the Ministry of Agriculture and Forestry. Information on selected districts comes from the Provincial Project Offices in the three selected provinces. It should be noted that by using various sources of secondary information there might be some discrepancies of information due to different methods of data collection and criteria used in these data analyses.

26. Information from the field studies in the three selected provinces, Vientiane in Lao PDR, and information in Thailand came from the field surveys carried out between the middle of August 2013 to the first half of November 2013 by the researcher. Field information was collected through interviews, and meetings with target groups. Other supporting information comes from public media such as newspapers, pressed released by relevant agencies, information from internet and media produced by public and private agencies relating to banana, sweet potato and peanut.

II.2. Demographic Information

According to the Lao Census of Agriculture 2010/11Highlights (May 2012), the numbers of farm households by farm/non farm, village type and provice, 2010/2011 in the three provinces in this IFAD-ABD Project shown in Table 1 indicate that the majority of housholds in the selected areas of Champasak, Salavanh, and Savannakhet are still in rual areas and are in farm sector.

Table 1.Number of households by village type and province, 2010/11

Province All households

Urban households Rural households with road Rural households without road

Total Total Farm Non-farm Total Farm Non-farm Champasak 105.7 30.1 57.2 46.1 11.2 18.4 15.3 3.1 Salavanh 55.4 5.1 48.8 45.8 3.0 1.6 1.5 0.1 Savannakhet 137.3 34.8 93.0 81.5 11.5 9.5 9.0 0.6

Whole country 1,021.4 313.9 622.3 556.3 66.0 85.2 78.8 6.5

Remark: Unit in thousand of households Source: Lao Census of Agriculture 2010/2011 Highlights, May 2012

27. Farm households have increased from 789,000 during the 1989/99 Census to 1,021,400 households in the 2010/11 Census. Information on farm poupulation of the three


Page 21

provinces by sex and age is shown in Table 2 below. If we consider farm workforce of the popolation as those of the age of 15 years old and over, Champasak, Salavanh, and Savannakhet will have the farm population of 286,900, 186,3000, and 444,300 persons, respectively.

Table 2. Farm population by sex and age (2010/2011)

Province Total (‘000)

Age group (in ‘000 persons) 0-9

years 10-14 years

15-24 years

25-34 years

35-44 years

45-54 years

55-64 years

65 years & over

Champasak 425.1 83.0 55.3 92.4 59.2 50.7 41.0 24.9 18.7 Male 210.9 42.6 27.3 45.6 28.9 24.7 20.3 12.6 9.0

Female 214.3 40.4 28.0 46.8 30.3 26.0 20.8 12.3 9.7 Salavanh 298.5 72.4 39.8 59.4 42.0 31.7 26.3 15.8 11.2

Male 146.9 36.1 20.8 28.6 20.0 14.8 13.1 8.1 5.3 Female 151.6 26.3 18.9 30.7 22.0 16.9 13.3 7.6 5.9

Savannakhet 651.7 121.8 85.6 147.2 98.8 80.9 60.1 33.9 23.5 Male 324.3 60.5 45.1 72.7 47.2 39.6 30.1 17.0 12.2

Female 327.4 61.2 40.6 74.5 51.5 41.3 30.0 16.8 11.4 Whole

country 4,501.0 931.5 579.7 978.9 672.4 517.6 408.7 235.9 176.4

Male 2,262.4 473.0 298.7 484.9 331.5 257.3 204.4 123.9 88.6 Female 2,238.6 458.5 281.0 494.0 340.8 260.2 204.3 112.0 87.7

Source: Lao Census of Agriculture 2010/11 Highlights, May 2012

28. The number of households in rural area by farm1 and non-farm, and land type is shown in Table 3 below and information on farmhouseholds’ characteristic is in Table 4. Numbers of farm households in the lowland in champasak, Salavanh, and Savanakhet as percentages of total households in that province are 56.4%, 60.1%, and 63.2%, respectively. Numbers of farm households in the upland in champasak, Salavanh, and Savanakhet as percentages of total households in that province are 0.9%, 7.0%, and 12.2%, respectively. Numbers of farm households in the plateau in champasak, Salavanh, and Savanakhet as percentages of total households in that province are 14.1%, 23.3%, and 3.6%, respectively. The futile lowland and plauteau areas are the major areas for banana, and peanut productions.

29. Fragmentation of land by province in 2010/2011 shows that the national average size of land holding is 2.4 ha and average number of parcels per land holding is 2.7 parcels. Among the three provinces, Savannakhet has the largest average size of land holdings at 3.1 ha, while Champasak has the average size of farm holding at 2.1 ha which is lower than that of the national average size of land holding.

1 According to the definition of the 2010/11 census, “farm household” is a household that operated 0.02 ha or more of agricultural land in the 2010 wet season or 2010/11 dry season; or was raising 2 or more cattle or buffaloes, 5 or more pigs or goats, or 20 or more poultry at the time of the census; or was raising any other livestock at the time of the census; or had aquaculture facilities at the time of the census.


Page 22

Table 3 Number of households by farm/non-farm and land type, 2010/11

Province All households

Lowland Upland Plateau

Total Farm Non-farm Total Farm Non-

farm Total Farm Non-farm

Champasak 105.7 87.5 59.6 27.9 0.9 0.9 0.1 17.2 14.9 2.3 % of all HHs in Champasak 82.8 56.4 26.4 0.9 0.9 0.1 16.3 14.1 2.2 Salavanh 55.4 37.7 33.3 4.4 4.0 3.9 0.2 13.6 12.9 0.7

% of all HHs in Salavanh 68.1 60.1 7.9 7.2 7.0 0.4 24.5 23.3 1.3 Savannakhet 137.3 112.8 86.8 26.0 18.6 16.8 1.8 5.9 5.0 0.9

% of all HHs in Savannakhet 82.2 63.2 18.9 13.5 12.2 1.3 4.3 3.6 0.7 Whole

country 1,021.4 583.8 385.9 197.9 223.4 209.4 14.1 214.2 187.6 26.6

% of all HHs 100% 57.2 37.8 19.4 21.9 20.5 1.3 21.0 18.4 2.6 Remark: Unit in thousand of households Source: Lao Census of Agriculture 2010/2011 Highlights, May 2012

Table 4. Characteristics of land holdings (2010/11)

Province No. of farm

households

No. of land holdings2

Area of holdings

(ha)

Average size of land

holding (ha)

No. of parcels (‘000)

Average no. of parcel per land holding

Average parcel size

(ha)

Champasak 75,400 74,200 158,800 2.1 156.9 2.1 1.01

Salavanh 50,100 50,000 130,600 2.6 143.5 2.9 0.91

Savannakhet 108,600 108,400 332,200 3.1 260.4 2.4 1.28

Whole country 782,800 776,700 1,870,200 2.4 2,089.1 2.7 0.90


30. Statistics of the Lao Census survey 2010/2011 show that the majority of land holding are owned land and low percentage are rented land. 97% of land holdings in Savannahket, 96.6% in Salavanh, and 95.3% in Champasak are owned land. The total size of owned land are 322,000 ha in Savannakhet, 125,400 ha in Salavanh, and 148,400 ha in Champasak, respectivsly. Information from the census also indicates that the majority of farm population work on their own land.

31. In 2010/2011 census, the average size of farm household in Champasak, Salavanh, and Savannakhet are between 5-6 persons per household which are in line with the national average household size of 5.75 persons. Members of each household can be family members or other persons such as hired or outside labour who live in the household.

32. Although the national average size of farm households is 5.75 persons and the three target provinces in this project have average farm household size between 5-6 persons, there is increasingly shortage of farm labour as the younger generation or age groups are either attending formal education or moving out of the farm sector to service sector. The use of hired or outside farm labour has increased over the year.

2 A land holding consists of one or more parcels. A land parcel is any piece of land entirely surrounded by land, water, forest, road, etc. not forming a part of that holding.


Page 23

Table 5. Number of farm households by household size (2010/11)

Province No. of farm households

Household size Average household

size 1 person 2-3 persons 4-5 persons 6-9 persons 10 or more

persons Champasak 75,400 500 10,100 29,100 31,900 3,700 5.64

Salavanh 50,100 300 7,100 17,100 21,000 4,600 5.96

Savannakhet 108,600 900 13,300 36,200 48,800 9,300 6.00

Whole country 782,800 3,400 108,700 294.300 323,200 53,200 5.75


II.3. Linkage to existing infrastructure in the selected provinces

II.3.1. Summary 33. The subproject area is located in Champasak, Salavanh, and Savannakhet provinces. Briefly the infrastructures of selected areas in this project are:

There are main roads linking the target villages to the capital of the province. These target villages are connected to the main road by gravel roads. Accessibility to the target villages in the rainy season are difficult in some areas due to the condition of the roads linking between the villages and the main roads.

All villages visited in the field studies except one villages in Nong district have electricity lines and water supply for consumption

Some cultivation areas have existing irrigation systems. However, most of the areas in this project rely on rain for water supply which makes it difficult to grow crops in dry season. The main emphases in some areas are to grow rice for consumption and selling and then grow sweet potato, and peanut after rice is harvested. Incomes from these agricultural products rely heavily on weather conditions in each year. If there is a dry spell, farmers may not have sufficient products available to sell to agricultural collectors.

All villages have primary schools and can get access to district hospital or provincial hospital by road.

There are local daily wet markets in all districts in this project where farmers or traders can sell their products to end consumers.

Formal agricultural product trading market in district level has not been established. Most of the trading activities take place at the village level by small or individual buyers visiting villages to buy occasionally, or farmers sell products to their regular agricultural product collectors.

Villagers have limited access to financial services or up-to-date market prices information.

II.3.2. Production of Temporary and Permanent Crops

34. Farmers in these target villages have experiences in growing banana, sweet potato, and peanut, and other agricultural production especially rice production either in wet and dry


Page 24

seasons. However, the traditional cultivation techniques used, limited quality seeds or saplings, and poor post-harvest handling resulted in low productivities and quality.

35. The definition of permanent crops and temporary crops in the Lao Census of Agriculture 2010/11 Highlights are as follows:

“Permanent crops are with a greater than one year growing cycle…… Many permanent crops are not grown in a compact plantation bust scattered around the holdings. Scattered permanent crops or crops not planted in a systematic manner or sufficiently densely to permit the area to be measured are not included in crop area figures but are included in the number of grower figures.” (p.19, Lao Census of Agriculture 2010/2011 Highlights)

“Temporary crops are crops with less than one year growing cycle. Land used for temporary crops refers to land on which temporary crops were grown during the reference year, whereas area of temporary crops planted refers to the total area of all crops planted during the reference year. The area of temporary crops planted may be greater than the areas under temporary crops because of double copping….. Temporary crops that are not planted in a systematic manner or sufficiently densely to permit the area to be measured are not included in crop area figures but are included in the number of grower figures.” (p.19, Lao Census of Agriculture 2010/2011 Highlights)

Banana, sweet potato, and peanut have been widely grown in many areas in Lao PDR. Information from Table 6 shows that in the census of 2010/2011 the total areas of banana cultivation has decressed around 30.6% from the areas surveyed in 1989/1999 as weel as the number of banana growers reduced from 109,000 persons in 1989/1999 to 70,400 persons in the census in 2010/2011. Total area of peanut and banana production can be found in Table 7. Information from these Tables indicates that among the three target provinces Salavanh has the largest areas and number of growers of peanut while Savannakhet has the largest number of banana growers. The total area that planted banana in Savannakhet is close to the size of that of Salavanh while Champasak has the smallest size of area planted banana.

36. For temporary crops, sweet potato shows increasion in area of cultivation and decresion in the number of growers. Peanut cultivation area and number of growers were both increased during the two periods of the census. One of the explanations was that many farmers had changed from traditional crops to other cash crops such as tapioca, maize, sugar cane, or permanent crops such as rubber which were introduced in the period between the two censuses.

Table 6 Total areas of cultivation and number of growers of selected crops

Area1 (ha) Number of growers 1998/1999 2010/2011 % change 1998/1999 2010/2011 % change Permanent crop - Banana 13,400 9,300 -30.6% 109,000 70,400 -35.4% Temporary crops - Sweet potato 200 700 +250.0% 19,600 10,200 -48.0% - Peanut 4,900 8,300 +69.4% 21,400 28,500 +33.2%

Remark: 1 Area exclude crops planted in plots less than 100 sq.m. Source: Lao Census of Agriculture 2010/11 Highlights, May 2012


Page 25

37. It should be noted that the figures appear in the planted area of Table 7 below do not include crops that were planted in the areas that were difficult to be measured. Findings from the field visits in this current study showed that many farmers planted banana, rice, peanut, and sweet potato in the same plots of land or planted them alternately. These patterns of cultivation might result in their production were not included in the results of the census. Therefore the figures in the latest census may be different from statistics from other sources of information.

Table 7. Production areas and numbers of growers of peanut and banana (2010/11)

Province Total area

for temporary

crops (ha)

Area planted peanut (ha)

No. of peanut growers

Total area for permanent

crops (ha)

Area planted banana (ha)

No. of banana growers

Champasak 107,100 1,900 2,600 33,800 500 5,200 Salavanh 88,400 2,800 5,500 13,900 2,200 7,000 Savannakhet 224,900 200 900 3,800 2,100 10,700 Whole country 1,231,000 8,300 28,500 149,200 9,300 70,400


38. According to Table 8 on the usages of various types of farm machinery, the percentage of farm households using tractors increased three folds between 1989/1999 and 2010/2011. The mechanisation of farm activities has been limited in some rural areas. Information shows drastic increase in using two-wheel tractor from 20% in the previous census to 61% in the 2010/11 census. Increased income made it possible for farmer to buy the two-wheel tractor to use in their farms.

Table 8. Farm households using farm machinery by type of machine

Type of machinery 1989/1999 2010/2011 Truck n.a. 14% Generator 1% 2% Four-wheel tractor 2% 9% Two-wheel tractor 20% 61% Water pump 4% 4%


39. The use of outside family labour is another way to cope with shortage of labour in rural areas. The use of outside labour in the latest census shows an increase from the national average of 26% in 1989/1999 to 45% in 2010/2011 as shown in Table 9. The southern part of the country only 25% of farm households used outside labour which was lower percentage than the northern part of the country. In terms of payment for outside labour, cash payment in the southern provinces was used between 77-89% of total type of payment which were much higher than the national average use of cash payment of 50% in 1989/1999 and 57% in 2010/2011. Exchange of labour at national level is 56% which is much higher than the rates in the three selected provinces as shown in the Table below which Champasak, Salavanh,


Page 26

and Savannakhet using exchange of labour at 14%, 19%, and 7%, respectively. Findings from the Census show that payment with farm produce was also used with lesser extent.

Table 9. Farm households by use of outside labour and type of payment (2010/11)


households

Use of outside farm labour

Type of payment (percentage of households for outside labour)

Did not use

Did use

With money

With farm produce

Exchange of labor

In other way

Champasak 75,400 56,100 19,300 81% 9% 14% 3%

Salavanh 50,100 37,500 12,500 77% 12% 19% 4%

Savannakhet 108,600 77,500 31,100 89% 11% 7% 4%

Whole country 782,800 431,000 351,800 57% 7% 56% 3%


II.3.3. Selected Agricultural Infrastructure

40. Details of the selected agricultural infrastructure in the three target provinces are shown in Tables 10-14. The Government has provided for various types of infrastructures in the villages. 87% of villages in the country has primary schools within one-hour walking distance with Champasak has higher percentage (96%) than the national level while the other two provinces have primary schools slightly lower than the national level. The villages in the three provinces also have pharmacy or drug kits of dispensary or hospital less than two-hour walking distance. More than half of the villages in the three provinces have access to electricity or connected to electricity grid. Safe water supply in the villages in these three provinces is much higher than the national average. More than 70% of the villages in the three provinces have accessible road to the districts. In general most villages3 in the selected areas have sufficient infrastructure which can support the value chain development.

Table 10. Selected infrastructure by province, village type, and land type (2011)

Province Number

of villages

Type of infrastructure (% of village)

Prim

ary

scho

ol

Inco

mpl

ete p

rim

ary

scho

ol

in v

illag

e

Prim

ary

scho

ol le

ss th

an

one h

our’

s wal

k

Phar

mac

y or

dru

g ki

t in

villa

ge

Disp

ensa

ry o

r ho

spita

l in

villa

ge

Disp

ensa

ry o

r h

ospi

tal l

ess

than

two

hour

s’ w

alk

Elec

tric

ity in

vill

age

Vill

age

conn

ecte

d to

el

ectr

icity

gri

ds

Safe

wat

er su

pply

in v

illag

e

Yea

r-ro

und

mot

orab

le

road

to d

istri

ct

No

mot

orab

le ro

ad to

di

stri

ct

Champasak 643,000 76% 20% 96% 70% 15% 61% 78% 74% 82% 70% 13%

Salavanh 605,000 50% 42% 84% 60% 15% 62% 65% 55% 82% 74% 1%

Savannakhet 1,012,000 65% 28% 83% 70% 16% 62% 64% 61% 74% 73% 2% Whole country 8,662,000 65% 27% 87% 70% 16% 62% 70% 55% 46% 66% 9%


3 From the field survey in the three provinces carried out in October 2013, Nong district of Savannakhet province may have more problems with road conditions which make it more difficult for transportation of fresh banana from farm sites to the district or the collection point in the province.


Page 27

41. Sources of electricity in the villages in the three selected provinces are shown in Table 11. Champasak has the highest percentage (78%) of villages with electricity among the three provinces, while Salavanh and Savannakhet have lower percentages of villages with elecricity. Major source of electricity is electricity grid. Some villlages without electricity may opt to use solar cells4, or public or private generator or hydro generator. Sources of household water in the villages in the three selected provinces are shown in Table 12. Most villagers use more than one sources of water for household water. Only 8-11% of villages in the three provinces have piped water. The major sources household water come from wells of borehole, river, stream, dam, or rain water from tanks or other sources.

Table 11. Source of electricity (2011)

Province No. of village

% of villages

with electricity

Source of electricity (% of villages) Electricity

grid Public

generator Private

generator Hydro

generator Solar cells

Champasak 643,000 78% 74% 2% 2% 2% 3%

Salavanh 605,000 65% 55% 3% 1% 3% 6%

Savannakhet 1,012,000 64% 61% 1% - - 1%

Whole country 8,662,000 70% 55% 2% 1% 12% 3%


Table 12. Source of household water (2011)


Source of household water (% of villages) Piped water

Well of borehole-protected

Well of borehole-

unprotected

River, stream, or

dam

Rain water from tank

Other sources

Champasak 643,000 11% 77% 25% 64% 74% 6%

Salavanh 605,000 10% 77% 19% 59% 77% 15%

Savannakhet 1,012,000 8% 48% 60% 38% 46% 11%

Whole country 8,662,000 12% 38% 29% 47% 35% 34%


42. 48% of rural villages in Lao PDR have irrigation either in the form of permanent weir, reservoir, pump scheme, gates and dykes, temporary weir, gabion, or other type of irrigation facilities. Around 54% of these rural villages did not have registered irrigation groups. The three provinces in this project have irrigation facilities in rural villages less than the national average as shown in Table 13. While 46% of rural villages in Champasak have irrigation, only 29% and 27% of rural villages in Salavanh and Savannakhet have irrigation facilities. This means that most farmers will have to rely on water from natural supply such as river, canal, stream, and rain water. Information also shows that most villagers in the irrigated areas have to use pump scheme. Most farmers in the non-irrigated areas with conventional cultivation methods will have to select crops that do not require high amount of 4 During a field study in October 2013 in a village in Nong district we found that villagers used solar cells which were installed by a private company. The company collects monthly fees from villagers for the usage of the solar cells.


Page 28

water in the dry season and mainly produce agriculture products when they have water from natural resources. The irrigation facilities should help them to increase the cycles of production to supply for commercial production.

Table 13. Type of Irrigation facilities in rural villages by irrigation type (2011)

Province No. of rural

village

% o

f rur

al v

illag

e with

irri

gatio

n

Type of irrigation facilities (% of rural villages) Villages with irrigation (% with irrigation groups)

Perm

anen

t wei

r

Res

ervo

ir

Pum

p sc

hem

e

Gat

es a

nd d

ykes

Tem

pora

ry w

eir

Gab

ions

Oth

er ir

riga

tion

faci

litie

s

No

grou

p

One

gro

up

Two

or m

ore g

roup

s

tota

l

Champasak 542,000 46% 5% 2% 27% 2% 2% 1% 14% 66% 16% 18% 100%

Salavanh 574,000 29% 10% - 8% 1% 14% 2% 1% 50% 26% 25% 100%

Savannakhet 867,000 27% 4% 8% 10% 3% 9% - 4% 55% 31% 15% 100%

Whole country 7,300,000 48% 17% 4% 7% 3% 29% 7% 2% 54% 22% 25% 100%


43. Water supply and soil condition are important for production of quality agricultural products. Rural villages in Champasak reported that 81% did not have problems with soil degradation, while 17% and 3% have problems with light and medium soil degradation, respectively. 68% of rural villages in Salavanh said they did not have problem with soil degradation, while 21% have light soil degradation, 11% has medium, and one percent has severe soil degradation. In Savannakhet 69% percentage of rural villages did not have problem with soil degradation, 25% has problems with light degradation and 6% with medium soil degradation.

Table 14. Selected agricultural characteristics of rural villages (2011)


villages

Irrigation (% of rural villages)

Soil degradation (% of rural villages)

% of rural villages

Wet

seas

on o

nly

Dry

seas

on o

nly

Both

wet

and

dry

seas

ons

Non

e

Ligh

t

Mod

erat

e

Seve

re

Tota

l

Rot

atin

g cu

ltiva

tion

Shift

ing

culti

vatio

n

Champasak 542,000 2% 13% 31% 81% 17% 3% - 100% 12% 7%

Salavanh 574,000 2% 6% 20% 68% 21% 11% 1% 100% 46% 2%

Savannakhet 867,000 3% 9% 16% 69% 25% 6% - 100% 20% 19%

Whole country 7,300,000 22% 4% 21% 70% 20% 8% 1% 100% 53% 18%



Page 29

II.3.4. Type of Services and Organisations at Village Level

44. Findings from the 2010/2011 census show that there are various type of services and organisations at village level in the three provinces. Land acllocation programme5 covered around 50 percent of the villages in the country. In Champasak this land allocation programme covered around 59% of the villages while the other two provinces have much lower number of land allocation programme. These three provinces have village development funds, cooperatives, and trade groups which should be important in the value chain development.

Table 15. Selected village services and organizations (2011)


Type of service/organisation (% of villages) Rice bank

Livestock bank

Cooperative Village development fund

Trade group

Land allocation programme

Champasak 643,000 3% 3% 5% 47% 8% 59%

Salavanh 605,000 23% 3% 6% 35% 7% 22%

Savannakhet 1,012,000 11% 5% 4% 31% 4% 21%

Whole country 8,662,000 15% 6% 4% 44% 8% 50%


II.3.5. Linkage to Financial Support

45. One of the problems cited by this Project and farmers interviewed was limited access to credit. Information from the latest census showed that only 13.3% percent of the total farm households in the country have access to agricultural credit. The public banks and the village development fund are the major sources of fund for farm households at national and provincial levels.

46. Among the three provinces in this project, 10.1% of farm households in Champasak, 10.6% in Salavanh and only 4.2% of farm households in Savannakhet have access to credit facilities. Champasak and Salavanh have higher percentages of credit obtained from public banks and low percentages of credit from village development fund than Savannakhet. Households in Savannakhet used credit from village development fund up to 50%, and followed by the public banks at 33% and microfinance of 14% of farm households with credit facilities.

5 This value chain study uses secondary information from the 2010/2011 census. However, it does not study the detail of the land allocation programme whether it was related to concession scheme in each province or not. The main interest was place on cooperatives, village development fund and trade groups which can be part of the value chain development of the three selected products in this study.


Page 30

Table 16. Farm households with credit and source of credits (2010/11)


households

No. of farm

households with credit

Sources of credit (% of farm households with credit) Public bank

Foreign bank

Private domestic

bank

Micro-finance

Village development

fund

Other

Champasak 75,400 7,600 69% 3% 2% 26% 5% Salavanh 50,100 5,300 77% 4% 1% 18% 9% Savannakhet 108,600 4,600 33% 7% 14% 50% 2%

Whole country 782,800 104,000 55% 1% 3% 3% 40% 7%


47. The value chain of agricultural products has many stakeholders which will need funding for activities in the value chain. Not only farmers or producers of agricultural products but also local collectors and traders of agriculture products may need funds for their business operations. To help local producers and other stakeholders to get access to credit facilities in the rural villages in the target areas will be crucial for the success of the project.

Table 17. Type of credit facilities in rural villages (2011)


villages

Percent of rural

villages with credit

facilities

Types of credit facilities (% of rural villages) Public bank

Foreign bank

Private domestic

bank

Micro-finance

Village development

fund

Other

Champasak 542,000 54% 32% - 4% 2% 33% 1% Salavanh 574,000 41% 25% 1% 4% - 21% 1% Savannakhet 867,000 27% 4% - - 2% 23% 1%

Whole country 7,300,000 44% 17% - 2% 3% 32% 2%


II.3.6. Market Linkage

48. Government policies of promoting commercialisation of agriculture products and demands from neighbouring countries such as Vietnam and Thailand have motivated farm households to move towards producing for trade. Farm households in Champasak, Salavanh, and Savannakhet who have been producing banana, sweet potato, and peanut for household consumption have increase their share in production for sale in the recent years.

49. In general these farm households might sell surpluses of their agriculture produces to neighbours, local traders or in nearby local markets. Recently sales of agriculture produces have significantly increased. The increases of sales of farm produces can be found in Table 18, which compares information from the census of 1998/99 to the corresponding data of the recent census of 2010/11. Not only that the number of farm households which sold some produces increased from 35% in 1989/1999 to 71%, the number of households who produced with the main purposes to sell increased five folds from 6% of farm households to 30% in the same duration. This pattern shows tendency that more farm households have the ability to produce for commercial purposes.


Page 31

Table 18. Sale of farm produces as percentage of farm households

Type 1998/1999 2010/2011

Main purposes for sale 6 30 Sold some produce 35 71

Source: Lao Census of Agriculture 2010/11 Highlights, May 2012 50. In the past most of agricultural products were produced for household consumption and surplus of their produces might be sold in local markets. Recently the trend has changed to more market oriented. Sales of agricultural products in the latest census showed that 84% of villages sold agricultural produces. Findings indicated that in 33% of rural villages farmers sold agricultural produces in local markets, 54% sold through brokers in the villages and 71% sold through brokers in other villages. When we look at provincial information, selling through brokers in other villages was the major means to sell agricultural produces, followed by selling to brokers in the same villages. Selling in the village markets in these three provinces was also higher than the national level.

51. Although contract farming has been promoted but the number of rural villages that sold agricultural products under contract farming agreements was still very low and even lower than selling directly to other processing companies. Around 92% of villages with road could sell agriculture products, when compared to 78% of villages without road. The differences also indicated not only on the number of villages but also on marketing method used. Logistic cost and time spent for transportation of products from areas which have limited road access were higher than those with roads. Traders of these agricultural products have to take the cost of operations into account. Land types also have impact on rural villages. Lowland and plateau both have higher percentage of rural villages in which agricultural produces were sold than the villages in upland.

Table 19. Marketing of agriculture produce in rural villages (2011)


villages

Percent of rural villages

in which agricultural produce sold

Agricultural produce marketing method (% of rural villages) Contract farming

Sell directly to

other processing companies

Sell through

broker in own

village

Sell through

broker in other village

Sell in village market

Sell in other way

Champasak 542,000 94% 6% 13% 68% 71% 52% 10% Salavanh 574,000 86% 5% 15% 62% 73% 42% 11% Savannakhet 867,000 82% 3% 3% 53% 63% 41% 10%

Whole country 7,300,000 90% 14% 6% 54% 71% 33% 9%

Rural with road 6,031,000 92% 16% 6% 57% 73% 36% 9%

Rural without road 1,269,000 78% 5% 2% 39% 64% 23% 8%

Lowland 2,651,000 92% 10% 7% 62% 71% 44% 10% upland 2,908,000 85% 15% 3% 43% 69% 23% 8% Plateau 1,713,000 93% 20% 9% 58% 75% 35% 7%

Mixture of land types 28,000 93% 19% 4% 63% 74% 33% 11%



Page 32

52. Permanent markets, shops, agricultural input shops, shop selling agricultural machinery and tools, petrol stations, and credit facilities are important instruments in the development of supply chain for agriculture products. The number of permanent markets in the three provinces is still very low. However, most villages have shops and petrol stations. The number of agricultural input shops and shops selling agricultural machinery and tools were also relatively lows in these three provinces.

Table 20. Agricultural infrastructure in rural villages by type of infrastructure (2011)


Type of agricultural infrastructure (% of villages)

Irri

gatio

n fa

cilit

ies

Irri

gatio

n gr

oups

Perm

anen

t mar

ket

Shop

Agr

icul

tura

l inp

ut sh

op

Shop

selli

ng a

gric

ultu

ral

mac

hine

ry a

nd to

ols

Petr

ol st

atio

n

Cre

dit f

acili

ties

Champasak 643,000 46% 16% 1% 87% 6% 6% 39% 27% Salavanh 605,000 29% 15% 1% 58% 2% 2% 25% 41% Savannakhet 1,012,000 27% 12% 1% 66% 2% 4% 50% 54%

Whole country 8,662,000 48% 22% 2% 62% 3% 3% 28% 44%


II.3.7. Linkage to Information

53. Agricultural information is important for most stakeholders in the value chain. Information on new production technologies, availabilities of agricultural inputs, as well as market and price information is all useful for farmers and traders in villages. The latest census of 2010/11 on source of agricultural information shows that farm households received information mostly from other farmers. 63% of farm households in Champasak received information from other farmers, while 55% of farm households in Salavanh, and 45% in Savannakhet received information from other farmers; television also provide agricultural information to farm households at close percentages (61%, 52%, and 54%, respectively) to receiving information from other farmers; radio which can reach wide ranges of farm households came third at 40%, 52%, and 54% of farm households, respectively; and public announcement can reach close to one third of the number of farm households in Champasak and Salavanh provinces.

54. Interestingly, only 11% of farm households in Champasak, 14% in Salavanh, and 15% in Savannakhet received agricultural information from extension services. These percentages are all lower than the national average of 18% and even lower than the number of farm households which received information from input suppliers at 17%, 30%, and 18% of farm households, respectively. The outreach of the extension services in giving agricultural information to farmers indicated needs for improvement in the capacity building for these local extension services.


Page 33

Table 21. Farm households by sources of agricultural information (2010/11)

Province No. of farm households

Sources of agricultural information (% of farm households) Public

Anounce-ment

Extension services Radio TV News-

papers Input

suppliers Other

farmers others

Champasak 75,400 33% 11% 40% 61% 6% 17% 63% 29%

Salavanh 50,100 33% 14% 52% 52% 7% 30% 55% 29%

Savannakhet 108,600 23% 15% 54% 54% 6% 18% 54% 33%

Whole country 782,800 34% 18% 43% 52% 8% 23% 55% 30%


II.3.8. Constraints

55. Constraints reported in the 2010/11 census came from village heads who were interviewed. The constraints reported were lack of irrigation, lack of inputs, lack of vaccination, low commodity prices, lack of land, lack of market, lack of draught animal or machinery, other constraints combined and lack of labour. Low commodity prices and lack of inputs were cited in most villages in the current field visits. Lack of irrigation was reported in the three provinces at the higher percentages than that of the national level. Secondly lack of agricultural inputs was the common problems in the three provinces.

56. Interestingly lack of labour in Champasak was found to be 19% of the total rural villages, while the percentages of those of Salavanh and Savannakhet were closer to the national level at 10% of the rural villages. Not only that the average size of household in Champasak (5.64) is lower than those of Salavanh (5.96) and Savannakhet (6.0), there might be other reasons behind the higher number of villages with labour shortage in Champasak such as migration of workforce and other socio-economic reasons such as level of education and job opportunities in service sector in Champasak are higher than in the other two provinces in this study.

Table 22. Constraints and problems faced by famers in rural village (2011)

Province No. of rural village

Constraints/problem (% of rural village)

Lack

of l

and

Lack

of i

nput

s

Lack

of i

rrig

atio

n

Lack

of l

abou

r

Lack

of m

arke

ts

Lack

of d

raug

ht a

nim

als

or m

achi

nery

Lack

of v

acci

natio

n

Low

com

mod

ity p

rice

s

othe

r

Champasak 542,000 20% 57% 62% 19% 13% 13% 45% 33% 12%

Salavanh 574,000 17% 53% 76% 12% 24% 26% 39% 37% 21%

Savannakhet 867,000 16% 36% 70% 10% 18% 12% 40% 23% 27%

Whole country 7,300,000 29% 43% 59% 10% 25% 16% 40% 38% 18%



Page 34

II.4. Information of the Three Provinces and Selected Areas

II.4.1. Champasak province 57. Champasak province is located in the Southern part of Laos. The capital city is Pakse. The total land area is 15,350 square km. As of 2010, the total population of Champasak province was 667,305 persons with the density of 43. 47 persons/sq. km. It is bordering in the North with Salavanh province for the length of 140 Km, in the South with Cambodia (135 Km), in the East with the Sekong and Attapeu provinces (180 Km) and in the West with Thailand (233 Km). There are 10 districts in province, namely: Pakse, Sanasomboun, and Bachieng chaleunsouk, Pakxong, Phonethong, Pathoumphone, Champasak, Sukhuma, Munlapamok and Khong.

Figure 1. Map of project areas in Bachieng district of Champasak Source: PPO Champasak, January 2014

58. The people of Champasak province live along the bank of Mekong River. In this province, we can find ancient temples which were influenced from the Angkor people who settled in Cambodia. There are many different minorities in Champasak whom have their own language, culture, and lifestyles. The distance from Vientiane to Pakse is 610 kilometers by Route 13 (South) via the provinces of Bolikhamxay, Khammouane, Savannakhet and Salavanh.


Page 35

59. There are two major zones in Champasak province including: (i) upland area that occupy 26% of total area, with an elevation of 1,284 m, the average annual temperature is 21°C, the average rainfall is 3,600 mm/year, and the relative humidity is 80%; and (ii) low land area which occupy 74% total area, with the annual average temperature of 27°C and the average rainfall is 2,300 mm/year. The total area of paddy rice cultivation in Champasak province is 119,594 ha, of which approximately 10% of total rice cultivation area is in irrigated areas. Bachieng district has only 2,364 ha for the total rice cultivation.

60. Champasak province is second largest socio-economic development province in Lao PDR. The provincial government estimates that GDP per capita is estimated to be at US$ 1,500 between 2011-2012. The main sources of income of population come from agriculture production, tourism, and service sector. Bachieng Chaleunsouk district which has been selected as the target site has an average per capita income of US$ 759 which is around half of the per capita income of the province. This Project will be implemented in 17 villages in four Khum Bans of Bachieng Chaleunsouk. More details are presented in Table 23. The total cultivation areas of banana, sweet potato, and peanut in the selected areas are shown in Table 24, while main information of the district and province is presented in Table 25.

Table 23. Production areas of target villages in Bachieng Chaleunsouk

No. Khum Ban No. Villages Product Cultivation area (HA)

Production (Ton)

1. Kengkia 1.1 Ban Kengkia Banana 26.0 1,300.0

Sweet potato 23.0 1,150.0

Peanut 358.0 429.6

1.2 Kachid Peanut 90.0 108.0

1.3 Nong Koong Peanut 7.8 9.36 1.4 Nong Bua-Tha Xang Sweet potato 4.0 200.0

Peanut 45.0 54.0

1.5 Meung Banana 40.3 2,015.0

Sweet potato 3.8 190.0

Peanut 103.0 123.6

1.6 Non Ou Dom Banana 25.0 1,250.0


Peanut 117.7 141.24

1.7 Khan Lai Banana 32.0 1,600.0

Peanut 178.0 213.6

1.8 Lad Bok Banana 62.0 3,100.0

Peanut 156.0 187.2

1.9 Kouang Xi Banana 75.3 3,765.0


Peanut 320.0 384.0

1.10 Phon Thong Banana 3.0 150.0

Peanut 113.0 135.6

2. Keng Gnao 2.1 Ban Keng Tun Banana 3.0 150.0

2.2 Mak Ngeo Banana 5.0 250.0

3. Kam Sam 3.1 Ban Long Lay Banana 16.0 800.0

3.2 Ou Dom Souk Banana 5.0 250.0

3.3 Thi Nung Lak Sib Hok Banana 6.0 300.0

4. Houay He 4.1 Ban Lak Xao Ha Banana 7.0 350.0

4.2 Houay He Banana 7.0 350.0

Source: Information from PPO Champasak, December 2013


Page 36

Table 24. Cultivation areas in selected Khum Ban in Bachieng district of Champasak

No. Khum Ban Banana (HA) Sweet Potato (HA) Peanut (HA)

1. Kengkia 262.3 36.8 1,488.5

2. Keng Gnao 8.0 - -

3. Kum Sam 27.0 - -

4. Houay He 14.0 - -

Total 312.3 36.8 1,488.5


Table 25. Some main information of Bachieng district in Champasak

No. Item Unit Bachieng District

Champasak Province

1 Total area Ha 87,703 1,535,000 2 Agricultural land Ha 10,151 303,944 3 Rainy season rice Ha 2,138 106,380 4 Dry season rice Ha 226 13,214 5 Upland rice Ha 0 0 6 Other crops Ha 7,787 36,730 7 Cattle Head 10,410 148,830 8 Buffalo Head 4,386 139,129 9 Pig Head 22,647 200,979 10 Goat Head 4,140 12,228 11 Poultry Head 220,832 5,253,932 12 Fish Ha 56 910 13 No of population person 54,150 706,068 14 No. of household No. 9,939 105,393 15 No. of Agriculture household No. 6,159 82,756 16 Women is owner of agricultural household Persons - 10,758 17 Avg. per capita income (year…..) USD 759 1,500 18 Agriculture sector % GDP 11 34.7 19 Commercial Service sector % GDP 9.5 31


II.4.2. Salavanh province

61. Salavanh is located in the Southeastern part of Lao PDR. The name of capital city is Salavanh; it is built in a large picturesque plain surrounded by mountains and the loop upstream. The total land area of Salavanh province is 10,553 km2. Salavanh is bordering with Thailand in the West, Vietnam and Sekong province in the East, Savannakhet province in the North and Champasak province in the South. There are 8 districts in the province, namely: Salavanh, Wapi, Khongxedone, Lakhonepheng, Lao Ngyam, Tumlan, Taoy and Samuaye.

62. As of 2010, population in the province reached a total of 364,405 people, of which 184,778 are female which comprising of the 51% of total population. Lao Loum occupies 67% and ethnic minority groups occupy 33%. The population density is 35 persons/ km2. There are many ethnic minority groups in Salavanh province 10 ethnic major groups are Lao, Katang, Suay, Taoy, Pako, Phuthai, Ngai, Katoo, Ala, and Yulaven.


Page 37

63. Salavanh is known for its four rivers: the Sedone, Selamang, Seset and Setapung. People can take a boat along the Sedone River, and then up access to Mekong river. Overall, the Salavanh river valley is characterized by a landscape of a fertile plain patterned with a patchwork of rice paddies and fruit orchards. The natural protected areas in Salavanh are Phouxienthong, Sesap and Sebang Nouan National Protected area. The Eastern slopes of Salavanh are heavily forested and support various wildlife species and the Southern slope of Boloven Plateau is densely of coffee plantation. In Salavanh the main cash crops are rice, black pepper, vegetables, potato, industrial plantation such as Bong tree, rubber tree and also fruit trees. Salavanh province has the climate of tropical monsoon with 2 distiguished seasons: the dry season is from November to March, and the rainy season starts from April to October. The annual average precipitation is 2500 mm. There are about the average relative humidity is 74% per year. The annual average temperature is 25.5 0C, minimum 11 0C, and maximum is 40 0C.

64. As of 2010 Salavan has 61,211 households; the provincial government estimates that about 23.9% of Salavanh’s households are poor. Per capita income of Lao Ngyam is estimated to be at US$ 1,061 against the national average of Salavanh province of US$ 1,100. The main income of population belong to agriculture production, but many farm households still did not have sufficient food and foodstuffs, especially rice for consumption.

65. Information received from PPO Salavanh on target villages in Lao Ngyam district is shown in Table 27. Total production area of this Project for banana is 1,527.5 ha with the yield of 16,775.28 tons. The total production area for sweet potato is 678 ha with the yield of 15,704.2 tons. The total production area for peanut is 799.6 ha with the yield of 939.48 tons. Map of Salavanh province and project area is presented in Figure 2.

Figure 2. Map of project areas in Lao Ngyam district of Salavanh Province Source: PPO Salavanh, November 2013


Page 38

Table 26. Target villages in Lao Ngyam district of Salavanh province

No. Khum Ban No. Villages Product Cultivation area (HA)

Production (Ton)

1 Ngew-1 1.1 Ban Ngew, Banana 247.74 2,725.14 Sweet potato 127.00 2,959.10 Peanut 91.30 118.69 1.2 Ban Lane, Banana 257.74 2,835.14 Sweet potato 105.00 2,446.50 Peanut 103.30 134.29 1.3 Ban Teme Banana 162.00 1,782.00 Sweet potato 117.00 2,726.10 Peanut 94.00 122.20

2 Dasair-2 2.1 Ban Donedou Banana 132.00 1,452.00 Sweet potato 87.00 2,027.10 Peanut 77.00 100.10

3 Nongkae-6 3.1 Ban Nongkae Banana 89.00 979.00 Sweet potato 13.00 302.90 Peanut 86.00 111.80 3.2 Ban Dongluang Banana 92.00 1,012.00 Sweet potato 18.00 419.40 Peanut 86.00 111.80 3.3 Ban Dongsuang Banana 134.00 1,474.00 Sweet potato 21.00 489.30 Peanut 81.00 105.30

4 Nabone-7 4.1 Ban Dongban Banana 315.00 3,465.00 Sweet potato 113.00 2,632.90 Peanut 90.00 117.00

5 Vanpeuay-8 5.1 Ban Vanpeuay Banana 98.00 1,078.00 Sweet potato 73.00 1,700.90 Peanut 91.00 118.30

Source: Statistics survey by PPO Salavanh, November 2013

Table 27. General information of Lao Ngyam district in Salavanh province

No. Item Unit Lao Ngyam District

Salavanh Province

1 Total area Ha 96,441 1,055,284 2 Agricultural land Ha 55,996 205,328 3 Rainy season rice Ha 1,500 70,520 4 Dry season rice Ha 600 69,680 5 Upland rice Ha 2,970 5,320 6 Other crops Ha 51,526 58,220 7 Cattle Head 466 133,272 8 Buffalo Head 15,520 157,078 9 Pig Head 101,388 905,489

10 Goat Head 4,340 38,576 11 Poultry Head 487,286 5,611,767 12 Fish Ha 680 1,500 13 No of population person 68,482 371,693 14 No. of household No. 13,826 61,295 15 No. of Agriculture household No. 13,135 58,230 16 Women is owner of agricultural household Persons 205 873 17 Avg. per capita income USD 1,061 1,100 18 Agriculture sector % GDP 66.57 53 19 Commercial Service sector % GDP 19.38 19

Source: Statistics survey by PAFO (information from PPO Salavanh, November, 2013)


Page 39

Table 28. Production of banana in Salavanh province

No. Item Unit Salavanh Lao Ngyam Others

1. Number of household producing banana No. 3,920 1,054 1,300

2. Average farm size HA 1.50 1.20 0.1 to 0.5 3. Irrigation Yes/No No No 4. Cost of production USD per HA 900 900 900 5. Cost of production USD per ton 82 82 82 6. Selling price per ton USD 413 413 413

7. Average annual income of banana production USD - -

8. Access to credit Yes/No Yes Yes No 9. Access to technology Yes/No Yes Yes No

10. Processing capability by household Yes/No Yes Yes No

11. Please identify type of processed products

Detail of products Banana drying Banana drying

12. Local traders/buyers No. 5 NA Local consumption

13. Destination of product(s) Local

consumption, or export

Thailand, Vietnam

Thailand, Vietnam

Local consumption

14. Quantity of local consumption per year Ton 51,744 2,783 -

15. Export per year Ton 56,567 12,170 -

16. If export, please identify destination of product(s)

Name of country

Thailand, Vietnam

Thailand, Vietnam

17. Number of processing plants in area No. - - 18. Main problems Details of

problem Price and

contracting Price and

contracting Price and

contracting

19. Is there any agricultural cooperative in the area? Yes/No No No No

Source: Statistics survey by PAFO (information from PPO Salavanh), 2013 Table 29. Production and trade of banana of Salavanh

2008 2009 2010 2011 2012 2013

HA Mil. LAK HA

Mil. LAK HA

Mil. LAK HA

Mil. LAK HA

Mil. LAK HA

Mil. LAK

Production area 5,704.0 6,705.0 6,705.0 7,125.0 7,543.0 7,811.0 Average farm size 1.0 6.5 1.2 8.4 1.4 9.8 1.5 11.3 1.5 10.8 1.5 10.8

Ton Mil. LAK Ton Mil.

LAK Ton Mil. LAK Ton Mil.


LAK Local consumption 12,548.8 81,567.2 14,751.0 103,257.0 14,751.0 103,257.0 15,675.0 117,562.5 16,594.6 119,481.1 17,184.2 123,726.2

Export 50,195.2 326,268.8 59,004.0 413,028.0 59,004.0 413,028.0 62,700.0 470,250.0 66,378.4 477,924.5 68,736.8 494,905.0

Import country Thailand 50,195.2 326,268.8 57,823.9 404,767.4 57,233.9 400,637.2 59,565.0 446,737.5 63,059.5 454,028.3 68,736.8 494,905.0

Import country Vietnam NA NA 1,180.1 8,260.6 1,770.1 12,390.8 3,135.0 23,512.5 3,318.9 23,896.2 NA NA

Source: PPO Salavanh (2013)

66. Information from PPO Salavanh shows production and trade of banana in Salavanh province in Tables 28 and 29. The average farm size in Salavanh has increased from 1.0 ha in 2008 to 1.5 ha in 2013. Local consumption in each year was much lower than the amount


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exported to Thailand. In 2012, according to the Customs Department’s information Thailand imported around 14,641 tons of bananas from Lao PDR6.

67. Salavanh province has fertile soil which allows farm households to produce various kinds of crops. Production of sweet potato has been exceeding the amount of local consumption either in the southern provinces of Laos or markets in Vientiane. Around 70-78% of total production of sweet potato was exported to Thailand. Most of the sweet potato or Ipomoea batata which has been imported into Thailand has purple texture.

Table 30. Production and trade of sweet potato

2008 2009 2010 2011 2012 2013

HA Mil. LAK HA

Mil. LAK HA

Mil. LAK HA

Mil. LAK HA

Mil. LAK HA

Mil. LAK

Production area 665.0 677.0 786.0 950.0 1,153.0 1,332.0 Average farm size 1.0 6.5 1.2 8.2 1.4 9.8 1.5 10.8 1.5 11.0 1.5 11.3





Export 10,224.4 66,458.4 10,408.9 70,780.4 12,084.8 84,593.3 14,606.3 105,165.0 17,727.4 129,409.8 20,479.5 153,596.3


Source: PPO Salavanh (2013)

68. Many farm households grow ground nut or peanut after rice is harvested. Productions of peanut in most areas are for local consumption and to export to Thailand. Details from PPO Salavanh are shown in Table 31.

Table 31. Production and trade of peanut

2008 2009 2010 2011 2012 2013

HA Mil. LAK HA Mil.

LAK HA Mil. LAK HA Mil.

LAK HA Mil. LAK HA Mil.

LAK Production area 6,746.0 6,790.0 6,790.0 7,125.0 8,122.0 8,250.0 Average farm size 0.7 4.6 0.8 5.4 1.0 7.0 1.0 7.2 1.2 8.8 1.2 9.0





Export 5,059.5 32,886.8 6,111.0 41,554.8 7,638.8 53,471.3 8,015.6 57,712.5 10,355.6 75,595.5 11,756.3 88,171.9


Source: PPO Salavanh, 2013

II.4.3. Savannakhet province

69. Savannakhet province or Kaysone Phomvihane is located in the western part of Lao PDR. The city is birth town of Kaysone Phomvihane, former president of Lao PDR and was named after him in 2005. There are 11 districts in Savannakhet province. It is the country’s most populous province and is home to about 15% of all Lao citizens. Stretching between the Mekong and Thailand in the west and the Annamite Mountains and Vietnam in the east, it has in recent years become an increasingly important trade corridor between these two

6 However, statistics from PPO Salavanh showed exportation to Thailand as 63,059.5 tons which is 4.3 times more than the import statistic showed on the Thai side.


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bigger neighbors. With the luxuriously smooth tarmac of Route 9 now complemented by a new Thai-Lao Friendship Bridge, opened in December 2006, the province is gearing up for even more traffic.

70. The population of 932,997 includes lowland Lao, Thai Dam, several small Mon-Khmer groups (Chali, Bru, Kaleung, Katang, Lave, Mangkong, Pako and Suay), and long-established and growing communities of Vietnamese and Chinese. Particularly in the lowland farming lands east of the Mekong River.

71. There are three NPAs wholly or partly in the province, Dong Phu Vieng to the south of Route 9, Phu Xang Hae to the north and Xe Ban Nuan straddling the border with Salavanh Province. Eastern Savannakhet is a good place to see remnants of the Ho Chi Minh Trail, the primary supply route to South Vietnam for the North Vietnamese Army during the Second Indochina War. It is also a major gateway for visitors arriving from Vietnam via Lao Bao.

72. Sepone district is mountainous district bordering to Vietnam. There are 14 Kumb Ban comprising of 88 villages and 7,859 households. Total population of the districts is 45,993 out of which 23,068 are women. The population comprising of the ethnic minorities groups of which 68.64% is Lao Theung, and 31.36% Lao Loum.

73. Nong district has 9 Kumb Bans comprising of 73 villages and 3,437 households. Total population of the districts is 22,382 out of which 11,198 are women. The majority of population comprising of the ethnic minorities groups.

74. Xaiphouthong district is located about 50 km southeast of Savannakhet city and is surrounded by the Mekong River on the west, Champhone district on the east, Kaisone Phomvihan district on the north, and Songkhone district on the south. The land area is fairly flat and is suitable for farming. However, the soils are mainly sandy loam or silt loam with low organic matter level and inherent fertility and low water holding capacity and high infiltration rates. All the 8,796 households in the district are fairly endowed.

75. Maps of the selected target three districts are showed in Figures 3-5.

Figure 3. Project area in Nong district of Salavanh province Source: Information provided by PPO Savannakhet, November 2013


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Figure 4. Project area in Sepone district of Savannakhet province Source: Information provided by PPO Savannakhet, November 2013

Figure 5. Project area in Xaiphouthong district of Savannakhet Source: Information provided by PPO Savannakhet, November 2013

76. As of 2012 Savannakhet’s per capita income is US$ 1,241, while the per capita income of Xaiphouthong district is US$ 1,115, and in Sepone is US$ 656. The lowest per capita income is in Nong district at US$ 485.28. The main income of population belong to agriculture production. However, many farm households still do not have sufficient rice for consumption. More information could be found in Table 33


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77. This IFAD-ADB project will be implemented in 5 villages as shown below:

Table 32. Name of target villages in Sepone, Nong, and Xaiphouthong districts

No. Khum Ban District Villages Products Cultivation area (Ha)

Production (Ton)

1 Khanthachan Xaiphouthong Khanthachan Banana Peanut 120 216

2 Thapho Xaiphouthong Thapho Banana Peanut 90 180

3 Khaengluang Sepone Dongsavanh Banana 16.25 126.5 Peanut

4 Along Nong Thathey Banana 7 70 Peanut

5 Khaenglin Nong Khaenglin Banana 6 60 Peanut

Source: Information provided by PPO Savannakhet on 12.10.2013

78. Some main information of the selected districts is presented below.

Table 33. Some main information of the selected districts in Savannakhet (2012)

No. Item Unit Savannakhet District

Xaiphouthong Sepone Nong 1 Total area Ha 2,177,400 60,295 230,875 173,209

2 Agricultural land Ha 651,385 19,982 89,132 67,453

3 Rainy season rice Ha 173,117 12,566 2,500 990

4 Dry season rice Ha 30,000 641 1,826 1,100

5 Upland rice Ha 1,417 0 650 587

6 Other crops Ha 130,114 1,530 18,999 33,800

7 Cattle Head 399,546 13,940 11,030 7,147

8 Buffalo Head 290,416 12,200 14,832 4,293

9 Pig Head 285,551 7,806 17,167 11,406

10 Goat Head 64,482 2,863 6,531 9,805

11 Poultry Head 2,937,461 148,778 145,478 118,272

12 Fish Ha 5,373 115 75 48

13 No of population Person 932,997 50,335 48,680 24,106

14 No. of household No. 147,964 9,677 8,648 3,992

15 No. of Agriculture household

No. 108,586 7,271 7,488 3,593

16 Women is owner of agricultural household

Persons 74,493 4,088 5,400 2,599

17 Avg. per capita income (year 2012)

USD 1,241 1,115 656 485.28

18 Agriculture sector % GDP 41.9 80.43 63.61 85.71

19 Commercial Service sector

% GDP 28.3 19.59 36.39 14.29

Source: Statistics survey by PAFO (information from PPO Savannakhet), Year 2012.


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II.5. Thailand Import Statistics of Banana, Sweet Potato, and Peanut

79. Thailand produces banana for local consumption and for export as table fruits or desert fruits and also used in food processing industry. The majority of banana grown for commercial are in Musaceae family which includes Kyuae Namwa in ABB banana group, Kyuae Hom Thong in AAA banana group, and Kyuae Khai in AA banana group. Sweet potato (Ipomoea batatas in Convolvulaceae family) has been grown in many parts of Thailand for household consumption and for processing into sweet or deserts. Peanut (Arachis hypogaea L. in Papilionaceae family) is widely grown for local consumption and to be used in food processing industry.

80. In recent years cultivation areas of these three products have gradually reduced as government policies to other cash crops, or agricultural product pledging schemes have motivated farmers to change to other products such as rice, cassava, sugar cane, rubber, or other oil palms. The demands for these three products for food processing industries also increased with the “Kitchen of the World” policy of the Thai Government on export promotion of food and processed food.

81. Thailand is selected as the main export market in this study by the IFAD-ADB project. The researcher searched for information on import statistics of the three products as can be found in Tables 34-40. The value of importation into Thailand is shown in these Tables are CIF prices (Cost, Freight, and Insurance). The exact value of each product without the expenses on freight and insurance might be lower than the CIF prices from the database of the Customs Department.

II.5.1. Importation of banana into Thailand

82. Importation of banana increases because of growing demand for fresh table fruit and for processed products for local consumption and for export. The promotion of solar dryer facilities also caused shortage of banana. Thailand exports both fresh and various processed banana products to other countries.

83. Laos has been the biggest exporter of fresh banana (HS 08069000 003) or Kyuae Namwa to Thailand. Plantains were imported from other countries such as the Philippines. Table 34 shows import statistics between 2010 up to October 2013 of banana and the value was CIF. Importation of banana from Laos has been increasing because of the decreasing in areas for banana plantation in Thailand. Most of the bananas imported into Thailand through Chongmek border crossing were sold and consumed mostly in northeastern provinces of Thailand as table fruits and to make sweets either for home consumption or for sale by small vendors. There is no import statistic of banana through Savannakhet border crossing into Thailand. Table 35 shows average CIF prices of imported banana during the corresponding periods.

84. Banana processors in Thailand are mostly located in the upper central of Thailand in Phitsanulok, Phichit, and Sukhothai provinces. These banana processors normally use locally produced banana or from nearby provinces in the upper central part of Thailand. Some bananas from Laos have been imported into Loei province of Thailand and sent to


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other parts of Thailand including the northeastern provinces but in lesser quantity than banana imported into Thailand via Chongmek border crossing point. Banana from Salavanh and Champasak which were imported into Thailand are used mostly in the northeastern provinces of Thailand. Bananas from Loei province either locally grown or imported from Laos have been considered to be of better quality than those imported from the southern provinces of Laos.

Table 34. Import of bananas, including plantains, fresh or dried (HS 0803) into Thailand

Jan-Dec 2010 Jan – Dec 2011 Jan-Dec 2012 Jan-Oct 2013 Quantity

(Ton) Value

(Mil. Baht) Quantity

(Ton) Value


(Ton) Value


(Ton) Value

(Mil. Baht)

Total 11,955.61 62.88 10,568.32 71.62 14,667.43 105.84 13,168.80 94.63 Laos 11,719.78 58.61 10,491.20 68.62 14,641 102.49 13,158.60 92.11 Philippines 235.75 4.25 58.61 1.02 13.79 0.55 China 0.07 0.02 6.79 1.77 7.32 1.89 8.36 2.26 Australia 0.42 0.06 South Africa 1.84 0.26

Source: Information and Communication Technology Center of the Ministry of Commerce with Cooperation of the Custom Department

85. Interviews with banana processors in Phitsanulok provinces of Thailand showed that they mostly used Thai banana as they are close to banana production areas in Phitsanulok, Phichit, Sukhothai, Kampangpetch, and Nakornsawan. Prices, cost of transportation, and quality of banana were the important factors for the banana processing buyers in Thailand. These processor said they could buy fresh locally produced banana around 7-14 baht per tier or hand depending on the season and availability of banana in the market. The average weight of banana used by these processors is 1.4 kilogram per tier. This can be translated into the price of locally grown banana of around 5-10 baht per kilogram.

86. Average prices of imported banana from Laos during 2010 to October 2013 are shown in Table 35.

Table 35. Average Price of Banana Imported into Thailand

Average Price in Thai Baht per Kilogram of Banana

Jan-Dec 2010 Jan-Dec 2011 Jan-Dec 2012 Jan-Oct 2013 Total 5.26 6.78 7.22 7.19

Laos 5.00 6.54 7.00 7.00

Philippines 18.03 17.35 39.77 China 284.05 260.52 258.65 269.97

Australia 138.19 South Africa 140.34



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II.5.2. Importation of sweet potato into Thailand 87. Local varieties grown and commonly used sweet potato in Thailand are Mun Thed or Mun Deang (red skin), Mun Khai (white or pale yellow skin, with white or orange texture), Mun Thorpheug (purple texture), and Mun Thiean (or Japanese sweet potato). Around 80 percent of importations of sweet potato came from Laos to supplement the shortage of sweet potato in the Thai market. Average prices per kilogram of sweet potato from Laos have been lower than those of other countries. Information of importation of sweet potato into Thailand during 2010 to October 2013 is shown in Table 36. Most of sweet potatoes from Laos which were imported into Thailand were Mun Thorpheug or sweet potato which has purple colour texture similar to that of taro which is called “pheuag” in Thai. Importation of sweet potato from Cambodia has started in 2013 at a rather small quantity. It is considered to be a potential source of sweet potato and can become a real competitor of sweet potato from Laos. Sisakhet province in Thailand which is one of the main suppliers of Mun Thorpheug is close to Cambodian border. Logistic between the two countries at this point is not complicated. Sisakhet regularly supplies Mun Thorpheaung to Talad Thai and Talad Simummuang.

88. Imported sweet potato from Vietnam, China, Japan, and Australia were mostly for “Japanese sweet potato” rather than normal varieties of sweet potato. These imported Japanese sweet potatoes fletched higher retail prices than those of normal varieties. Imported of sweet potato from Japan was shipped by air freight. It could be sold over a thousand baht per kilogram in hypermarket or superstore selling premium quality food. Some of them were import for propagation purposed. Japanese sweet potatoes imported from Vietnam at around 35-38 baht/kg were normally sold around 90-125 baht/kg in supermarkets. Japanese sweet potato varieties normally fletches higher price than other varieties of sweet potato. Demands for Japanese sweet potato in Thailand have been growing with limited local supplies. The areas in Thailand that produce Japanese sweet potato are Chiangmai, Phichit, and Pracheubkirikhan provinces. Retail prices of Japanese sweet potato which are locally produced in Thailand are around 70-100 baht/kg in supermarkets, while production cost was around 25 baht/kg at farm gate, and wholesale price was around 50-60 baht/kg.

Table 36. Sweet potatoes, fresh or dried (HS 071420)

Jan-Dec 2010 Jan – Dec 2011 Jan – Dec 2012 Jan – Oct 2013

Quantity (Ton)

Value (Mil. Baht)

Quantity (Ton)

Value (Mil. Baht)

Quantity (Ton)

Value (Mil. Baht)

Quantity (Ton)

Value (Mil. Baht)

Total 9,353.37 58.49 10,541.94 168.90 15,566.81 251.67 10,508.94 177.04 Laos 8,988.05 44.94 10,053.90 149.18 14,814.60 222.29 9,614.73 144.22 Vietnam 333.30 11.71 458.94 16.42 519.17 19.25 805.46 28.55 China 27.12 0.45 156.65 4.07 44.40 0.98 Japan 4.91 1.39 7.56 2.48 9.02 3.53 8.28 2.26 Indonesia 20.28 0.75 67.37 2.54 24.00 0.85 Cambodia 12.03 0.14 Australia 1.26 0.08



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Table 37. Average price per kilogram of sweet potato imported into Thailand

Average Price in Thai Baht per Kilogram

Jan-Dec 2010 Jan-Dec 2011 Jan-Dec 2012 Jan-Oct 2013

Total 6.25 16.02 16.17 16.85 Laos 5.00 14.84 15.00 15.00 Vietnam 35.13 35.78 37.08 35.45 China 16.59 25.98 22.07 Japan 283.10 328.04 391.35 272.95 Indonesia 36.98 37.70 35.42 Cambodia 11.47 Australia 63.49


Figure 6. Average prices (baht/kg) of sweet potato imported into Thailand

Source: Adapted from information from the Information and Communication Technology Center of the Ministry of Commerce with Cooperation of the Custom Department

II.5.3. Importation of Peanut into Thailand

89. Peanut cultivation areas around 180,000 rai are located mostly in the north, northeastern, and central provinces of Thailand. Total production in Thailand is approximately 45,000 tons per year. Peanut is used as food ingredient in cooking, raw materials for processed edible oil, and for various types of processed snacks for local consumption and for exports. The varieties of peanut used in Thai market are extensive. Peanut selling in the market comes in the forms of fresh pods, dried pods, shelled peanut seeds, and grounded peanut. Quality of locally produced or imported peanut is one of the main factors that have impact on the decision of buyers and traders. Food processing manufacturers require different types of peanut for specific products. Mixed grade and mixed variety peanut normally get lower prices than graded and single variety peanut.

90. Around 80% of the amount of peanut used in Thailand has been imported and only 20% of the total amount required has been produced in Thailand. Information on importation


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of peanut into Thailand during 2010 to October 2013 is showed in Table 38. India and China have been the major suppliers of peanut into Thailand. However, the quality of peanuts from these two countries is different. Peanut from China are used mostly in processing products and has bigger seed size and better favour than peanut imported from India. Importations of peanut from Laos have increased during 2010-2012 in terms of quantity and prices. Myanmar has been an emerging supplier of peanut into Thai market during 2012 and 2013 due to political stabilities in the country which make importation from Myanmar become easier. Quality of peanut from Myanmar can meet with the requirements of Thai buyers. Myanmar can become one of the major suppliers of peanut into Thailand.

Table 38. Peanut, not roasted or otherwise cooked, whether or not shelled or broken

Jan-Dec 2010 Jan – Dec 2011 Jan – Dec 2012 Jan – Oct 2013

(HS 1202) Quantity (Ton)

Value (Mil. Baht)

Quantity (Ton) Value (Mil. Baht)

Quantity (Ton)

Value (Mil. Baht)

Quantity (Ton) Value (Mil. Baht)

Total 54,981.34 1,482.78 55,055.41 1,107.52 64,905.46 1,672.43 48,543.81 1,622.43 Myanmar 5,100.71 205.41 16,195.85 802.09 India 11,536.86 92.40 26,673.89 193.30 27,965.86 212.10 13,742.89 93.27 China 19,235.12 816.06 10,888.29 522.50 14,517.16 824.79 8,920.39 444.81 Laos 5,563.00 50.73 7,905.30 210.86 8,140.95 222.89 5,473.72 147.42 Indonesia 8,295.50 124.70 7,193.25 105.88 7,161.91 116.16 101.30 5.81 Vietnam 9,366.23 365.87 1,000.36 50.45 1,531.80 73.34 3,622.34 119.45 Malaysia 478.85 10.65 229.56 5.92 119.52 3.11 Bangladesh 80.00 0.49 USA 451.51 20.58 279.42 13.01 49.91 2.96 89.81 4.32 UK 22.00 0.56 44.00 1.54 Argentina 54.24 1.79 18.01 0.67 109.15 6.64 36.00 1.55 New Zealand 150.50 4.25 21.5 0.60 Senegal 216.00 1.08 Source: Information and Communication Technology Center of the Ministry of Commerce with Cooperation of

the Custom Department

Figure 7. Importation of peanut into Thailand by quantity



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Table 39. Average price per kilogram of peanut imported into Thailand

Average Price in Thai Baht per Kilogram of Peanut

Jan-Dec 2010 Jan-Dec 2011 Jan-Dec 2012 Jan-Oct 2013 Total 26.97 20.12 25.77 33.42 Myanmar 40.27 49.52 India 8.01 7.25 7.58 6.79 China 42.43 47.99 56.81 49.86

Laos 9.12 26.67 27.38 26.93 Vietnam 39.06 50.43 47.88 32.98 Indonesia 15.03 14.72 16.22 57.35 Malaysia 22.24 25.79 26.02 Bangladesh 6.13 USA 45.58 46.56 59.31 48.10 UK 25.45 35.00 Argentina 33.00 37.20 60.83 43.06 Italy 71.88 New Zealand 28.24 27.91 Malawi 6.11 Saudi Arabia 468.00 Senegal 5.00


91. Average prices per kilogram of peanut imported into Thailand have been increasing during 2010 to October 2013. Between 2010 to October 2013 the average prices of peanut from Laos have been below the average prices of imported peanut from Myanmar, China, and Vietnam into Thailand in each corresponding year. Most of peanut from Laos are of mixed grades and mixed varieties which made it less attractive in the Thai market.

Figure 8. Average prices of peanut imported into Thailand


92. Not only that Thailand imports peanut from ASEAN countries, Thailand also exports peanut and peanut products to other countries as shown in Table 40 and Figure 10. For


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example Laos exported fresh and dried peanut to Thailand and imported processed peanut products from Thailand.

Table 40. Import and export of peanut between Thailand and ASEAN countries

Volume: Ton Value: Mil. Baht

2008 2009 2010 2011 2012 Volume Value Volume Value Volume Value Volume Value Volume Value

Import 25,473 345 19,954 222 23,704 553 17,117 377 22,056 620

Export 5,631 148 14,304 290 8,430 287 14,248 326 18,725 200

Balance of trade -19,842 -197 -5650 68 -15,274 -266 -2,869 -51 -3,331 -420

Source: Information from presentation slide of Khon Kean Field Crops Research Center, 2013

Figure 9. Import and export of peanut between Thailand and Asian countries Source: Information from presentation slide of Khon Kean Field Crops Research Center, 2013

II.6. Varieties of Banana, Sweet Potato, and Peanut in Thailand

93. As Thailand is selected as selected as the main focus for this study, this section provides information on varieties of the three products which have been produced and traded in Thailand. Findings from field visits in the target areas in Laos showed that farmers mostly used traditional varieties found in the areas. To meet with market demands and the goal to produce commercial varieties for export market, this section provides information which may help the Project and smallholder farmers to extend to varieties of the selected three crops to meet with demands in the Thai market in addition to the existing varieties cultivated in the project areas.

II.6.1. Varieties of Banana Available for Commercial in Thailand

94. Thailand has cultivation areas of Namwa banana around 3.8 million rai in 2011 with fresh produces of 780,000 tons which was sold as fresh produce for 8,600 million baht. There are many varieties of banana grown in Thailand. For commercial purposes varieties which are common in the market are Kyuae Namwa, Kyuae Khai, and Kyuae Hom Thong. Kyuae Namwa (Musa sapientum) is in the Silk Subgroup, which in Genome ABB is susceptible to Panama disease. In Thailand the areas which used to suffer from Panama


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disease had changed to other varieties7 that have more resistance to the disease such as: (a) Sucrier subgroup which is AA Genome such as Kyuae Khai, or Pisang Mas (Musa acuminate ‘Kyuae Khai’), or (b) Cavendish Subgroup which is AAA Genome (Kyuae Hom Khieo) or Dwarf Cavendish (Kyuae Hom Khieo Khom’, and ‘Kyuae Hom Kom), or (c) Gros Michel subgroup such as Kyuae Hom Thong (Musa acuminate ‘Kyuae Hom Thong’)8

95. Thai consumers use Kyuae Namwa as fresh table fruit, or cook banana sweets. It is also widely used for processed banana products for local consumption and for export. Within the Silk Subgroup, there are various varieties such as Mali Aung, Nualchan, Namwa Khom, Namwa Nual, Namwa Khao, Namwa Dang, Kyaue Huk-mook, and Kyuae Hin.

96. Kyuae Khai is used as fresh table fruit or desert fruit, and cook as sweet such as cooked in syrup or coconut milk. Currently Thailand exports Kyuae Khai more than Kyuae Hom Thong. Varieties which are produced for commercial are Kyuae Khai Khampangpetch, Kyuae Khai Kasetsart 1, 2, 3, and 5, and Kyuae Lep Mu Nang or Lady Fingers.

97. Thai consumers prefer Kyuae Hom Thong which has golden skin colour more than Kyuae Hom Kiau or Hom Keia Khom which have greenish skin. Kyuae Ngyao from Laos which has good taste and is popular with local consumers in Laos does not have market in Thailand because of its physical appearance. While consumers in Laos believe that the dark marks or spots on the skin indicate good quality and sweetness, Thai consumers prefer golden peel with no marks or spots.

98. Hom Thong is use as fresh desert fruit and processed as snack such as vacuum fried Hom Thong chips, or deep fried banana chips. Another type of banana in this group which has been widely used for cooking is Kyuae Tani (Musa balbisiana Colla). Its leaves are used or wrapping and craft, while and flowers is used in cooking.

99. Pictures of some types of banana mentioned9 above are shown as follows:

7 More information could be found in Ploetz et al. (2007) 8 According to Ploetz, et al. (2007) Gros Michel Subgroup is prone to wind damage and susceptible for Panama disease. In area that has Panama disease epidemic, farmers might change to Cavendish subgroup which has more resistance. However, areas which have disease suppressive soils may be able to produce for commercial purpose. 9 Pictures of Pakchong 50 variety is shown in other part of this report.

(1) Kyuae Namwa


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(3) Kyuae Namwa Khieo

(4) Kyuae Namwa Khom

(5) Kyuae Huk Mook

(2) Kyuae Namwa Nual

(7) Kyuae Hin


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Figure 10. Some varieties for commercial production of banana in Thailand Source: Department of Agriculture, Http://www.doae.go.th/library/html/detail/banana/index1.html

(10) Kyuae Hom Khieo Khom’

(12) Kyaue Hom Thong

(8) Kyuae Khai

(9) Lep Mu Nang or Lady Fingers

(13) Kyuae Tani


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II.6.2. Varieties of Sweet Potato available in Thailand 100. Sweet potato in Thailand can be grown in many parts of the country and in most seasons. There are two groups of sweet potato growers— those who grow sweet potato after rice is harvested, and those who grow sweet potato all year round for commercial. The latter group may grow around 2-3 crops per year as follows: a) First crop is planted in May which is the beginning of the rainy season and harvested in August. This crop has higher yield than the second crop; b) Second crop is planted in September and harvested close to the end of the year. If cultivation areas are irrigated the yield will be higher than those that are grown in non-irrigated areas.

101. There are three groups of sweet potatoes by weight and duration of cultivation: a) Light varieties which have shorter cultivation time of around 90 days; b) Medium varieties which take around 120 days from cultivation to harvest; c) Heavy varieties which are harvested around 150 days after the cultivation.

The Thai DOA’s three groups—light, medium, and heavy are shown in Table 41. Table 41. Varieties of sweet potato by harvest time

By harvest time after cultivation Varieties available in Thailand Light 90 days Phichit 1, Phichit 133-7, Phichit 166-5 Medium 120 gays Mae Joe, Huay Sithon Heavy 150 days Okut (Kaset)

Source: http://www.doae.go.th/library/html/detail/paddy/c10.htm

102. There are around 450 varieties collected at the Phichit Agricultural and Research and Development Center, of which 208 varieties were local variety, and 242 are imported or selected varieties. If grouped by colour of texture, there were 78 varieties with purple texture, 96 varieties with white texture, 50 varieties with orange texture, and 226 varieties with yellow texture. In 2005 Mae Jo University’s researchers had tested these varieties for suitability for commercial cultivation in farmers’ fields in Phichit, Sukhothai, and Ayudha. They selected 5 good local varieties to test yields in each site. They also crossed good local varieties with favourite varieties from Australia, USA, and Japan for 38 pairs and with open pollination 20 pairs. Results of first clonal selection for 1,159 clones are shown in Table 42. Table 42. Studies on sweet potatoes by Mae Jo University in 2005

Yield Per Rai (Kg.) Local variety Colour Phichit Sukhothai Ayudhya Ranking Phichit 166-5 white 2,400 2,158 No. 2 PROC NO 65-16 White 2,500 2,363 3,280 No. 1 PROC OPS 101-R89-3 White 2,068 No. 3 PROC VSP 5-11 2,928 FM P5-26 Clonal Selection Phichit 223-24 Orange 2,213 Phichit 226-7 Orange 3,440 Phichit 268-3 Orange 3,080 Phichit 223-23 Yellow 3,170 Phichit 226-1 Yellow 2,587 Phichit 226-31 Yellow 2,560

Source: http://www.agric-prod.mju.ac.th/web-veg/article/new145.htm (2005)

http://www.agric-prod.mju.ac.th/web-veg/article/new145.htm


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103. In a Thai DOA’s study in 2011 on crops planting after rice was harvested, the findings showed that sweet potato could be one of good cash crops for farmers. Information on sweet potato varieties in this study is shown in Table 43. The DOA advised farmers to select varieties that should meet with market demands, requirements, and conditions in their areas. Average cost of production in Thailand was around 5,000 baht/rai in 2011 when average yield was around 1,500 kg/rai or 9.4 ton/ha. Average selling price was 10 baht/kg. This DOA’s study showed that farmers would earn around 10,000 baht/rai or 62,500 baht/ha for sweet potato grown after rice was harvested. Good soil preparation, selection of good varieties, proper cultivation, sufficient water for cultivation, and good farm management would increase the yield and could result in income to be higher than 10,000 baht/rai.

Table 43. Varieties of sweet potato and their characteristics

Yield % Starch Shape and Size Texture Cultivation kg/Rai by dry weight Shape & Skin colour Width Length White Phichit 166-5 90-120 days 2,450 28.7% Long elliptic, Red skin 4.5 15.5 PROC No. 65-16 90-110 days 2,603 78.1% Long elliptic, Red skin 5.3 13.5 Yellow Phichit 265-1 90-120 days 3,120 Long elliptic, Red skin 5.0 16.5 Orange T 101 90-120 days 2,990 Long elliptic, Red skin 6.0 16.7 Purple Phichit 65-3 90-110 days 2,100 Long elliptic, Red skin 3.5 13.6

Source: Department of Agriculture’s study of crops after rice harvest (2011)10

104. Samples of sweet potato and Japanese sweet potato available in the Thai market are shown below.

(Sources: Pictures of sweet potato from various sources on Internet to show colour of texture)

Japanese sweet potato (Source: Pictures from articles by Thaweesak Chairuengyod, 2011)

Figure 11. Samples of sweet potato available in Thai market

10 Please find more information at: http://www.google.co.th/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=1&ved=0CCoQFjAA&url=http%3A%2F%2Fwww.doa.go.th%2Foard2%2Fimages%2Fstories%2Ftube2.doc&ei=kaW6UuX8CI6IiQejnIHQCg&usg=AFQjCNGOjOGszrEdunoOLhK_4BRFn9JvWQ


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II.6.3. Varieties of Peanut Available for Commercial in Thailand

105. Information on peanut varieties grown and trade in Thailand is shown in Table 44 and Figures 13-18. Most of the information presented in this section came from information and posters of Khon Kean Field Crops Research Center (KKFCRC) under the Department of Agriculture. The Thai DOA also has provincial research and development centers which work on development of field crops which can meet local requirements on qualities, yields, and resistance to disease. Table 44. Varieties of peanut in Thailand

Variety Pods Shelled Seeds

Fresh Pods Dried Pods Large Seeds Medium Seeds

Kalasin 1 X

Kalasin 2 X

Tainan 9 X X

Khon Kean X

Khon Kean 4 X X X

Khon Kean 5 X X

Khon Kean 611 X X X

Khon Kean 60-1 X X

Khon Kean 60-2 X

Khon Kean 60-3 X

Khon Kean 84-7 X X

Khon Kean 84-8 X

Source: Information from posters of Khon Kean Field Crops Research Center (KKFCRC)

106. Pictures of peanut from Myanmar selling at Talad Simummuang are shown in Figure 12. Thai buyers said the bright pink colour of seeds and overall condition of the pods could meet with Thai market requirements. Some buyers said it was local variety in Myanmar while the other said it looked quite similar to the Thai Kalasin 1 variety.

Figure 12. Peanut from Myanmar at Simummuang market Source: http://www.youtube.com/watch?v=jRBzf9JlZo4 11 This variety was developed under the collaborations of DOA and ICRSAI of India

http://www.youtube.com/watch?v=jRBzf9JlZo4


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Figure 13. Suggested peanut varieties in Thailand Source: Posters of Khon Kean Field Crops Research Center (KKFCRC)

Varieties to plant before or after other crops: Tainan 9, Khon Kean 4, Khon Kean, and Kalasin 1

Varieties for area affected by Groundnut Bud Necrosis Virus (GBNV) epidemic: Khon Kean 6

Varieties for dry pods: Tainan 9, Khon Kean 60-1, Khon Kean 4, and Khon Kean 5

Varieties for fresh pods: Khon Kean 60-2, Kalasin 2, Kalasin 1, and Khon Kean 4

Varieties large seeds: Khon Kean 60-3, and Khon Kean 6

Varieties for fertile soil and sufficient water supply: Any varieties can be used especially Khon Kean 5, Kalasin 2, Khon Kean 60-3, and Khon Kean 6


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Figure 14. Varieties for fresh peanut Source: Posters and pictures from Khon Kean Field Crops Research Center (KKFCRC)

Left: picture taken on 27.08.2013 from the Fourth National Conference on Legumes, Thailand, Right: pictures from Khon Kean Field Crops Research Center (KKFCRC)

Figure 15. Seeds of peanut varieties

Kalasin 1

Kalasin 2


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Figure 16. Varieties for medium size seeds Source: Posters of Khon Kean Field Crops Research Center (KKFCRC)

(1) Khon Kean 5 and Khon Kean 6 Varieties


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(2) Khon Kean 84-7 (3) Khon Kean 84-8

Figure 17. Details of selected peanut varieties Source: Posters of Khon Kean Field Crops Research Center (KKFCRC)

(1) Khon Kean 84-8 plant (2) Khon Kean 84-8 pods (3) Khon Kean 84-8 seeds

(4) Khon Kean 84-7 pods (5) Khon Kean 6 seeds

Figure 18. Samples of Peanut from Khon Kean Field Crops Research Centre (Pictures taken on 27.08.2013 from the Fourth National Conference on Legumes, Thailand)

107. Detailed analyses of each product will be presented in Chapters III and IV.


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CHAPTER III. FIELD SURVEY

108. Field surveys of this current study had been carried out in the three target provinces in Laos and also in Thailand and were conducted during late August 2013 to the first half of November 2013. The researcher visited selected production sites in Champasak, Salavanh, and Savannakhet; markets in Vientiane, Champasak in Lao PDR, Pathumthani, Ubonrachthani, Sisakhet, Bangkok and Phitsanulok provinces in Thailand; and research stations in Phichit, Nakornrachasima, and Nakornpathom provinces in Thailand.

109. The three products in this value chain study are fresh banana (Harmonised Code 08039000), sweet potato (Harmonised Code 07142000), and peanut or ground nut (Harmonised Code 1202) which included peanut in pod (Harmonised Code 12021090) and shelled peanut (Harmonised Code 12022000). The products selected by Champasak and Salavanh PPOs are banana, sweet potato, and peanut while the products selected by Savannakhet PPO are banana and peanut.

110. The field visits covered production areas, and markets in Lao PDR such as Vientiane, and Pakse, wholesale and retail markets in Thailand, research stations and research institutes in Thailand, processing facilities of potential buyers of fresh and dried banana in Thailand. The main emphasis of this value chain study of three products is to investigate components which will support the development of value chains of the three selected products in both domestic markets in Lao PDR and exported markets in Thailand.

111. Apart from using secondary information, other methods of data collection used were face-to-face interviews and meetings with farmers, local line agencies, extension staff, traders/brokers, local agricultural product collectors, food processors, researchers, and academia. The researcher conducted field surveys at various points in the value chain of banana, sweet potato, and peanut in Laos and Thailand. It is also to explore whether some of the successful models used in Thailand can be employed with some modification to suit local conditions for the development of value chain in this IFAD-ADB project. Information collected from traders, agricultural product collectors, buyers of these products should be useful for stakeholders in the value chain development in Lao PDR.

112. This IFAD-ADB project looks at not only fresh produces but also processed or more value added products. The researchers planned to cover the participation and roles of stakeholder such as farmers, agricultural product collectors, buyers/traders, importers, and producers of these three products in Laos and in Thailand.

III.1. Field Visits in Thailand

113. The researcher started from talking to potential buyers and visited wholesale markets in Thailand to see how the selected products from Laos were sold in Thailand at Talad Thai12 which is one of the biggest wholesale markets for agricultural products and Simummuang13 market in Rangsit which is around 10 km. from Talad Thai. Both markets are considered to 12 Information on Talad Thai can be found at http://www.talaadthai.com/main/ 13 Information on Simummuang market can be found at http://www.taladsimummuang.com/


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be the biggest wholesale markets for agricultural products in Thailand14. In addition the retail markets such as modern trade chain, supermarket and superstores, and local markets in Bangkok, Ubonrachthani, Sisakhet, Phichit, and Phitsanulok provinces were also visited.

114. Logistics of farm produces from farmers to consumers in Thailand are shown in Figure 19 which is developed by Simummuang Market.

Figure 19. Logistics of fresh produces in Thailand: from farmers to consumers Source: http://taladsimummuang.com/dmma/Images/file/Value%20Chain%204MM%20SC-04(1).jpg

115. Farmers sell their fresh produces via various routes:

o Local collectors and collectors from other areas who may send these fresh products either to wholesale markets, or retailers, or shops and restaurants, or local wet

14 Talad Thai has recently announced that it will invest more money to prepare for the AEC Market. Currently it has around 450 Rai or 720,000 square meters for 3,000 shops which serves more than 100,000 customers per day. The volume of trade is over 500 million baht a day. Approximately a combined of 15,500 tons of fresh produces are traded in Talad Thai and Simummung markets every day.

http://taladsimummuang.com/dmma/Images/file/Value%20Chain%204MM%20SC-04(1).jpg


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markets, or processing plants. These collectors and farm producers not only related to each other through trading activities, they also providers of seeds, and agricultural inputs such as fertilisers and insecticides and in some cases provide loans to farmer as cash advance for production;

o Some farmers or farmer groups can directly sell their produces to wholesale markets, distribution centers, food shops, supermarkets, processing plants, or local markets. Selling through these venues may require them to include quality control measures and in some case to have pre-cooling, treatments of products, cool room storage, sorting, and packing facilities to meet buyers’ requirements;

o There are other retailers, or wholesalers who buy from wholesales market and resell products to other buyers, agricultural product collectors, retailers, fresh or wet markets, shops, and restaurants, and local vendors who may use small vans, motorcycles, cars, or trucks bring products to sell to villagers.

III.1.1. Banana at Talad Thai Agricultural Wholesale Market

116. Talad Thai provides daily prices of agriculture products on its websites which buyers and traders can check for information on prices and availability. It also presents records of wholesale prices over the past 2 years in graphical format. Apart from fresh produces, the shops in this market also sell processed products such as dried banana, processed banana products, deep-fried peanut, roasted and boiled peanut. Apart from Kyuae Namwa there are other types of banana selling in this market such as “Kyuae Hom Thong”, and “Kyuae Khai”. Prices vary every day according to seasonal, availability, and conditions of products. Average wholesale prices of the three types of banana at Talad Thai in 2013 are as follows:

Table 45. Wholesale prices of banana by type and size at Talad Thai Market

Wholesale Prices of Banana in 2013 Talad Thai Website (in THB)

Low High Namwa per tier: Large 20 25 Namwa per tier: Medium 15 18 Namwa per tier: Small 5 10 Kyuae Khai per tier: Large 30 40 Kyuae Khai per tier: Medium 20 28 Kyuae Khai per tier: Small 6 18 Raw Hom Thong per basket of 7 tiers: Large 400 480 Raw Hom Thong per basket of 7 tiers: Medium 200 350 Raw Hom Thong per basket of 7 tiers: Small 180 200 Half-ripe Hom Thong per basket of 7 tiers: Large 280 300 Half-ripe Hom Thong per basket of 7 tiers: Medium 180 200 Half-ripe Hom Thong per basket of 7 tiers: Small 150 150 Ripe Hom Thong per basket of 7 tiers: Large 300 300 Ripe Hom Thong per basket of 7 tiers: Medium 180 200 Ripe Hom Thong per basket of 7 tiers: Small 140 150

Source: http://www.talaadthai.com/price/default_new.php


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117. Average wholesale prices of Kyuae Namwa in Thai market are generally lower than those of Kyuae Hom Thong and Kyuae Khai. Export prices of these two types of banana from Thailand to other countries are even higher than the local prices shown above. Lao PDR has been exporting only Kyuae Namwa to Thailand. Farmers in the Project may be able to increase their income by producing other types of banana for Thai market such as Hom Thong or Khai banana.

Figure 20. Talad Thai’s Wholesale prices of banana by type and size in 2013 Source: Adapted from information from http://www.talaadthai.com/price/default_new.php

118. All types of banana found at Talad Thai Market were in good quality with minimum levels of bruises and with relatively better skin conditions than those the researcher found in the target areas. The prices and quality of product are strongly related and this reflected the importance of post-harvest treatment and good transportation management of perishable products from farm sites to the markets.

119. Kyuae Namwa at Talad Thai comes from various parts of Thailand and in some seasons there were shortages of products. However, there was no Kyuae Namwa from Laos at Talad Thai market. Locally produced Kyuae Namwa arrives at Talad Thai in bunches and will be separated at the market into tiers or hands. Kyuae Hom Thong arrives in plastic baskets with 7 tiers per basket. Khai banana also packed in basket as tiers but with more than 7 tiers per basket. Banana from Talad Thai are sold to various traders, buyers, and small venders from many parts of Thailand. Some shops can arrange transportation of products to their buyers. Kyuae Hom Thong and Kyuae Khai which come mainly from central parts such as Pathumthani, Supanburi, Rajburi, Petchburi provinces, and lower northern parts of

http://www.talaadthai.com/price/default_new.php


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Thailand such as Sukhothai, Kamphangpetch, and Phichit are sold redistributed to other parts of the country from Talad Thai and Talad Simummuang wholesales markets.

120. Average wholesale prices in 2013 of banana by types and sizes at Simummuang market are shown in Table 46. Table 46. Average wholesale prices of banana at Talad Simummuang in 2013

Product Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Namwa Nual Large

28.23 26.98 26.48 26.13 26.53 26.24 24.58 29.05 29.40 27.94 25.38 22.63

Namwa Nual Medium

21.20 20.02 18.48 18.50 19.19 18.60 17.45 20.44 22.10 20.13 18.24 16.50

Namwa Nual Small

12.22 12.20 11.60 11.72 12.31 12.16 11.50 13.65 13.18 11.87 10.79 7.50

Kyuae Khai Large

37.27 38.68 36.71 34.35 29.38 29.66 29.56 33.55 36.79 37.42 32.41 30.00

Kyuae Khai Medium

25.33 26.20 24.81 25.68 24.94 25.59 25.05 26.35 26.93 27.29 22.43 18.75

Kyuae Khai Small

14.05 15.73 12.56 12.95 12.94 11.95 12.03 15.15 17.48 16.97 13.40 8.50

Hom Thong Large

404.00 475.36 400.00 406.00 403.75 432.1 451.6 507.04 443.00 448.1 468.6 457.50

Hom Thong Medium

292.83 363.93 296.77 306.00 303.75 325.9 324.8 362.50 318.33 341.67 380.69 300.00

Hom Thong Small

174.00 228.57 178.06 180.00 177.50 180.00 182.33 221.07 189.33 208.33 194.48 190.00

Note: 1. Prices of Kyuae Namwa and Kyuae Khai are baht per tier Prices of Hom Thong are in baht per basket of 7 tiers 2. Kyuae Khai is of Khamphengpetch variety

Source: http://www.taladsimummuang.com/dmma/portals/NewsDetail.aspx?id=291

121. Figure… shows the average prices of three types of banana by size in each month of 2013 from Simummuang Wholesale Market. The average prices of all types of banana reflected availability of products in each month. The cyclical seasons and rain level in each month have impact on supply of banana. When supplies are high the prices will drop, and when supplies are low the prices will increase. For example bananas which are harvested during January to February and between July to November have better wholesales prices than those harvested in the rainy season. Festivals and special Buddhist functions also increase demands and prices of all types of banana. During Chinese New Year festival prices of banana increase and the highest is Hom Thong banana.

122. The quality of Kyuae Namwa at Talad Thai was good. Average wholesale prices are divided into three groups according to sizes—large, medium, and small. Comparisons of average wholesale prices of various types of banana are shown in Figure 21. Pictures of banana at Talad Thai Wholesale Market can be found in Figure 22. Wholesale prices of banana fluctuated different periods of the year. Figure 21 shows that during March and June in 2013 average wholesale prices of all types of banana dropped. This period not only there were abundant or banana in the market, there were various types of fresh fruits available in the markets such as mango, rose apples, custard apples, durian, jackfruits, santol, mangosteen, melon, water melon, orange, and lychee, to name a few competing for attention of Thai consumers. Prices of Kyuae Namwa are relatively flat during March-July and November to December.

http://www.taladsimummuang.com/dmma/portals/NewsDetail.aspx?id=291


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123. For dried banana processing plants, availability of raw materials at lower or lowest prices and low level of humidity are important. High level of humidity makes it more difficult to dry banana by solar crop dryers and conventional methods. High sugar contents in banana make it susceptible to mold, if the peeled bananas have not been sufficiently dried in the first day. Thai producers who use solar crop dryers will have to use additional source of energy such as gas burner in the first day of the drying process. The production cost during the wet season will be higher than in the dry season. Some dried banana producers will plan their productions to fall in the rather dry period such as March to June when bananas are cheap and the weather is lees humid. They keep stocks of dried banana in cold storage to use in the rainy season.

Figure 21. Average wholesale prices of banana in Thai market in 2013 Source: Adapted from http://www.taladsimummuang.com/dmma/portals/NewsDetail.aspx?id=291

(1) Kyuae Namwa (2) Kyuae Hom Thong



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(3) Kyuae Khai in basket (4) Kyuae Khai

Figure 22. Banana at Talad Thai Wholesale Market, Pathumthani (Pictures taken on 24.08.2013)

III.1.2. Sweet Potato at Talad Thai Agricultural Wholesale Market

124. There are various varieties of sweet potato which can be grown for commercial in Thailand. Mun Thorpheug which is called Mun Daang or Mun Kaewl in Laos is grown in many areas such as Nakornsithamarach, Surachthani, Songkhla, Ayudhya, and Sisakhet. Pictures of some of sweet potatoes at Talad Thai Market are shown below.

(1) Mun Deang or Mun Thed (2) Mun Khai (3) Mun Thorpheug

Figure 23. Sweet potato sold at Talad Thai Market (Pictures taken in August 2013)

125. From the interviews with various shop owners at Talad Thai, none of them said they imported sweet potato from Laos. They said they have been buying and selling Mun Thorpheug from either Ayudhya or Kanthoraluk district in Sisakhet province. However, when the researcher asked a Thai trader in Ubonrachthani on the origin of what was called “Kanthoraluk or Sisakhet sweet potato”, he said most of Mun Thorpheug sent from Ubonrachthani came from Lao PDR in mixed grades and unwashed.

126. Average, high and low daily prices of sweet potato by type of sweet potato at Simummuang Wholesale Market are shown in Table 47.


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Table 47. Average prices (baht/kg) of sweet potato at Simummuang Market in 2013

Average Daily prices in Thai baht of Sweet potato (Mun Deang) in 2013 Average High Low Average High Low Average High Low

Jan - - - May 16.00 16.00 16.00 Sep 16.00 16.00 16.00 Feb - - - Jun 16.00 16.00 16.00 Oct 16.00 16.00 16.00 Mar - - - Jul 16.00 16.00 16.00 Nov 16.00 16.00 16.00 Apr - - - Aug 16.00 16.00 16.00 Dec 16.00 16.00 16.00 Average Daily prices in Thai baht of Sweet potato (Mun Deang) large size in 2013

Average High Low Average High Low Average High Low Jan 11.97 12.00 11.00 May 20.00 20.00 20.00 Sep 25.00 25.00 25.00 Feb 12.00 12.00 12.00 Jun 22.17 25.00 20.00 Oct 20.48 25.00 20.00 Mar 16.67 22.00 12.00 Jul 25.00 25.00 25.00 Nov 20.00 20.00 20.00 Apr 21.40 22.00 20.00 Aug 25.00 25.00 25.00 Dec 20.00 20.00 20.00 Average Daily prices in Thai baht of Sweet potato (Mun Deang) small size in 2013 Average High Low Average High Low Average High Low Jan 5.00 5.00 5.00 May 9.00 9.00 9.00 Sep 12.52 15.00 12.00 Feb 5.00 5.00 5.00 Jun 11.60 15.00 9.00 Oct 10.19 12.00 10.00 Mar 6.38 9.00 4.00 Jul 15.00 15.00 15.00 Nov 10.00 10.00 10.00 Apr 8.30 9.00 8.00 Aug 15.00 15.00 15.00 Dec 10.00 10.00 10.00 Average Daily prices in Thai baht of Sweet potato (Mun Tor Pheua) in 2013 Average High Low Average High Low Average High Low Jan - - - May 13.00 16.00 10.00 Sep 13.00 16.00 10.00 Feb - - - Jun 13.00 16.00 10.00 Oct 13.00 16.00 10.00 Mar - - - Jul 13.00 16.00 10.00 Nov 13.00 16.00 10.00 Apr - - - Aug 13.00 16.00 10.00 Dec 13.00 16.00 10.00 Average Daily prices in Thai baht of Sweet potato (Mun Tor Pheua) large size in 2013 Average High Low Average High Low Average High Low Jan - - - May 8.00 8.00 8.00 Sep 8.00 8.00 8.00 Feb - - - Jun 8.00 8.00 8.00 Oct 8.00 8.00 8.00 Mar - - - Jul 8.00 8.00 8.00 Nov 8.00 8.00 8.00 Apr - - - Aug 8.00 8.00 8.00 Dec 8.00 8.00 8.00 Average Daily prices in Thai baht of Sweet potato (Mun Tor Pheua) small size in 2013 Average High Low Average High Low Average High Low Jan - - - May 8.00 8.00 8.00 Sep 8.00 8.00 8.00 Feb - - - Jun 8.00 8.00 8.00 Oct 8.00 8.00 8.00 Mar - - - Jul 8.00 8.00 8.00 Nov 8.00 8.00 8.00 Apr - - - Aug 8.00 8.00 8.00 Dec 8.00 8.00 8.00 Average Daily prices in Thai baht of Sweet potato (Mun Khai) in 2013 Average High Low Average High Low Average High Low Jan - - - May 14.00 14.00 14.00 Sep 14.00 14.00 14.00 Feb - - - Jun 14.00 14.00 14.00 Oct 14.00 14.00 14.00 Mar - - - Jul 14.00 14.00 14.00 Nov 14.00 14.00 14.00 Apr - - - Aug 14.00 14.00 14.00 Dec 14.00 14.00 14.00 Average Daily prices in Thai baht of Sweet potato (Mun Khai) large size in 2013 Average High Low Average High Low Average High Low Jan 10.23 11.00 10.00 May 15.00 15.00 15.00 Sep 18.38 25.00 17.00 Feb 10.00 10.00 10.00 Jun 19.33 25.00 15.00 Oct 15.19 17.00 15.00 Mar 12.33 15.00 10.00 Jul 25.00 25.00 25.00 Nov 15.00 15.00 15.00 Apr 14.87 15.00 11.00 Aug 25.00 25.00 25.00 Dec 15.00 15.00 15.00 Average Daily prices in Thai baht of Sweet potato (Mun Khai) small size in 2013 Average High Low Average High Low Average High Low Jan 5.97 6.00 5.00 May 8.87 9.00 5.00 Sep 10.86 15.00 10.00 Feb 6.11 7.00 6.00 Jun 11.60 15.00 9.00 Oct 7.29 10.00 7.00 Mar 6.43 7.00 5.00 Jul 15.00 15.00 15.00 Nov 7.00 7.00 7.00 Apr 7.60 9.00 7.00 Aug 15.00 15.00 15.00 Dec 7.00 7.00 7.00

Source : http://www.taladsimummuang.com/dmma/portals/NewsDetail.aspx?id=291 127. Figure 24 shows averagee prices of various type of sweet potato sold in Simummuang wholesale market. The prices of most varieties increased during May to end of September, while the prices of Mun Thorpheug has been quite stable throughput the year. Sweet potatoes average prices are shown in Table… by type and size.



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Figure 24. Average prices of sweet potato at Simummuang Market in 2013 Source : http://www.taladsimummuang.com/dmma/portals/NewsDetail.aspx?id=291

128. Sweet potatoes imported from Laos were normally sent to packing houses in Ubonrachthani, mostly in Warinchamrarp district to wash, grade, and repack into plastic bags of 9-10 kilograms. These graded and repacked sweet potatoes were sent to Talad Thai or other markets in Thailand as Kanthoraluk or Sisakhet sweet potato. He mentioned that locally produced sweet potato from Sisakhet was not large enough in quantity to meet with the demands in the Thai markets. However, there might be two reasons for using not telling that sweet potato was imported from Laos. Firstly the Thai traders did not want to reveal where the product came from to avoid competition from other buyers. Secondly, their concerns about the image of product and the perceptions of consumers make them to declare that the imported sweet potato is of Thai origin.

129. Apart from the wholesale prices in Simummung Market, Talad Thai also has information on the average wholesale prices of sweet potato which is shown in Table 48. Table 49 shows information on prices of sweet potato in Lao PDR and in Thailand. Information in Table 49 was collected during the field visits by the researcher.

Table 48. Average prices of sweet potato at Talad Thai Market in 2013

Prices of sweet potato by type Talad Thai Website Low High

Mun Thed (Large) 16 18 Mun Thed (Small) 5 10 Mun Khai (Large) 10 11 Mun Khai (Small) 5 6 Mun Khai (Orange colour texture) 10 11 Mun Thiean or Japanese sweet potato 17 18 Mun Thorpheug 10 11

Source: Talad Thai Website, 2013



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Table 49. Comparisons of prices of sweet potatoes in Laos and Thai markets

Mun Daang or Mun Thorpheug

Mun Khai Japanese sweet potato grown in Thailand

Mun Thed grown in Thailand

Farmgate prices 1,000-1,500 kip/kg (Champasak & Salavanh)

Farmgate price in Thailand 5-7 baht/kg (Suphanburi, Sisakhet,and Pichit)

Farmgate 20-25 bhat/kg in Pichit province

Farmgate price 10-15 baht/kg (Suphanburi)

Retail prices 3,000-4,000 kip/kg in Pakse market

Wholesale price 12 baht/kg at Charoensri market for Sisakhet grown sweet potato

Wholesale price 50-70 baht/kg in Pichit

Wholesale price 26-27 baht/kg at Talad Thai market

Retail prices 4,500-5,000 kip/kg in Vientiane

Wholesale price 15-17 baht/kg at Talad Thai market

Farmgate price 20-25 baht in Pracheubkirikhan

Wholesale price of 9 baht/kg in Sisakhet and Charoensri markets

Retail prices 10 baht/kg at Warinchamrarp market for Sisakhet grown

Retail price 70 baht/kg in supermakets in Bangkok for Japanese sweet potato grown in Chiangmai

Wholesale price of 12-14 baht/kg at Talad Thai market

Retail prices 9 baht/kg at Khanthoraluk and Warinchaumrarp markets for Sisakhet grown sweet potato

Retail 90-100 baht/kg in supermarkets in Bangkok for Japanese sweet potato grown in Pichit

Retail price of 25-35 baht at local markets in Thailand

Retail price 8,000 kip/kg at Khua Din market in Vientaine

Japanese sweet potato imported from Vietnam

Retail price 100-125 baht/kg at supermarket chains in Bangkok

Source: Data collected in field visits in Laos and Thailand during September-October 2013 by the researcher

III.1.3. Peanut at Talad Thai Agricultural Wholesale Market

130. Simummuang and Talad Thai are the two major wholesale markets in Thailand for peanut from various parts of Thailand. At the time of the survey in August 2013, most of the peanut found in the market came from Laos. Table 50 shows average wholesale prices of peanut sold in Simummuang market in 2013. Prices varied depending on seasons and availability of products in the market. Between July and August average prices of peanut were higher and drop when local products arrived in the market.

131. Peanut buyers and traders would start buying fresh peanut from traders who collected locally produced peanut first. After that they would buy peanut from Myanmar. After peanut from Myanmar exhausted, they would buy peanut from Laos. Most of the issues raised on peanut from Laos were related to quality and post-harvest treatments. Peanut from Laos normally come in mixed grade and variety which make it difficult to use. Fresh peanut from Laos has been sold at the prices lower than those from Thailand or Myanmar.

132. Average wholesale price of fresh peanut ranged between 40-47 baht/kg on the day of the survey in August 2013. Most of the peanut at that time came from Laos as stocks of locally produced and peanut imported from Myanmar had dried up. Apart from fresh peanut pods, there were processed peanut products such as sand roasted peanut, and roasted sesame coated peanut at the prices around 55-60 baht/kg.


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Table 50 Average daily wholesale prices of peanut at Simummuang Market in 2013

Average daily prices in Thai baht of mixed grade raw peanut in 2013 per bucket Average High Low Average High Low Average High Low

Jan 240.00 240.00 240.00 May 230.00 230.00 230.00 Sep 255.17 280.00 250.00

Feb 230.00 230.00 230.00 Jun 236.67 280.00 230.00 Oct 222.90 250.00 220.00

Mar 230.00 230.00 230.00 Jul 271.94 280.00 230.00 Nov 220.00 220.00 220.00

Apr 243.33 530.00 230.00 Aug 280.00 280.00 280.00 Dec 220.00 220.00 220.00 Average daily price in Thai baht of mixed grade local variety in 2013 per bucket

Average High Low Average High Low Average High Low

Jan 226.33 240.00 220.00 May 220.00 220.00 220.00 Sep 221.72 230.00 220.00

Feb 220.07 222.00 220.00 Jun 221.33 230.00 220.00 Oct 220.00 220.00 220.00

Mar 220.00 220.00 220.00 Jul 230.00 230.00 230.00 Nov 220.00 220.00 220.00

Apr 220.00 220.00 220.00 Aug 230.00 230.00 230.00 Dec 220.00 220.00 220.00 Average daily prices in Thai baht of mixed grade raw local variety peanut in 2013 per kilogram


Jan - - - May 38.00 38.00 38.00 Sep 38.00 38.00 38.00

Feb - - - Jun 38.00 38.00 38.00 Oct 38.00 38.00 38.00 Mar - - - Jul 38.00 38.00 38.00 Nov 38.00 38.00 38.00

Apr - - - Aug 38.00 38.00 38.00 Dec 38.00 38.00 38.00 Average daily prices in Thai baht of mixed grade boiled peanut in 2013 per kilogram


Jan 50.00 50.00 50.00 May 50.00 50.00 50.00 Sep 52.69 56.00 52.00

Feb 50.00 50.00 50.00 Jun 50.80 56.00 50.00 Oct 48.39 52.00 48.00

Mar 49.00 50.00 20.00 Jul 56.00 56.00 56.00 Nov 48.00 48.00 48.00

Apr 50.00 50.00 50.00 Aug 56.00 56.00 56.00 Dec 48.00 48.00 48.00 Average daily prices in Thai baht of mixed grade boiled local variety peanut in 2013 per kilogram


Jan 49.20 50.00 48.00 May 47.90 48.00 45.00 Sep 48.69 52.00 48.00

Feb 48.00 48.00 48.00 Jun 48.53 52.00 48.00 Oct 48.00 48.00 48.00

Mar 48.00 48.00 48.00 Jul 52.00 52.00 52.00 Nov 48.00 48.00 48.00

Apr 48.00 48.00 48.00 Aug 52.00 52.00 52.00 Dec 48.00 48.00 48.00

Source: http://www.taladsimummuang.com/dmma/portals/NewsDetail.aspx?id=291

Figure 25. Average wholesale prices of raw peanut by variety in 2013 Source: Adapted from http://www.taladsimummuang.com/dmma/portals/NewsDetail.aspx?id=291




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Figure 26. Average wholesale prices of boiled peanut (baht/kg) by variety in 2013 Source: Adapted from http://www.taladsimummuang.com/dmma/portals/NewsDetail.aspx?id=291

133. Pictures taken from a wholesale shop selling peanut at Talad Thai Wholesale Market are shown in Figure 27.

(1-3) Fresh peanut from Laos selling in bucket at Talad Thai Market around 110-130 baht/bucket

(4 and 5) Fresh peanut selling at Talad Thai Market

Figure 27. Fresh peanut at Talad Thai market (Pictures taken on 24.08.2013)



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(4) Boiled peanut at 46 baht/kg (5-6) Boiled peanut at 10 kg/bag from Saraburi province

Figure 28. Peanut at Talad Thai Wholesale Market (Pictures taken on 24.08.2013)

134. Boiled peanut was either sold loosely between 45-52 baht/kg or sold in a bag of 10 kg. The boiled peanut came from suppliers in areas close to Bangkok or from producers in Saraburi provinces who sent their products to Talad Simummung and Talad Thai market. These boiled peanut suppliers bought fresh locally grown and imported peanut from Myanmar and Laos in large quantities to boil and keep the boiled peanut in cold store before shipping their products to wholesale markets or to retailers.

III.1.4. Supermarkets, Trade Fairs, and Shops at Don Muang Airport

135. The researcher visited supermarkets, department stores, trade fairs in Bangkok, and shops in airports to explore whether they were selling banana, sweet potato, and peanut as fresh produces or in processed form. Most of the markets visits sold fresh produces and processed products which have been at least have been minimally processed or fully processed to add more value to the products. Snack markets in Thailand are relatively large and some of the processed products have been exported to various countries.

136. Supermarkets sell various kinds of fresh banana and fresh sweet potato. Most of them sell processed banana, sweet potato, and peanut product in snack section. Some of them sell boiled peanut but rarely sell fresh peanut. Fresh banana which is used as table fruit or desert fruit is sold in supermarket at the prices much higher than those in the local wet market. Supermarket chains rarely buy directly from individual farmers. They buy banana from farmers groups or farmer cooperatives or from suppliers who collect banana and pack them into consumer size packages which can be 1-2 fruits, 3-4 fruits, or a tier of banana per pack. Banana for supermarket chains come as individual pack with bubble wrap and in plastic bag. Most bananas sold in supermarket were washed and trimmed at the farms or at the packing houses. Generally supermarket chains prefer to sign contract with suppliers which specify the quantity and quality of products. Prices in the contract can be adjusted every month upon the consent of the sellers and buyer and availability of the products.


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(1) Namwa banana at 59 baht/tier (2) Namwa banana and Khai banana (3) Khai banana

Figure 29. Banana at Tops supermarkets in Bangkok (Picture taken on 08.11.2013)

Figure 30. Various types of banana sold at Tops Supermarket (Picture taken on 14.10.2013 on the left, and on 05.01.2014 on the right)

137. A picture of various types of banana selling at Tops supermarket at the World Trade Centre Shopping Mall shows Namwa banana at 59 baht/tier, 29 baht per a pack of 4 fruits, Hom Thong banana in 3-4 fruits/pack, Kyuae Khai at 24 baht/pack of 4 fruits, and Lady Finger banana at the back of the picture in Figure 29 (left). In late December 2013 the price of Namwa banana supplied by Dole (Thailand) in a smaller shop of Tops was 45 baht/tier (Figure 30: right). Prices of banana are different due to varieties, seasonal supplies, sizes of products, and location of stores

138. Sweet potatoes sold in department stores or supermarkets in Bangkok were Japanese sweet potato imported from Vietnam. The retail price was 125 baht/kg. Apart from sweet potato chips, and deserts made from sweet potato, a Japanese bakery chain in Bangkok sells bread made from sweet potato flour.


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(1) & (2) Imported Japanese Sweet Potato from Vietnam. Retail price 125 baht/kg (Yellow texture)

(3) Sweet potato bread from Japanese bakery shop in Bangkok

Figure 31. Japanese sweet potato and sweet potato bread (Picture taken on 14.10.2013)

139. Trade fairs are good venues where new products from small producers or community enterprises or even some universities in Thailand can exhibit their products to general public and traders.

Figure 32. Processed banana products

140. There are trade fairs organised by private sector and government’s agencies in Bangkok and other provinces in Thailand throughout the years. The Ministry of Commerce, the Ministry of Agriculture and Cooperatives, the Ministry of Industry, and the Ministry of Interiors are among the major organisers of trade fairs which support producers in their development projects. Most of these fairs are organised annually. Fresh and processed food products are popular among buyers who look at these trade fairs as convenient venues to buy products from many provinces in Thailand in one stop. These government agencies have allocated their annual budget for promotional activities such as training, product developments, improvement on packaging, and also include subsidies for small producers’ participation in the trade fairs. Most of participants in these fairs are invited to participate by the agencies they work with such as the Department of Rural Development under the

Right: Vinegar from Namwa banana Left: Chilli sauce using banana vinegar, chilli, and papaya puree

These two products from banana have been developed by the Vocational Training College in Surathani province in the south of Thailand. Surathani is one of the areas which produce commercial banana for local consumption and for export. (Picture taken at the Thailand Research Expo, August 2013)


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Ministry of Interior, the Department of Export Promotion, and the Office of Permanent Secretary of the Ministry of Commerce, the Department of Agriculture under the Ministry of Agriculture and Cooperatives, and the Department of Industrial Promotion under the Ministry of Industry.

141. Not only that the participants in the development projects receive technical support to improve their production, the assistance also extend to help them on market information and market accesses. When small producers or agricultural cooperatives are invited to participate in the trade fairs in Thailand, they may get financial support for transportation and accommodation, and the booths to exhibit their products are free of charge. These trade fairs normally organised between 5-10 days. Some participants who work with many government agencies may participate in the trade fairs more than 5-6 times per year. When they are strong enough they may join trade fairs organised by the private sector on their own. Pictures of products taken at various trade fairs in Bangkok are shown in Figure 13.

(1) Chemical free banana (2) Solar dried banana products coated with honey or chocolate

(3) Solar dried banana (front) in plastic bags 80 baht/kg (4) Solar dried banana products

(5) Vacuum fried Hom Thong banana (6) Fried Kyuae Hin from south of Thailand


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(7) Solar dried banana from Nongkhai (8) Various flavoured crispy fried banana

(9) Sand roasted peanut from Udonthani (10) Fried peanut in batter from Sukhothai

(11) Peanut products from Nan Province (front of the box) (Back of the box)

(12) Peanut products from Tak province (without jacket) (with outer jacket)


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(13) Dry peanut from Nakornsawan (6) Fried peanut in batter from Ubonrachthani

Figure 33. Thai products available at trade fairs organised in Thailand

142. Processed banana products at Don Muang Airport are sold at premium prices as the rent was very high. Products are attractive and clearly provide visual image of products on the boxes. Thai and foreign customers buy for their own consumption and as gift for others.

(1-3) Chocolate coated dried banana (270 baht/box of chocolate coated dried banana15)

(4) Dried banana (5) Dried banana coated with cashew nut

15 Bangkok Banana Choco is a processing company in Bangkok who buys solar dried banana from Phitsanulok province and further processed the dried banana by coating with chocolate and put in attractive packages. Its products are sold in supermarkets and shops at Donmuang airport. The price at the airport is 270 baht per box while the same product sold in Phitsanulok is around 120 baht/box.


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(6) Deep fried banana sandwiched with (left) sweet tamarind and (right) preserved pineapple

Figure 34. Processed banana products selling at Don Muang Airport (Pictures taken on 11.11.2013)

Figure 35. Locally produced Japanese sweet potato selling at the Royal Project shop (Pictures taken on 11.11.2013)

143. There is a shop which is belonged to the Royal Development Project at Don Muang airport. This shops sells fresh agricultural and horticulture products, canned and carton fruit juices, rice, snacks, garment and souvenirs which are produced by villagers in the development projects in many parts of Thailand. Japanese sweet potato produced by a development project in the north has always been sought after by buyers. Supply of Japanese sweet potato at the shop depends on availability of product and harvest time. It was sold at 70 baht per bag. There are two types of bag used. One type of the bag was clear plastic bag with label giving details on GAP (Good Agriculture Practices), GMP (Good Manufacturing Practices), and HAAPC (Hazard Analysis Critical Control Point) processes used by the Royal Project with a sticker showing barcode and price of product. The other type of package was a netted bag which has no details on product. Both types were sold at the same price of 70 baht/bag. The locally grown Japanese sweet potato has yellow texture and all was trimmed, cleaned, and dried before packing.

III.1.5. Local markets in Thailand

144. The researcher visited local markets in Bangkok and other provinces in Thailand during field visits to see how the selected three products were sold either as fresh or in processed forms. Normally consumers buy fruits and vegetables in markets close to their homes and most local markets offer not only fresh but cooked or processed products. Retail


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prices in normal markets are cheaper than those of similar products selling in supermarkets and department stores. Vendors in local markets buy their products either from Talad Thai, Simummuang, or other wholesale markets in Bangkok close to them to sell to customers. In some markets farmers or producers of fresh produces bring their own agricultural products in their vans and sell directly to customers. These producers may park their vans close to the markets and sell their produces from the back of the vans or driving through various small lanes and using microphone to announce what types of products they are selling. Some mobile vendors sell groceries which include fruits and vegetables. These vendors have regular customers who live along the roads which they visit on daily basis or 2-4 times per week. The Thai households in urban and rural areas can conveniently buy small amount of groceries without having to go to the market. The researcher also found that Vietnamese vendors in Laos also do the same things of bringing products close to customers’ homes.

145. On a field visit to meet a group promoting cultivation of Japanese sweet potato in Phichit province. The researcher also visited a local market in the central of the city. Phichit province is one of the main areas which produce banana, sweet potato, and peanut. Bananas such as Namwa, Khai, and Hom Thong found in the market were produced locally and of good quality. Sweet potato or Mun Thorpheug also came from local farms close to the city.

Figure 36. Locally produced banana and sweet potato at Phichit market

(Pictures taken on 18.08.2013)

146. During a field visit to Ubonrachthani, the researcher visited Nongbuachaiyawarn roadside market. This market has shops and stalls selling fresh vegetables and fruits, and local food specialties. This market serves visitors who stop their vehicles to rest and buy local products for consumption and to bring home as gifts for others. Local produces such as fruits and vegetables, young coconut, bamboo shoots, fishes, and local food products came from growers in the local areas who have rice farms and produce other crops before or after rice season. They rent stalls on both sides of the main roads connecting Ubonrachthani to other areas from the local municipality to sell their produces. This type selling activities provides opportunities to smallholders to have additional income apart from rice which is their main crop. Along the roads linking the three target provinces in Laos, we also found farmers who similarly bring their fresh products to sell to travelers.


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147. Khai banana sold in this market came from Sukhothai and Kamphengpetch provinces which are quite far away. Many stalls sold boiled peanut as snack. When asked of the origin of these peanut, most shop owners said they either grown peanut by themselves after rice was harvested or on a separate small plots all year round. Apart from selling fresh peanuts to traders or buyers, they sell boiled peanut to visitors or travelers at the price of 10 baht/bag while fresh and uncooked peanut was around 30-35 baht/kg.

(1) Boiled local peanut (10 baht/bag) (2) Kyuae Khai from Sukhothai (20 baht/tier)

Figure 37. Peanut and Khai banana at Nongbuachaiyawarn market (Pictures taken on 10.09.2013)

148. The following pictures were taken by the researcher at Rachawat market in Bangkok on 20 and 28 November 2013. Rachawat market is a privately owned local market selling fresh produces and foods. It has retailers or sellers who buy fresh products from Talad Thai wholesale markets or Mahanak wholesale market to sell to consumers. There are many stalls selling banana, sweet potato, and cooked peanut in this market.

149. Banana sold in the market are Namwa, Khai and Hom Thong. Retail prices of Namwa banana reduced slightly from 30 baht/tier on 20 November to around 25 baht/tier on 28 November. Kyuae Khai prices were relative stable at around 30-35 baht/tier depending on sizes. During the festive time such as the end of the year or during Buddhist events the prices may increase between 15-40%.

(1) Khai banana (2) Namwa banana


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(3) Namwa banana (4) Raw Hom Thong banana


(5) Namwa banana (6) Namwa banana (7) Namwa banana


Figure 38. Bananas at Rachawat Market in Bangkok

(1) Steamed sweet potato (2) Steamed Mun Khai (3) Fresh sweet potatoes

Figure 39. Sweet Potatoes at Rachawat Market in Bangkok (Pictures taken on 28.11.2013)

(1) Boiled peanut (2) Sand roasted peanut (3) Deep fried peanut


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(4) Deep fried peanut (0.5 kg/bag) (5) Deep fried peanut (200 gm/bag)

Figure 40. Peanut at Rachawat Market in Bangkok (Pictures taken on 28.11.2013)

150. In local markets in Bangkok, we rarely find fresh and uncooked peanut. Consumers feel it is easier to buy boiled peanut as snack than to buy fresh peanut. If they are concerned with food safety issue, they may reheat the boiled peanut before consumption. Other forms that are available in the markets are deep fried, and sand roasted peanut. These processed peanut are used either as snack, or in cooking, or in noodle or papaya salad shops. Sweet potatoes are sold either fresh for cooking, or already cooked as snack. Bananas are sold as fresh or desert fruits, and as cooked sweets such as banana wrapped with glutinous rice and banana leaves and steamed, or banana in syrup, or banana in coconut milk, or grilled banana.

III.1.6. Charoensri Wholesale Market in Ubonrachthani

151. Charoensri Wholesale Market is one of the largest wholesale markets in the north-eastern part of Thailand. Not only that it is a trading place for locally produced agricultural products, it is also selling agricultural products from Lao PDR. Many products under Contract Farming Agreements between Lao PDR and Thailand such as cabbage, pumpkin, banana, sweet potato, and peanut from Laos are traded daily at Charoensri market. Some of the traders/sellers in Charoensri market buy their products from brokers or collectors which are called “Longhs” in Thai. These “Longhs” have connections with local collectors of agricultural products in Laos who deliver their products to a collecting point close to Wangtao border crossing, or they may themselves go to Laos to buy products from local producers with their partners in Laos. Some Thai traders and buyers trade in more than 2-3 products. For peanut they either sell at their stalls in Charoensri market or send fresh or dried and shelled peanut directly to processing companies in Thailand.

Figure 41. Shops selling banana at Charoensri Wholesale Market



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152. Supplies of locally grown Namwa banana cannot meet with the increasing demands; vendors at Charoensri market have to rely mostly on banana from Laos. Although the researcher found that some vendors have been selling Hom Thong banana or Khai banana, these two types of banana came from Talad Thai Wholesale Market in Pathumthai province or from provinces in the central part of Thailand such as Sukhothai, Khampangpetch, or Loei provinces. Locally produced Namwa banana got better prices than banana from Laos, for example banana from Loei was sold around 150-185 baht/bunch while banana from Lao Ngyam was sold around 120-150 baht/bunch.

153. The competition to get banana from Laos has been intense during the past 1-2 years. Even though there has been a simple grading system for banana collectors in Laos such as a bunch which has around 8-9 tiers is counted as one bunch, two bunches of slightly lower quality is equal to one bunch, and 3-4 bunches of much lower quality down the line are counted as equal to one bunch when the collectors buy these banana. This grading system is too coarse to give proper benefits to farmers in Laos and buyers in Thailand. However, because of the scarcity of the locally produced banana, Thai buyers are taking risk and willing to buy banana from Laos. They were willing to take all kinds of banana to sell to their regular customers. Farmers in Laos who want to get quick money would cut prematurely developed banana and sell to local collectors who then sell these mixed quality to Thai buyers. These practices make it harder to ensure that buyers would get profit as some products would have to be sold at discounted prices.

(1) Pre-maturely cut banana (2) Over ripped banana

Figure 42. Prematurely cut and over ripped banana from Laos (Pictures taken on 09.09.2013)

Figure 43. Fruits being broken or bruised during transportation (Pictures taken between 09-10.09.2013)


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154. Proper post-harvest treatment for banana has not been well developed16 which caused banana to arrive at the Thai market in lower quality than it should have been. Banana from Laos came with sand or clay on skin of fruits. Banana fruits were sometimes tinted or coated with dripping latex when bunches of banana were cut and laid horizontally to the ground. The latex causes the skin of the fruits to turn to darker colour. Uploading and downloading of banana are among other reasons of why there were many dark marks or bruises on the skin or broken fruits. Bunches of banana were laid on top of the others. Workers were found standing on banana while loading them up to or down from the trucks.

(1) Darkened banana skin from latex and sand (2) Sand covered banana

Figure 44. Namwa banana from Laos at Charoensri Market (Pictures taken on 09.09.2013)

155. Some Thai vendors at Charoensri market said they lost money if they received banana which were of poor quality. They classified low quality as: (a) having less than 7-8 tiers of banana per bunch, (b) banana that was cut prematurely, (c) banana bunches that were covered with sand or clay, (d) banana that have broken fruits in the tier, (e) banana that have thick skin and red core, and (f) banana that was cut when it was over-ripen. They may have to cut the low quality bunches into separated tiers and sell them individually at discounted prices, or they will reduce the prices of the whole bunch to 30-45 baht/bunch which are lower than the average price they pay for these bananas.

Figure 45. Lower quality banana selling at discount prices (Pictures taken on 09.09.2013)

156. The researcher observed the downloading of banana from Sepone when the trucks arrived at Charoensri market. These trucks arrived at the market around noon. Bananas were 16 Details of collecting point of products in Laos will be discussed later in the part of field visits to Lao PDR.


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downloaded from the trucks into the trader’s shop and some parts were loaded directly into a truck of a regular customer who was waiting for the banana from Laos. Interestingly these bananas are called “Vietnamese” banana even they came from Sepone. When asked why they were called Vietnamese banana, the Thai shop owner said this was because most of these bananas came from the farms that were run by Vietnamese operators who rent banana gardens from Laotian farmers. “Vietnamese” banana normally get better prices from the Thai buyers as they were cut more matured than banana from Lao Ngyam in Salavanh or Bachieng in Champasak. However, uploads and downloads of banana were not well operated and many bunches had broken or damaged fruits. Workers stood on the top of banana and started loading banana from the middle of the truck instead of start loading from the rear end of the truck and carefully removed banana inwardly to the front of the trucks.

Figure 46. Workers downloaded banana from the middle of the truck (Pictures taken on 15.09.2013)

Figure 47. Downloading Sepone banana onto customer’s van (Pictures taken on 15.09.2013)


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Figure 48. Banana from Sepone at Charoensri Market, Ubonrachthani (Pictures taken on 15.09.2013)

157. Sweet potato from Laos arrived in Ubonrachthani unwashed and would be sent to wash and repack into plastic bags of 9-10 kg/bag in small packing houses mostly in Warinchanrarp district before shipping to Charoensri Market. Most of sweet potatoes from Laos were Mun Thorpheug. Mun Khai in this market came mostly from Sisakhet and Ubonrachani area. Another type of sweet potato from Sisakkeht sold at Charoensri Market was Mun Khapi which has darker purple texture. The researcher met with a Thai trader at Chongmek, and she showed the researcher some sweet potatoes from Laos before they were sent to a packing house to be cleaned and repacked.

Figure 49. Sweet Potato from Laos arriving at Chongmek Border Crossing (Pictures taken on 09.09.2013)


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A delivery truck brings sweet potato from a packing house to Charoensri Market

Figure 50. Washed and repacked sweet potato arrived at Charoensri Market (Pictures taken on 15.09.2013)

(1) Mun Khai and Mun Thorpheug (2) Mun Khapi (far right) and Mun Khai

(3) Packing Mun Khai into 10 kg/bag (4) Mun Khai

Figure 51. Shops selling sweet potato at Charoensri market (Pictures taken on 15.09.2013)

158. On Another visit on 15.09.2013 to Charoensri Market, the researcher visited shops selling peanut to local consumers. Some of the shops sold not only peanut but also sweet potatoes such as Mun Khai, Mun Kapi, and Mun Thorpheug from Sisakhet and Mun Thorpheug from Laos. Peanut sold in these shops came from Ubon and nearby areas in fresh form. At one shop the owner using plastic basket as a sieve to take away the soil that came with the pods. Her staff put the peanut into plastic bag at 10 kg/bag. When asked what varieties she has been selling, she said there were many varieties and one of them which has quite large pods and seeds came from the Queen’s Royal Development Project.


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Using plastic basket Shaking sand away from peanut pods before weighting and packing

Wighting and packing into 10 kg/bag for consumers

Samples of seeds (Pictures taken on 15.09.2013)

Figure 52. Shops at Charoensri Market selling fresh peanut (Pictures taken on 15.09.2013) 159. A Thai peanut trader said he bought dried and shelled peanut from Laos for another trader who has a contract with a peanut processing plants. While visiting his stall, he showed the researcher a bag of peanut which he had sent to the trader and it was rejected and returned to him. The reason for rejecting this bag of peanut was that the moisture level was over the limit of 12% and the seeds had fungus17 on them.

Figure 53. Peanut rejected from a buyer in Bangkok and returned to a Thai trader (Pictures taken on 09.09.2013)

17 According to the Thai Regulation the maximum level of Alpha-toxin (Aspergillus flavus and A. parasiticus) should not exceed 20 microgram per one kilogram of food

Peanut seeds from a variety given by the Royal Project


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III.1.7. Ban Kha Khome Women Group in Ubonrachthani

160. A women group at Ban Kha Khome which is 23 km from the heart of Ubonrachthani has been producing sand roasted peanut for commercial. The group buys dry unshelled peanut twice a year from a Thai trader in Amnartcharoen who delivers peanut to the group’s premise. When asked whether they knew where the peanut came from, the members said their peanut came from Ubonrachthani, Amartcharoen and Saraburi provinces. They had never bought peanut directly from Laos or in Charoensri Wholesale Market. Peanut comes in a sack of 40 kg at the prices between 38-42 baht/kg.

161. Each year the group buys around 300-400 sacks of peanut and store them in their office. It starts buying peanut in May of each year. When the leaders of the group were asked whether they would buy peanut from Laos, they said they were willing to try, if peanut could be delivered to their premise. They prefer peanut which has thin shell and two seeds per pod, which was likely to be Tainan 9. Mixed varieties would be difficult to roast as some might be burnt before the whole batch was fully cooked.

162. The group invested 40,000 baht from its profit in the extension of the building which the group uses as office, packing area, and storage for peanut. Group’s members take turn to work on roasting and packing. The two leaders of the group are responsible for marketing and selling product. They have two sets of stoves and roasting pans at the back of the office. The group buys sand from another village close to Mae Khong River. Roasting time is around 40-50 minutes. Net profit from selling roasted peanut was over 100,000 baht/year.

(1) Office of the Women Group (2) Roasting area at the back (3) Inside and packing area

(4) Storage area for raw peanut bags (5) Two roasting sets (6) A set of roasting pan and stove

Figure 54. Kha Khome women group produces sand roasted peanut (Pictures taken on 09.09.2013)


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Figure 55. Sand roasted peanut of Kha Khome Women Group (Pictures taken on 09.09.2013) III.1.8. Khangsapeu Market in Ubonrachthani

163. Khangsapeu, one of the tourist spots in Piboonmungsaharn district, is one of the famous tourist areas where local visitors come for dining and leisure during the evening, during weekends, and holidays. It is under the responsibility of the local municipality who oversees the areas and has policies to promote tourism and SME business in the area. The road along the bank of Khangsapeu has restaurants, and shops selling local products and souvenirs. These small shops also produce various processed snacks from banana, sweet potato, and taro. The owners of these shops produce processed snacks in their shops and buy other processed snacks such as solar dried banana from other producers to sell as well.

164. Each shop is operated by 2-3 persons and most is considered to be family business with mother and daughter(s), husband and wife, or siblings. Not only selling to consumers who are tourists, some of them produce processed snack and sell to local wholesalers. Their snack products are well-known among buyers as freshly produced, tasty, and good quality. The prices of products are affordable for tourists. A normal pack of snack is 20 baht or three packs for 50 baht. These shops buy banana, sweet potato, and taro either from Charoensri wholesale market or they can order from small vendors who deliver products to their shops. A bunch of fresh banana was around 150-200 baht. Equipments and technologies used are simple and easy to maintain. Packaging is attractive, not too complicated, and they can be ordered from small printing shops without much difficulty.

(1) Khangsapeu (2) Shops selling souvenirs and snacks

Each day members roast between 4-6 pans of peanut depending on orders. For 4 pans roasting, they can pack into 81 dozens of small packs. Roasted peanut are packed in plastic bags with stickers showing its brand name and contact numbers of the group. Packaging is simple and acceptable to consumers. Each dozen of small packs is sold at a wholesale price of 45 baht. Retailers sell each small bag at 5 baht/bag and get a profit of 15 baht/dozen. A bag of one kilogram of roasted peanut is sold at 90 baht/bag

Buyers can order product by phone and come to collect it by themselves. The Ban Kha Khome Women Group also sells to some grocery shops who are regular customers.


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(3-5) Owners of the shops are producing deep fried banana and packing into bags for sale

(6) A shop operated by husband and wife (7) The husband is frying banana Figure 56. Khangsapeu Market in Ubonrachthani (Pictures taken on 09.09.2013)

(1) Banana chips (2) Purple sweet potato crisp (3) Yellow sweet potato sticks

(4) Banana and sweet potato products (5) Banana products from various shops at Khangsapeu

Figure 57. Snacks from banana and sweet potato at Khangsapeu (Pictures taken on 09.09.2013)


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III.1.9. Warinchumrarp Market in Ubonrachthani

165. The researcher visited Tesban 1 Market at Warinchumrarp district of Ubon. This market comprises of shops and stalls selling various types of food including fresh fruits and vegetables. Some of the fresh products came from nearby province such as Sisakhet or from Charoensri Wholesale Market in Ubonrachthani.

Figure 58. Banana at Tesban 1 Market in Warinchumrarp


Figure 59. Sweet potato and banana at Warinchumrarp Market in Ubon


166. There were many shops selling peanut products in Warinchumrarp market. The researcher asked some shop owners where they bought peanut from and sold peanut to. All of the shop owners interviewed said they bought peanut from Raitip who is one of the biggest manufacturers of peanut products in Thailand. The full name of the company is Thai Cereals World Company Limited18, but it is mostly called “Raitip”. The company has its representatives visiting these shops on regular basis. The shop owners can place orders by telephone and receive product in very short time. They said they were happy with the 18 Information of the company can be found at http://www.raitip.com/


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quality of peanut from Raitip. Peanut products from Raitip come in various sizes and the packaging is attractive. These retail shops bought large wholesale pack of 10 kg of peanut and repacked into smaller size in clear plastic bags such as 500, 250, 200, and 50 grams for consumers and food shop owners. Customers used peanut to roast or cook into sweet or snack, or use them in food shops as part of condiments for noodle or use in papaya salad. When asked whether they bought any peanut from Laos. Most shops said they preferred to buy Raitip products as their local customers wanted to be ensured that the products came from reliable producers. Some shops said they used to buy peanut from Laos before but stopped buying even though the prices were lower than Raitip’s products. They said peanut from Laos were not fully dried and could be kept in short period before becoming rancid.

167. Raitip’s peanut were normally repacked into smaller retail packs by the shop owners and sold at the prices between 10-40 baht per pack. Raitip did not have any objection that these shop owners repacking peanut in retail sizes. Products are either in whole seeds with husk or without husk, broken into half or quarters, or ground. Some shops sold fried peanut or roasted peanut which they used Raitip’s raw peanut to cook. When asked whether they knew where Raitip’s peanut came from, most shop owners said the seeds came from peanut farms in Thailand. When asked whether they were satisfied with quality of Raitip’s products, they said they were satisfied with quality of products and services of its representatives.

168. Interestingly, these shop owners did not know that apart from locally produced peanut Raitip also bought peanut seeds from Laos. On the way from Pakse to Wangtao border crossing, we stopped at the “Cabbage Market” where many kinds of fresh produces are transferred from Laotian trucks into Thai trucks. We met with a Thai trader and her team who just finished uploading peanut from Bachieng into a Thai truck. The Thai driver told us that the loaded peanut would be delivered to Raitip’s factory in Thailand. Raitip has been one of his regular customers.

(1) Raitip peanut in 10 kg/pack. Wholesale price is 560 baht and retail price is 700 baht/pack


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(2) 500 gm. packs (3) Raitip ground peanut (4) Raitip’s 500 gm pack and retail packs

(5) repacked peanut (6) consumers packs (7) consumer packs

Figure 60. Peanut products from Raitip and repacked sizes (Pictures taken on 10.09.2013)

Figure 61. Various retail peanut package sizes at Warinchumrarp Market


III.1.10. Kanthoraluk Market in Sisakhet

169. Kanthoraluk district in Sisakhet province is known to be one of the major producing areas of sweet potato and peanut. The researcher visit Kanthoraluk market which opens from early morning to evening. Vendors in this market are selling to other local wholesalers, retailers, and end users in Kanthoralux and Sisakhet areas. The market was designed in tow rows of continuous line of stalls with have high roof. The cement ground under the roof was built with a slope that delivery trucks can upload or download products. This design could be


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used for the building collection centres in the three selected areas of the project. Some sellers in this market also buy fruits and vegetables from Charoensri wholesale market in Ubonrachathi. Buyers who placed orders in advance were waiting for the delivery van.

Figure 62. Fresh procures stalls at Kanthoraluk market (Pictures taken on 15.09.2013)

Figure 63. Products from Charoensri Market arriving at Kanthoraluk market (Pictures taken on 15.09.2013)

Figure 64. Locally grown banana at Kanthoraluk market (Pictures taken on 15.09.2013)

(1) Mun Khapi (2) Mun Thorpheug (3) Mun Khai

Figure 65. Kanthoraluk sweet potato (Pictures taken on 15.09.2013)


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Figure 66. Locally produced peanut at Kanthoraluk market (Pictures taken on 15.09.2013)

Figure 67. Peanut rejected and returned by buyers (Pictures taken on 15.09.2013)

III.1.11. Field Visit to Phichit on Japanese Sweet Potato

170. The researcher visited a group called Agricultural Knowledge Dissemination Group in Phichit province. This privately owned group has a farm in Phichit which produces commercial crops of fruits and vegetables including Japanese sweet potato. Mr. Thaweesak Chairuengyod who is the leader of the group bought Japanese sweet potato from Japan (yellow and purple texture), Korea (yellow texture), Taiwan (orange texture), and Australia (orange texture) to grow at his farm. This farm has been producing tuber to sell to wholesalers and retailers for consumption, and shoots for propagation for 8 years. Varieties which have yellow and orange textures are more stable than those with purple texture.

171. Cost of production of tuber is 25 baht/kg. Wholesale price at its shop at the farm is 50 baht/kg and retail prices are around 90-99 baht/kg. The farm grows 6 crops per year in its plots. Each crop has yield between 2.5-3 tons/rai. Japanese sweet potatoes harvested in the rainy season are not as good or as sweet as those harvested in drier period. Those grown in the rainy period are to get shoots for propagation than to get tuber. Shoots are sold at 15 baht/piece. If the volume increases such as over 200-300 shoots per order, the price is reduced to 10 baht/piece. Income from selling shoots is higher than selling tubers. Recently the farm has focused on selling shoots as they have limited areas to grow Japanese sweet potato although there have been high demands for its Japanese sweet potato. Customers can place an order products and transfer money to the account of the group and shoots can be sent either by post, train or buses. Shoots for propagation can be kept around 7.10 days after being cut.


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172. Japanese sweet potato requires well drained sandy loam and have to be well looked after to get high yields. If the vine produces too many leaves, it will have lower amount of good tubers for sale. Workers in the farm have to round the vine up to keep the main root grow better than to have too many small tubers at the nodes of the vine. The main reason they can grow up to six crops per year is that the farm uses movable sprinkle water system. Investment for the sprinkler is not high and the system can be removed by its workers to other plots when needed. The last crop is harvested around April to May. The farm will stop growing Japanese sweet potato between June-August because soil would be too wet to grow. Books on growing Japanese sweet potato and banana produced by this group have been given to the targeted PPOs. Shoots of yellow and orange Japanese sweet potato have been grown by DAFO Lao Ngyam and PPO Salavanh in September 2013 for a trail.

Figure 68. Preparation of plots for Japanese sweet potato (Pictures taken on 18.08.2013)

Left: Plot to grow sweet potato for propagation purpose Right: Sample of a shoot prepared for propagation

Figure 69. Japanese sweet potato at the Agricultural Knowledge Dissemination Group (Pictures taken on 18.08.2013)

173. When asked whether there would be any interest to collaborate in producing sweet potato in Laos, the manager of the farm said the group has limited resource and personnel to work in Laos. However, if the Project wants to buy shoots or send staff to be trained at the farm, he would support the requests.

III.1.12. Bangkrathum District of Phitsanulok province

174. The researcher visited Phitsanulok province to meet with solar dried banana producer groups who work closely with the Solar Energy Research Laboratory of the Department of Physics, Silpakorn University by joining a team from Silpakorn University working with


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producers in November 2013. They kindly helped the researcher to meet with some producers and visited solar crop dryers to see their operations. The researcher met with: (1) Bangkrathum Solar Dried Banana Women Cooperative; (2) Community Learning Centre of Ban Klongkalon, Bangkrathum district, and (3) Mr. Wuthichai Chana, the leader of Bupha Solar Dried Banana Community Enterprise.

175. The first producer group is led by Mrs. Punnee Sawasu and her sister, Mrs. Teunta Jaithiengtham. This group has three units of solar greenhouse dryers among them to use. They sell solar dried banana under their brand name of “Chula” to retailers and local shops. The group also sells and buys solar dried banana with other solar dried banana producers in Bangkrathum. Mrs. Punee visits her customers at Wat Ratanamahathat on daily basis to check whether they want to place any new order. Customers can place orders by phone.

(1) Mrs. Punnee (Leader) (2) Mrs. Teunta (3) Dried banana with the brand name of “Chula”

Figure 70. Bangkrathum Solar Dried Banana Women Group (Pictures taken on 12.11.2013)

(1) Ripened banana waiting for peeling (2) Trimming solar dried banana and packing into plastic bags

Figure 71. Members working for the group (Pictures taken on 12.11.2013)

176. This group buys fresh green banana around 7-10 baht/kg from Bang-rakhum district. These prices are inclusive of transportation cost to their solar greenhouse dryers. The standard practice in Bangkrathum is that one banana tier is 1.4 kg in weight. Sellers of banana with his or her delivery van will bring the van to be weighted twice—one before the delivery of banana and the other after the van is emptied. Most suppliers use weighting services at the local rice collection centers. Each rice collection center charges fee for the weighting service and prints the first and second weights and calculates into the number of tier of banana for the suppliers to show to the buyers who will pay them accordingly.


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177. The first unit of solar dryer was given to this group with full subsidy from the Department of Alternative Energy Development and Efficiency (DEDE) at the beginning of the collaboration project of DEDE and the Solar Energy Research Laboratory of Silpakorn University. We visited the third solar greenhouse dryer which Mrs. Tuenta has applied for partial subsidy from DEDE to build. The solar dryer was completed and opened on 30 December 2012. This new solar dryer has been modified from the previous version installed in Pakse, Champasak. It has improved air inlets and outlets and a meter to measure level of temperature and humidity inside of the dryer. It also has a gas burner at the back to be used when the temperature is low or it rains on the first day of drying process. This solar dryer can dry around 1.4-1.5 ton of banana per time.

178. There are around 10 members in this group who take turn to work for the group such as peeling fresh banana, drying, hand-kneeled banana, trimming, packing banana into wholesale sized plastic bags (10 or 25 kg per bag), or retail sized plastic boxes. Members are paid 2 baht per white enameled bowl for peeling fresh banana and 15 baht per two bowls for trimming dried banana. For one van load of banana the group uses around 8 persons to peel and dry banana. Average net profit for each solar greenhouse dryer is around 500,000 baht/year. If the group has large order which they cannot fulfill, the group either buys solar dried banana from other producer groups or hires other producers to dry banana for them at the fee of 3 baht/kg of dried banana. Solar dried banana of this group is sold at wholesale price of 40-45 baht/kg and retail price between 70-80 baht/kg or 60 baht per half kilogram. Retail pack of 200-250 gram in plastic container is sold between 35-55 baht/pack depending on the types of packaging material used and quality of dried banana.

179. This group is willing to transfer technology to smallholder producers in the IFAD-ADB project. The leader said it would take around 10-14 days to learn the whole drying process in Thailand or the group can send some members to Laos to train the producer group in Laos. When asked whether they would be interested to buy fresh banana from Laos or not, the group said it would be interested to do so if banana could be delivered to Bangkrathum. They would prefer banana which has thin skin and not too big in size as they can be dried easier than larger ones. They had offered to do a trial of using banana from Laos to produce dried banana. Mrs. Punee said that if the Project would like to send producers from Laos to be trained at her group, they could bring banana from Laos with them to have practical training.

(1) Solar greenhouse dryer at Mrs. Tuenta’s house (2) The signpost in front of the solar dyer


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(3) Air inlets at the front of dryer (4) Meter reporting temperature and humidity in the solar greenhouse dryer

Figure 72. Mrs. Tuenta’s solar greenhouse dryer

180. In 2014 the DEDE will give partial subsidy for another 33 solar greenhouse dryers to small dried banana producers in Bangkrathum district. This group has already submitted an application for an additional dryer as the existing three units are not enough for its operations. The criterion and level of subsidy is announced in advance every year. Solar greenhouse dryers help these producer groups to dry banana in all type of weather which they could not do in the past. Their banana products are now more hygienic and well perceived by consumers than the dried bananas which are dried in open air.

Figure 73. Drying banana inside the solar greenhouse (Pictures taken on 12.11.2013)

181. If suppliers of green banana do not take good care during the transportation, they will receive bruised banana which will turn into white patches after being dried. These white patches are harder than the normal texture and have to be trimmed out before packing. They sell these trimming parts to farmers who raise chicken or fishes. Currently dried banana producers have more problems on supplies of locally produced banana as the production areas decreased and more competition to get good quality banana. They may receive bananas which have different levels of maturity which do not have the same ripening period.

182. Another process to keep banana with less bacteria is to put them in the oven. When the temperature in the oven reaches 150° C, they will turn it off and keep banana in the oven for 1-1.5 hours. For every 50 kg of dried banana, the weight will decrease one kilogram. Some buyers will buy from the producers without baking. They will perform this step by themselves. After these bananas are cooled down to room temperature, members of the groups will pack them into plastic boxes and sealed the packs before sending to retailers.


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Green banana riped at different time and in one dryer they may have banana being dried at different times.

Figure 74. Banana inside of the solar greenhouse dryer

(1) Solar dried banana: large and small size (2) Bruised spots turned white after being dried

(3) A member is trimming the white and dark part from dried banana

Figure 75. Solar dried banana before packing (Pictures taken on 12.11.2013)

Figure 76. Flattened dried banana are packed in (Pictures taken on 12.11.2013)


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183. The second group the researcher visited with the Silpakorn team was the Community Learning Centre of Ban Klongkalon village in Bangkrathum district. The team came to fix an automatic temperature control which controls the air inlets at this new solar greenhouse dryer. This dryer is smaller than the one belonged to Mrs. Tuenta. The leader of this group is Mrs. Pornthip Nuyean who said that last year the Community Learning Centre could not find additional fund from its local administrator to expand the size of the solar greenhouse dryer. The small solar dryer has limited drying space. Some bananas had to be dried outside of the greenhouse. Birds and insects have caused problems to banana which were dried in open air. She hoped that the Centre could have more space to dry banana. The Centre would apply for the second unit of solar greenhouse dryer from DEDE next year.

184. This group bought banana from a local supplier who collected banana from gardens in Utraladit province and Bangrakham in Phitsanulok. The supplier delivered banana to the Centre. She said immature and bruised banana caused the Centre to lose money in some lots. Prices of banana have been increasing as there have been more solar dried banana producers who expanded the number of the solar greenhouse dryers in Bangkrathum areas. Some producers may have between 10-30 units of solar greenhouse dryers in their operations.

(1) Mrs. Porntip Nuyean (2) Signpost of the DEDE for the subsidy in 2013 for this Centre

Figure 77. Leader of Community Learning Centre of Ban Klongkalon (Pictures taken on 12.11.2013)

(1) Newly delivered green bananas (2) Bananas which have been covered for one day

Figure 78. Bananas bought from a supplier in Phitsanulok (Pictures taken on 12.11.2013)


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(1) Front door and central heat chamber linking to gas burner (2) Air inlet at the front of the solar dryer

(3) Gas burner unit and solar cell panel at the back (4) Gas burner to be used on first day of drying, if it rains

(5) Banana dried in the solar greenhouse dryer (6) Flattened banana dried outside the solar greenhouse

(7) Banana which can meet standards (8) Dried bananas with white patches are substandard

Figure 79. Solar greenhouse dryer and dried bananas (Pictures taken on 12.11.2013)


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III.1.13. Wat Phra Sri Rattanamahathat Market in Phitsanulok

185. The researcher visited Wat Phra Sri Rattanamahathat Worawiharn in Phitsanulok province. This temple is called Wat Yai for short. It is the one of the main attractions in the province. The Thais who worship Phra Buddha Chinnarat, one of the most revered Buddha images in Thailand, visit the temple which is the home of the revered Buddha image throughout the year, especially during all Buddhist festivals and the temple’s annual fair in January and boat racing in the first week of October. Along the inner wall of Wat Yai, there are shops and stalls selling banana products. Visitors to the temple normally buy these banana products for consumption or as gifts. Dried banana sold at Wat Yai are produced by various producer groups in Phitsanulok either as simple solar dried banana, or processed products in modern packaging. Products sold in Wat Yai are slightly cheaper than similar products sold in other provinces. Each shop in Wat Yai is selling various brands of dried banana and dried banana products.

186. The researcher met with the owner of Rai Wimolwanich at her shop in Wat Yai. Although Rai Wimolwanich has a large orchard of its own but it does not grow banana to produce solar dried banana. It buys solar dried banana from Mrs. Punnee’s group. Rai Wimolwanich processes these solar dried bananas in 200° C oven and sells rounded solar dried banana under its own brand. It has a small factory to process flattened bananas into solar dried banana dipped in chocolate. Rai Wimolwanich has its website, Facebook and email accounts. Many shops at Wat Yai also use the same practices that they buy solar dried banana or other banana products such as crispy chips from small producer groups at wholesale prices and repacked them into consumer’s pack sizes. Most of them use their own brand names.

187. Some food or snack manufacturers buy solar dried banana from Bangkrathum in Phitsanulok and processed into more value added products and send them back to sell in Phitsanulok. Bangkok Banana Choco is one of these companies. It processed solar dried banana into chocolate dipped banana products with honey or strawberry flavours. Its banana products are sold in Wat Yai’s shops between 120-130 baht/box and the similar products are sold at Don Muang Airport at 270 baht/box.

188. On the question of what type of processed products would have better profit for small producer groups; the team from Silpakorn University said producing banana chips required lower level of investment in processing facilitates and quicker profit than producing solar dried banana. This is because banana chips can be produced from green or semi-ripe banana without having to go through many processes as solar dried banana. Frying pots, stoves, and cooking oils, and packaging materials can be purchased off the shelf and quite easily in the market. Solar greenhouse dryers are more expensive and cannot be bought off the shelf. Small scale banana processor groups in Sukhothai province are major producers of banana chips while in Bangkrathum of Phitsanulok, the small producer groups are more interested in solar dried banana productions than producing banana chips. Small producers of Bangkrathum district have been subsidised by the public sector under the collaboration of DEDE and Silpakorn University on promotion of utilisation of alternative energy, otherwise it would be difficult for them to invest in solar crop dryers by themselves.


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(1) The owner of Rai Wimolwanich (2) Solar dried banana in plastic bags

(3) Taking banana out of the oven and keep in closed containers before packing into plastic bags

(4) Pictures of a box of processed banana product from Rai Wimolwanich

Figure 80. Processed dried banana products by Rai Wimolwanich (Pictures taken on 14.11.2013)

189. Wat Yai’s retailers are considered to be an important part of the value chain of banana in Phitsanulok province. The ranges of products they offer to customers are large and give consumers choices to pick from. These shops have been selling solar dried banana and other processed banana products such as dried banana dipped in chocolate, banana chips, and banana candy together with other snacks all year round. Small producers of banana products in return will have continuously demands for their processed products. They buy banana from suppliers or wholesalers who have to buy banana from growers. This also helps banana growers in Phitsanulok and other nearby provinces.


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190. Pictures of shops at Wat Yai and banana products are shown as follows:


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Thai tourists buying banana products

Figure 81. Banana products selling at shops at Wat Yai (Pictures taken on 13.11.2013)

III.1.14. Pakchong Research Station, Nakornrachasima 191. The researcher visited Pakchong Research Station which is a research unit under the Inseechandrasitthiya Institute for Crop Research and Development (IICRD)19 of Kasetsart University. Pakchong Research Station in Pakchong district, Nakornrachasima province, presents its missions20 as follows:

To research on horticulture and related fields including orchards, vegetables, ornamental plant, seed production and quality control, pest management, post harvest technology, biotechnology and marketing. To provide training for bachelor degree students from Kasetsart University and other institutes including student exchange program. To supply academic service and transfer technology to public and private agencies. To serve research services and facilities to lecturers, researchers, students from Kasetsart University and other institutes from both public and private agencies. To produce and distribute high quality varieties of the mandate horticultural crops to public and private sectors

19 Please see more information at http://www.iicrd.ku.ac.th/Eng/iicrd_001_e1.htm 20 Information from http://www.iicrd.ku.ac.th/pcrs/pcrs_001.htm

http://www.iicrd.ku.ac.th/pcrs/pcrs_001.htm


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192. One of the crops that Pakchong Research Station has researched and developed is banana. The researcher met with Mrs. Kulayani Suvivat who is the Senior Agricultural Specialist who works on banana. The Pakchong Research Station has recently developed a banana variety called Pakchong 5021 which produces a large bunch and good quality banana which meet with Thai customers’ preferences.

Figure 82. Packchong 50 developed by Pakchong Research Station Source: http://www.rdi.ku.ac.th/kasetresearch54/GroupEconomic/17-4-Kunlayanee_Suv/template.html

193. Pakchong Research Station sells tissue cultured banana suckers to Thai growers at the price of 50 baht/sucker. Those who are interested to buy suckers of Pakchong 50 have to place orders in advance22. Popularity of this variety among Thai banana growers is high especially for those who want to grow banana for commercial. Growing banana from tissue cultures can help growers in the areas which have problems with outbreaks of diseases. If 21 Please find more information on Pakchong 50 banana at http://www.youtube.com/watch?v=l7MhoeKePp4 22 Currently the queue is long. It may take around a year to get tissue cultured suckers of Pakchong 50 banana produced by the Research Station. There are many private nurseries who sell Pakchong 50 suckers as well as other varieties such as Mali Aung (white centre variety), Hom Thong, and Khai banana. The prices offered by these private nurseries differ depending on the size of the orders and transportation cost.


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they are not certain whether banana suckers in the areas have been infected or not, it would be better to use tissue cultured suckers. Some banana producer groups or more advanced orchards can produce tissue cultured banana suckers for sell. Income from this part is relatively good. Pakchong Research Station also works with banana growers by transferring technologies on production and introduces good farm management practices to them.

194. The researcher asked Mrs. Kulayani whether the Research Station could provide technical supports in banana production and product development for the IFAD-ADB project in Laos. She said it would be possible, if the IFAD-ADB project officially proposed to Kasetsart University and asked for technical supports in writing. The Research Station may be able to work with the Project and findings from the collaborations can be transformed into a research project of the Research Station. The Station has also worked with Thai producers who wanted to buy dried banana to supply to producers of bakery products. The Research Station has good relationships and connections with Thai manufactures.

195. The Research Station also collaborates closely with the Department of Food and Technology of the Faculty of Agro-Industry of Kasetsart University. If the IFAD-ADB project wants to develop a project on producing banana flour to be used as substitution of wheat flour in producing bread and bakery product, the Pakchong Research Station could add this part into the collaboration agreement. Mrs. Kulayani has asked whether the researcher could find any formula of baguette produced in Laos and existing varieties of banana, so that she could ask researchers in the Food and Technology Department to do some experiments on banana flour23. Wheat flour has to be imported into Laos; to be able to produce banana flours and use as import substitution not only save foreign exchanges but can also help smallholders in remote areas to have more income from banana.

196. During the outbreaks of panama disease in Thailand, the Pakchong Research Station worked with Namwa banana growers in the infected areas in prevention and remedies. It has researchers working on enzymes and biocontrol for banana which may meet with the organic production of banana. The collaborations with Pakchong Research Station could provide an integrated support system which helps farmers to add more banana varieties for the Thai market as fresh produces, and development of processed banana products for local markets. With its knowledge and experiences in previous epidemic outbreaks in Thailand, there should be some of lessons learned and good practices which the Thai experts can share with local line government agencies and farmers in the project.

23 In Thailand there have been some academic institutes who work with small producers groups to use banana flour in bakery and confectionery products. Some products which can use banana flours for substitution of wheat flour are bread, cookies, brownie, pancake, and cake.


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III.1.15. Department of Physics, Silpakorn University, Nakornpathom

197. The Solar Energy Research Laboratory (SERL), Department of Physics of Silpakorn University has been the leader in the field of solar crop dryers. This laboratory has been led by Dr. Serm Janjai24. His research project had built its first solar crop dryer in Thailand in 1992 for the Royal Development Project at Chitralada Place. Some of the solar crop dryers which were built by SERL during 1996-1998 are still in use up till today. The Department of Physics has been working in a collaboration project with the Department of Energy Development and Efficiency (DEDE) of the Thai Ministry of Energy. DEDE has a policy to provide financial subsidy to Thai producers to use alternative energy such as solar energy.

198. One of the famous study cases that the SERL has done in terms of integration and innovation is the assistance it provided to a Thai dried banana producer group in Phitsanulok in 200725. This case started when a shipment of dried banana from a Thai producer group which was exported to Russia was rejected by its customer because of a problem on quality of product. After technical consultations with SERL, this producer group built a foundation of the solar greenhouse dryer by itself, while the SERL provided a full subsidy from the fund it received from DEDE for the construction of a solar greenhouse dryer for the group. After that the SERL collaborated with the Food Technology Department to help this group on product development and packaging for its products under a grant from the Research Council of Thailand.

199. This producer group also received support from SERL and other departments in Silpakorn University to improve its factory and later it could obtain GMP (Good Manufacturing Practice) certification from the Ministry of Industry. Currently this group has been exporting premium banana products to many countries under the brand name of Banana Society. It has been awarded and selected as one of the innovative companies. It is using a brand name of Bupha Solar Dried Banana Community Enterprise for its banana products for local markets in Thailand.

200. SERL has just finished building 5 units of solar greenhouse dryers in Cambodia26 and it also signed an agreement with the Food and Agriculture Organisation of the United Nations (FAO) in building a side-loading solar tunnel dryer for a development project in Mae Hongsorn province in Thailand. The side-loading solar tunnel dryer in FAO project is

24 . Dr. Serm Janjai studied in France during 1981-1986 and did research work in Germany for two years on the development of solar crop dyers. He also carried out research on solar tunnel dryer with University of Stuttgart of Germany during 1995-1999. Although Dr. Serm Janjai has recently retired from government work, his is still working full-time as the senior advisor and specialist at the Solar Energy Research Laboratory. He continues to lead on the collaboration project with the Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy. He supervises post graduate students in the Department of Physics. In the past there were students from Lao PDR who received scholarships from Thailand International Development Cooperation Agency (TICA) under the Thai Foreign Ministry to study at the Department of Physics of Silpakorn University. 25 It was in the same period as the DEDE’s collaboration project with the Department of Electricity of Lao PDR to build a solar dryer system at Champasak Agricultural and Forestry College in Lao PDR. 26 This project was fund by Bayer which received funds from donors in Germany.


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used to dry chilli. Up till now apart from projects in Thailand, SERL has built a solar crop dryer in Sierra Leone27, a unit in Lao PDR, and 5 units in Cambodia, and.

201. In Thailand there were more than 8,000 producers of dried banana. Most of them are still using traditional way of drying banana in open air. Bangrathum district in Phitsanulok province is an exceptional because most producer groups have been shifting to solar greenhouse dryers. Their collaborations with DEDE and SERL have increased profit and reputation for these small dried banana producer groups. They became role models for other producers. Although some of them did not get subsidy from the DEDE and SERL, they invested in the construction of the solar greenhouse dryers by themselves. Some producers have expanded and built more units of solar dryers after they earn more profits from their first subsidised solar greenhouse dryers.

202. The DEDE has provided funding for banana producers in term of subsidy for the construction of the solar greenhouse dryers. The applicants for DEDE’s subsidy have to submit their application for consideration. They have to be working and have experience in producing dried banana28. After the subsidy is approved each recipient will have to build the solar dryer and they will get reimbursement from DEDE after they start producing solar dried banana. This is to ensure that the DEDE’s funding will be allocated to experienced producers who are willing to use solar dryers and that the funding would not a free lunch for anyone to get just it and fail to deliver tangible results. The payback period for a side-loading solar tunnel dryer is around 1-2 years, while the payback period of the solar greenhouse dryer is around 2-3 years given that these dryers have been used for production in full capacity. The researcher asked Dr. Serm Janjai about the success rate of these solar dried banana producers. He said the success rate has been around 80%. In terms of investment, funding from government agencies had helped producers to have higher Internal Rate of Return (IRR) than those who have had to invest in the construction of solar greenhouse dryers by themselves.

203. Dr. Serm has mentioned that for small producer groups, the investment in the solar dryer would be expensive for them to afford. Subsidy from the public sector would be essential for their investment and long term business operations. In 2013 there was a study by the Food Technology Department of Silpakorn University on Economic Internal Rate of Return in dried banana and medicinal herb productions. The researchers of the Food Technology Department studied the following economic indicators: NPV = Net Present Value (+), BCR = Benefit-Cost Ratio (>0), and IRR = Internal Rate of Return (> interest rate of loan from commercial bank)

The study was aimed to provide information on different level of subsidy which would have impact on BCR and IRR of the producer groups. Findings from the study are as shown in Table 51. The study used three sizes of dried banana producers and two levels at 50% and

27 The dryer is currently used to dry ginger. 28 DEDE also provides financial subsidies on solar greenhouse dryers to other groups who produce crispy rice crackers, medicinal herbs, dried fruits and vegetables, dried fishery products and rubber sheet producers.


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100% of subsidy provide by the public sector to these producer groups in comparison with no subsidy. Results from the study show that level of subsidy is correlated positively with levels of BCR and IRR. With higher level of subsidy, the higher the rates of BCR and IRR.

Table 51. Level of subsidy and economic indicators by size of dried banana producers

Size of producer Level of subsidy NPV (THB) BCR IRR (%) Community enterprise: Small 0 166,489.24 11.77 4 50 367,678.62 11.92 9 100 568,868.00 12.08 15 Community enterprise: Medium 0 382,902.67 11.11 5 50 813,187.27 11.29 11 100 1,113,173.40 11.32 18 Private company 0 73,317,700.10 16.38 41 50 85,031,473.87 16.88 60 100 96,745,233.23 17.41 98

Note: NPV = Net Present Value (+); BCR = Benefit-Cost Ratio (> 0); and IRR = Internal Rate of Return (> interest rate for loan) Source: Department of Food technology, Silpakorn University

204. Table 52 shows economic indicators of medium sized community enterprises before and after using the solar greenhouse dryers from a study by the Department of Food Technology. Calculation in the study was based on banana producers who operated as community enterprises and have around 11-30 workers producing 8-10 ton of dried banana per year or using fresh banana around 26-30 ton per years in their production.

Table 52. Comparison of economic indicators before and after using solar greenhouse dryer

NPV (THB) BCR IRR (%) Before using solar greenhouse dryer 148,174.03 12.41 2 After using solar greenhouse dryer 2,420,609.84 17.33 23

Note: NPV = Net Present Value (+); BCR = Benefit-Cost Ratio (> 0); and IRR = Internal Rate of Return (> interest rate for loan) Source: Department of Food technology, Silpakorn University

205. In 2013, the ratio of the public subsidy to investment by the producer is 55:45. The cost of building the solar greenhouse in Thailand is shown in the bracket at the end of each size of solar greenhouse dryer. There are three sizes of solar greenhouse dryers: 1. Solar greenhouse with the size of 6.0 x 8.2 square metres (350,000 baht) 2. Solar greenhouse with the size of 8.0 x 12.4 square metres (680,000 baht) 3. Solar greenhouse with the size of 8.0 x 20.8 square metres (1,100,000 baht)

206. In the first year of the DEDE’s financial subsidy project, it provided subsidy of 60% of the cost of the construction of solar greenhouse dryers to 14 small producer groups. In the second year it provided 55 % subsidy to 28 units, and in the third year it provided 55% subsidy to 27 successful applicants. In 2014 DEDE will give subsidy of 33 units of solar greenhouse dryers to dried banana producers in Bangrathum district of Phitsanulok.

207. SERL has added a heating system using gas burner at the back of the solar greenhouse dryer. Banana has high content of sugar. In the rainy season or on the cloudy day, banana producers may have to use gas heating system in the first day of the drying process to avoid banana getting fungus on them. The new system also add a meter to read temperature and humidity levels. The temperature and humidity inside of the solar


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greenhouse have to be kept at the right levels. Producers sometimes use electrical fans to help air circulation and ventilations inside of the greenhouse.

208. The SERL has an experience in working in Lao PDR. The researcher asked Dr. Serm for his advices on building the solar crop dryers in Laos. He said the most important factors would be entrepreneurial spirits, real business ownership, and good leadership in the operation. Most of the successful Thai solar dried banana producer groups are the groups that have entrepreneurial spirits, clear business purposes, and have visionary leaders who work hard to expand their business. Another one of his advices was not to hire a builder who does not have technical knowledge on solar energy.

209. When asked what type of collaboration could be possible between SERL and the IFAD-ADB project, he suggested that it could be in the similar format as what the SERL has done with the FAO. FAO signed an agreement with Silpakorn University to build a solar greenhouse dryer, and the University assigned SERL to carry out the work under the agreement. SERL would send a team to survey the site, design, and then build the solar crop dryers. It would take very short time to build as SERL has its own construction team. SERL can provide training for producer groups by arranging for them to learn from some producer groups in Thailand or send some trainers from these groups to Laos. The size of the solar greenhouse he recommended was 9 x12 square metres29 which would be easier to control temperature inside of the greenhouse than the larger greenhouse dryer.

210. There are various types of solar crop dryers developed by Department of Physics. The pictures of side-loading solar tunnel dryers and solar greenhouse dryers are shown in Figures 83 and 84. These solar dryers are still being used for research and demonstration purposes.

(1) Side-loading solar tunnel dryer (poly carbonate top) (2) Solar panel of side-loading solar tunnel dryer

29 A solar dryer system built in Champasak in 2007 at Champasak Agricultural and Forestry College consisted of a side-loading solar tunnel dryer, a roof-integrated solar dryer, and a solar greenhouse dryer. The size of the solar greenhouse dryer at the Champasak Agricultural and Forestry College was 8 x 20 square metres. The unit in Pakse was estimated to have a payback period of 2.75 years. However, this did not materialise as the solar greenhouse dryer was used occasionally for demonstrations for students and they rarely had been used for commercial purposes. The whole system could not generate income enough to pay for its maintenance cost. On the contrary, 80% of the similar solar greenhouse dryers built in Thailand during 2007-2008 have had payback period shorter or close to 2.75 years.


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(3) and (4) Side-loading solar tunnel dryers with glass top

Figure 83. Side-loading solar tunnel dryers at the Department of Physics (Pictures taken on 4.10.2013)

211. In 2007 SERL built 7 units of side-loading solar tunnel dryers for the Royal Development Projects in Chiangrai and Nan provinces in Thailand. This type of solar dryer is used by small producer groups to dry agricultural products. It is not too big to operate and can dry products in quantity which can still be sold for commercial. This type of dryer may be considered for Sepone or Nong districts in Savannakhet as it has capacity to dry around 100 kg of banana, while a solar greenhouse dryer is used for 1,000 -1,400 kg/time.

(1) Small size greenhouse dryer (parabola dome) (2) Central heating system using gas burner at the back

(3) Solar cell panel and gas burner at the back (4) Air inlet at the front and air outlet at the back of dome

Figure 84. The Greenhouse dryers at the Department of Physics, Silpakorn University (Pictures taken on 4.10.2013)


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Figure 85. Books on Solar Crop Dryers by the Department of Physics

III.1.16. Institute of Nutrition, Mahidol University, Nakornpathom

212. The researcher asked Dr. Anadi Nithithamyong of the Institute of Nutrition (INMU), Mahidol University in Nakornpathom province whether the Institute of Nutrition has been working on any research project related to sweet potato. She said the Institute has recently received funding from the National Research Council of Thailand (NRCT) for a project related to sweet potato. She help arranging a meeting with Dr. Sitima Jittinandanawho is the Deputy Director for Policy and Quality Development of INMU and the leader of the research project on sweet potato for the researcher.

213. Dr. Sitima said INMU was in the process of designing the content and activities of the project which might start with sweet potato flour and improvement on nutritional quality of sweet potato flour. She would be interested to collaborate with the IFAD-ADB project on how to transfer technology to community enterprise or small producers which have limited excess to technologies. By having better income from improved technologies in production process, farm households may directly and indirectly improve their livelihoods and have more accesses to better nutrition for their families. She would be willing to exchange information from INMU research project on sweet potato with to the Project in Laos. INMU has very good relationships with food processor and manufacturers in Thailand.


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III.2. Field Visits in Lao PDR

214. Field visits had been carried out in Champasak, Salavanh, and Savannakhet. The researcher also visited markets in Vientiane. Information presented in this section will be brief and more details are presented in the value chain analyses in the next chapter.

III.2.1. Markets in Vientiane

215. The researcher visited Talad Chao and Khua Din markets, supermarkets, and street food vendors in Vientiane to find what types of banana, sweet potato, and peanut were available and used in the market. There were a lot of snacks produced from banana, sweet potato, and peanut available in the market or along the roadside of Vientiane. These snacks were not expensive.

Figure 86. Cooked banana, sweet potato, and peanut in Vientiane (Pictures taken on 31.08.2013)

(1) Fried banana fritters vendor (2) and (3) Grilled banana and sweet potato vendors

Figure 87. Process products by street food vendors in Vientiane (Pictures taken on 30.10.2013)

216. There were processed banana, sweet potato, and peanut in other forms which can be kept longer such as chips, or crisp of banana and sweet potato, and some roasted peanut sold


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in small shops and supermarkets in Vientiane. Processed products sold in Phimphone supermarket under its own brand name were of good quality, although they were 50-55% more expensive than banana and sweet potato products sold along the roadside. At the airport in Vientiane airport there is a shop selling snacks which included banana, sweet potato, and peanut products. Most of the products were locally made and sold at the prices that were almost twice of the prices outside the airports due to the high rent at the airport. Interestingly this shop also sells dried banana and banana candy made in Thailand.

(1) Banana crisps in 100 gm. bag at 8,000 Kip (2) Sweet potato crisps in 100 gm. bag at 8,000 Kip

Figure 88. Processed banana and sweet potato at Phimphone supermarket (Pictures taken on 27.10.2013)

III.2.2. Vientiane: Khua Din Market

217. Banana sold at Khua Din were Kyuae Nam and Kyuae Ngaw. Kyuae Nam or Namwa came from areas close to Vientiane. Most of the banana found at Khua Din or other shops in Vientiane seemed to be in better quality than banana from Lao Ngyam or Bachieng. Consumers, small grocery shops and small producers of sweet or desert or snack producers buy Kyuae Nam from Khua Din market at the retail prices around 5,000 - 6,500 kip/tier.

218. The researcher met with an owner of a shop at Khua Din Market who sold sweet potatoes such as Mun Khai from areas close to Vientiane, and Mun Daang which came from Pakse. She has a local supplier who bought products from various parts of the country and delivered products to her stalls. She bought Mun Daang at 4,000 kip/kg and sold at 5,000 kip/kg. She bought approximately one ton of Mun Daang per time.

219. During the festive period or Buddhist celebrations, she normally sold all of the products. However, outside the festive periods some of sweet potatoes could not be sold and were left rotten which meant she might not get profit. Sweet potatoes from Pakse came unwashed. She had her family members wash them. Many of the sweet potatoes at her stall were broken or bruised due to impact during transportation. She said she would be interested to buy other varieties of sweet potatoes from southern parts of Laos. Currently Mun Khai was sold at 8,000 kip/kg which was a better price than Mun Daang.


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Figure 89. Banana at Khua Din Market (Pictures taken on 27.10.2013)

(1) Owner of the shop (2) Mun Daang (3) Mun Daang (4) Mun Khai

(5) Mun Daang (6) Mun Daang (7) Mun Khai

Figure 90. Sweet potato at Khua Din Market (Pictures taken on 31.08.2013)

(1) Banana Chips (20 Sweet potato chips (30 Sugar glazed peanut

Figure 91. Locally made processed products at Vientiane airport (Pictures taken on 30.10.2013)


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220. The researcher found that there were some locally produced banana, sweet potato and peanut products at a shop in the departure lounge of airport in Vientiane. Prices of these products were double of the prices of the same products in the city. This shop also sells dried banana products from Phitsanulok province and banana candy from Thailand.

(1) Solar dried banana from Phitsanulok, Thailand (2) Banana candy imported from Thailand

Figure 92. Thai products at a shop at Vientiane Airport (Pictures taken on 30.10.2013)

III.2.3. Champasak Province: Banana

221. Champasak PPO has selected four Khum Ban as target project sites for banana, sweet potato, and peanut value chain development. The researcher had opportunities to visit Kengkia and met with the Head and Deputy Heads of the village and also some members of the women association.

(a) Meeting with the Head and Deputy Heads of the village (Picture taken on 02.09.2013)

(b) Meeting with villagers and members of women group (Picture taken on 08.09.2013)

Figure 93. Meetings in Kengkia, Bachieng district

Figure 94. Banana and banana gardens in Bachieng areas (Pictures taken on 02.09.2013)


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222. At the time of the field visits in Kengkia farmers mentioned that their banana gardens have suffered from epidemic outbreaks which caused their banana trees to wilt and die. The researcher took pictures and sent to Mrs. Kulayani who is an expert at Pakchong Research Station in Thailand and asked her about the symptoms and remedies.

Figure 95. Banana garden in Kangkia which has been infected


223. Mrs. Kulayani suggested that there might be some causes of the outbreaks: 1) Odoiporous logicollis Marshall coming from pest which makes small holes in the pseudo stem and the mucous on the tree possibly showed that the tress might be infected; 2) Outbreaks from bacterial infection which is called bacteria wilt or Moko disease. The yellow leaves are wilted along the tree and the tree gradually dies. Bacteria will infect the xylem of the pseudo stems and brown rings would be found when the tree is cross-sectioned. This infection comes from Pseudomonas solanacearum which is found in soil or the base of the stem of the banana trees. It can spread through water and suckers which are transferred from one infected garden to the others. Farmers should remove the infected trees


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and destroy them by burning and then pour 5% formalin solution over the burned tree (or ash). Farmers should leave the soil at least 48 days before they grow any new banana plant. In addition before planting any suckers, they should also be soaked in formalin solution; 3) Outbreaks from fungal infection or Panama disease or Fusarium wilt. The fungus would infect the roots and grow in the xylem of the tree causing the xylem to be blocked and rotten. The tree which could not get food wilted and then gradually died. Leaves would turn into yellow and wilted. The infection might come from Fusarium oxyporum f.sp. cubense which spread through water in areas that contain clay or has poor water drainage. The fungus could produce a lot of conidia spores which could deposit on the skin of the rhizome or through the suckers. Farmers should clean all areas under the trees and improve water drainage. The infected stems should be removed and burned. However, if the soil was high in acidity, the spores may spread widely and seriously increase infected areas. Farmer should put lime (Calcium oxide or CaO) to reduce acidity of the soil immediately;

224. Among the three possible infections, the easiest one to eradicate is the first one. Normally we can find both bacterial and fungal infections in the same area. Fungal infection is the most serious one. For bacterial or fungal infection, the banana trees have to be removed and destroyed; the plots have to be removed and ploughed, soils should be baked under the sun and the areas have to be changed to grow other plants 2-3 years before coming back to grow banana30. If the soil is highly affected, it cannot be used to grow banana at all. Using the new suckers from the infected trees will cause wider spread of the infection. The conditions in most gardens we visited were not well managed. The gardens need to be better managed in term of weeding and removing debris or wastes to reduce the habitat for pests, bacteria, and fungus. The number of suckers should be reduced and the yellow or wilted leaves should be removed as much as possible. Farmers we met told us that the yield of their banana production reduced around 30-50% after the gardens were affected.

225. Most banana gardens we visited have been planted for a long time and the grove of banana were quite large. The number of suckers should be reduced and the yellow or wilted leaves should be removed as much as possible. Another problem which farmers mentioned was pests which caused banana leaves to curl and damage the plants. Although larva can be eaten as snack, the pests could cause dropping in yield of banana.

Figure 96. Erionota thrax thrax Linn. Found in Kengkia (Pictures taken on 08.09.2013)

30 In Thailand some affected areas could not grow Namwa banana for 10-20 years.


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III.2.4. Champasak Province, Bachieng District: Peanut

226. Kengkia has fertile soil suitable for growing peanut. Farmers in Kengkia believed that they have more areas for peanut production than banana production. We found that farmers have been very active and want to produce for commercial. Currently most of them grow more than one crop in their fields. Some farmers have been growing peanut and sweet potato alternately. Some may grow banana in their plots together with other crops.

227. Farmers sell their peanut to local millers who are also agricultural product collectors. Wholesale prices of fresh peanut were between 2,000-4,000 kip/kg. Local agricultural product collectors normally deliver peanut to the Thai traders who come to the collecting point close to Wangtao border crossing. At the time of the survey the average wholesale price of shelled peanut was 32 baht/kg at 18% level of moisture. After the Thai traders inspect quality of peanut, he or she would hire local workers to upload peanut into Thai trucks. The workers were paid as a group around 1,500 baht/truckload and they would spread the money among themselves. Thai buyers pay for transportation cost from the collecting point to their premises.

Figure 97. Peanut in Kengkia, Bachieng district (Pictures taken on 02.09.2013)

III.2.5. Champasak: Pakse New Market 228. The researcher visited Pakse New Market several times to observe trading in banana, sweet potato, and peanut. This market is considered to be one of the largest markets in the southern part of Laos. Regular buyers are wholesalers, food shop or restaurant owners, and end users which come from many districts in Pakse and sometimes from other nearby provinces. The market starts trading from small hours of the day till late evening.

229. There were Kyuae Nam, Kyuae Ngaw, and Kyaue Khai sold as desert fruits in the markets. Vendors in the market buy products from their regular suppliers who collect banana (Kyuae Nam) from growers at the price between 7,000-20,000 kip/bunch depending on the sizes and deliver to the vendors’ stalls early in the morning. There were banana leaves and flowers sold at the market.


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(1) and (2) Banana vendors at Pakse New Market (Pictures taken on 03.09.2013)

(3) and (4) Kyuae Nam was sold at the price of 3,000-4,000 kip/tier while

Kyuae Ngaw was sold around 10,000-15,000 kip/tier. (Pictures taken on 03.09.2013)

(3) Ripe Kyuae Nam (4) Raw Kyuae Nam (Pictures taken on 01.09.2013)


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(5-7) Banana flowers and leaves (Pictures taken on 03.09.2013)

(8-9) Vendor selling banana leaves at market at 2,000 kip/bundle


Figure 98. Banana fruits, flowers, and leaves at Pakse market

230. Inside of the market, there were vendors who sold grilled banana. The researchers asked these vendors how were their businesses. They said they made considerable profits from selling grilled banana. One young vendor who sold both fresh and grilled banana at her stall said profit from selling grilled bananas was much higher than profit from fresh banana.

Figure 99. Vendors selling banana products (Pictures taken on 03.09.2013)

231. During festive periods or religious ceremonies especially Buddhist events, there were more traditional sweets or deserts selling in the market. The researcher visited Pakse New Market in the morning of 3 September 2013 and found more shops selling cooked banana, sweet potato, and peanut products. There were vendors who sell flowers and Baise which used banana leaves to make. These Baise and cooked banana, sweet potato, and peanut were used as religious offerings at the temples or at homes. Banana leaves were used in wrapping banana and glutinous rice.


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(1) and (2) Vendors selling Baise for Buddhist event (Pictures taken on 03.09.2013)

(3-5) Cooked banana and glutineou rice wrapped in banana leaves (Pictures taken on 03.09.2013)

(6) and (7) Deserts made from banana, cooked sweet potato, and boiled peanut (Pictures taken on 03.09.2013)

Figure 100. Cooked banana, sweet potato, and peanut at Pakse market

232. There are stalls selling sweet potato or Mun Daang at Pakse New Market during the period of the field visits. Agricultural products suppliers or collectors bought sweet potato from farmer at the prices between 1,200-2,000 kip/kg and sold to vendors or retailers at Pakse market around 2,000-3,000 kip/kg. End users or consumers bought sweet potatoes at the prices around 3,000 -5,000 kip/kg depending on sizes, quality and availability of products in the market. Sweet potatoes are normally washed and repacked into plastic bags around 20-23 kg/bag before sending to retailers. Normally retailers in this market are selling many types of fresh agricultural products. They may sell vegetables, fruits, banana, sweet potato, peanut, and other products in their stalls.

233. Fresh peanut sold at the market were of mixed varieties and there was no grading system. Collectors bought peanut from growers around 2,000 kip/kg and sold to retailers at


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Pakse market at the price of 5,000 kip/kg. The farm gate price might go up to 4,000 kip/kg if the supplies were limited. It seemed that there was no post-harvest handling other than being picked off. There were a lot of soils and debris in the peanut sold in this market. Suppliers delivered fresh peanut to retailers between 2-5 am in the morning.

(1-3) Mun Daang at Pakse market (Pictures taken on 01.09.2013)

(4-6) Peanut from Lao Ngyam and Bachieng (Pictures taken on 01.09.2013)

(7-9) Peanut from Lao Ngyam and Bachieng (Pictures taken on 03.09.2013)

Figure 101. Fresh peanut at Pakse market

234. From the interviews with local vendors who bought fresh peanut to boil and sell. They said they bought fresh peanut at the prices between 4,000- 5,000 kip/kg. From the original amount bought they might get between 65-70% of good peanut to boil. This means the actual cost of fresh peanut the bought would be around 7,000-7,700 kip/kg. They said washing peanut was a time consuming task. If there were cleaned and washed peanut


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available at higher prices, they would be willing to buy these cleaned peanut. Regarding what type of peanut they preferred, they said they preferred peanut pods which have 2-3 seeds more than pods which had only one seed. There was no preference on the colour of the seeds31. They sold boiled peanut to consumers at the price of 5,000 kip per three measuring glasses (please see pictures below). These vendors said they have had good profit even though they had to throw away 25-35 percent of the fresh peanut they bought.

Left and center: Vendors of boiled peanut; Right: Boiled peanut with various type of varieties and pod sizes

Figure 102. Vendors of boiled peanut at Pakse market (Pictures taken on 01.09.2013)

235. Other processed peanut products found in Pakse market were shelled peanut, roasted peanut, deep fried peanut, and peanut bars. These products were produced in Pakse by small local producers.

(1) Shelled peanut (2) 5,000 kip/8 packs of peanut (3) 5,000kip/7 packs of peanut bars

Figure 103. Peanut products at Pakse market (Pictures taken on 20.10.2013)

31 This was different from the Thai market. For boiled peanut the Thai market prefers seeds which have pink colour over seeds with white or pale colour.


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III.2.6. Salavanh Province: Banana

236. Banana gardens in Lao Ngyam also suffered from epidemic outbreaks which were quite similar to gardens in Kengkia in Bachieng district of Champasak. Banana trees which were affected died or produced immature fruits. Some farmers we met said their gardens have been infected and in some serious cases the most of the banana in the gardens were affected. They suspected that collectors sent workers who cut banana bunches with knives which might have brought diseases into their gardens. The infected trees would have smaller or immature fruits. However, as demands for banana in Thai market have been high, farmers did not want to cut affected trees and wanted to sell even poorer quality banana to collectors.

237. Most of banana producers said they did not have time to weed their gardens and cost of hiring causal workers to weed their gardens were expensive. We found that there were large numbers of suckers and dried leaves hanging around the trees. Pseudo stems were left on the ground without removing away from the garden after bananas were harvested.

Figure 104. Banana gardens affected by epidemic outbreaks (Pictures taken on 07.09.2013)

238. Banana gardens in Lao Ngyam and Bachieng might have been suffered from bacterial or fungal infection and other types of pests. Their problems needed to be looked after as soon as possible; otherwise it will spread to larger areas and will have impact on commercial productions of banana in the targeted sites.

239. We also found many gardens which have problems from pests which damaged banana plants. These pests indicated that farmers had not been able to manage their farms or gardens in proper ways or sufficiently. The pest infested gardens would have lower yields or


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immature banana which meant they would have less income from their gardens. The lower quality fruits resulted from epidemic and pests have been shown on the size of the smaller bunches of banana, or smaller fruits.

Figure 105. Erionota thrax thrax Linn. Found in Lao Ngyam (Pictures taken on 07.09.2013)

Figure 106. Odoiporous logicollis Marshall found in Lao Ngyam banana gardens (Pictures taken on 12.09.2013)

Figure 107. Pheaoseptoria leaf spot in Lao Ngyam (Pictures taken on 12.09.2013)

240. Farm management and post-harvest handling needed to be improved, if farmers want to get better income from commercial production. Post-harvest handling of banana at Lao Ngyam has been done in traditionally ways. Bunches of harvested banana were laid flat on the ground before moving to the cart or trucks. Farmers neither have had information on how their products looked like when they arrived in Thai markets, nor understand that selling products with mixed quality would result in lower prices for both the farmers and the local product collectors. Farmers have very little negotiation power to get better prices. They may not have many choices when selling to product collectors. In some case their regular buyers (product collectors) provide financial loan or cash advance for them.


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241. Thai traders who bought banana from Lao Ngyam and Bachieng mentioned deteriorating quality of banana and started looking for new source of banana. Some of the Thai buyers started buying banana from Sepone while others have been exploring banana suppliers in Cambodia. Burirum and Sisakhet provinces in Thailand which border with Cambodia are potential sources of banana for the Thai markets.

Figure 108. Banana from Lao Ngyam (Pictures taken on 12.09.2013)

III.2.7. Salavanh Province: Sweet Potato

242. Lao Ngyam is one of the big cultivation areas of sweet potato. Although there are Mun Daang and Mun Khai growing in Lao Ngyam, the majority of growers have been producing Manu Daang more than Mun Khai. As mentioned before, in some gardens or plots we could find farmers growing banana, sweet potato, and peanut. In some cases they were growing rice in the same plots.

(1-5) Harvest time of Mun Daang in Lao Ngyam (Pictures taken on 07.09.2013)

(6-8) Harvest time of Mun Khai in Lao Ngyam (Pictures taken on 12.09.2013)

Figure 109. Sweet potato in Lao Ngyam


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243. At the time of the field visits, growers were harvesting sweet potato in their plots. Growers could harvest over the period of two weeks by selecting the larger tubers first. They loaded sweet potato packed in plastic bags between 70-75 kg per bag into small trucks or carts and either brought their harvest to a colleting point in the village32, or they could leave their products on the roadside waiting for the collectors’ trucks to collect these sweet potatoes. The current collecting point serves as a point where growers and collectors meet and products are exchanged. There is no roof or storage areas, products were laid on the ground waiting for the collectors. The collector will weigh these bags and put them in their trucks before leaving to another collecting point close to Chongmek border crossing.

Figure 110. Information board at a collecting point in Lao Ngyam (Pictures taken on 07.09.2013)

(1) and (2) Growers bring sweet potato to colleting points (Pictures taken on 12.09.2013)

(3-5) Waiting for collectors and weighing their produces (Pictures taken on 07.09.2013)

32 The IFAD-ADB project has set up a collecting point with poster board providing information to farmers.


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(7) and (8) Farmers brought their produces to collecting point where collector’s trucks were waiting for them.


(9) Sweet potato leaving at roadside waiting for collectors (Pictures taken on 12.09.2013)

Figure 111. Transfer of sweet potato from growers to collectors

244. Handling of sweet potatoes from the time they were harvested and left the farms to collecting point need improvement. Sacks of potato were left under the sun and rain for a long period before loading into the collector’s trucks. Quality would deteriorate according to the numbers of uploads and downloads of products along the supply chain. Workers of the collectors did not have knowledge on product handling. We found them either standing or sitting on the products in most places we visited.

III.2.8. Salavanh Province: Peanut

245. In the first visit to Lao Ngyam district in Salavah during cultivation period of peanut and sweet potato we found some farmers had already cultivated new crops while the others had not finished harvesting their crops. The first visit to Lao Ngyam was in early September 2013. Some farmers were growing both crops in their plots.

(1) and (2) Newly cultivated plots


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(2) and (3) Farmers growing peanut and sweet potato

Figure 112. Cultivation plots of peanut and sweet potato in Lao Ngyam (Pictures taken on 07.09.2013)

246. In the second visits on 12 september 2013, Mr. Supoj Pongwachararak the Chairperson of Nawarin Company joined the survey together with, Mr. Navin Prathumrat, the Assistant Managing Director. Nawarin which is one of the biggest peanut products manufacturers in Thailand. The Company has been producing peanut and other bean and pulse products under the brand names of Mitchaorai, Double Pagodas, Hello, and Jangko. The company has bought fresh peanut close to 1,000 ton/year from Laos. It buys from many provinces in Laos. Mr. Supoj would like to explore whether there would be any possibility to work closely with producer groups in Laos. Nawarin can transfer production and post-harvest technologies and become a buyer of peanut from producer groups in the Project.

247. Mr. Supoj has expressed an interest on possibility to take consession on land to grow peanut in Laos. He has been concerned that direct involvement with producer groups might cause some conflicts with local peanut collectors in Bachieng and Lao Ngyam. His observations from the field visits in Xaiphouthong in Savannakhet and Lao Ngyam in Salavanh were: (1) quality of soils in Lao Ngyam was good for growing peanut; (2) the density of the rows of peanut in Thailand was higher than the density farmers used in Laos; (3) peanut producer groups Laos has to improve yield per ha; (4) he was very concerned with alpha toxin contamination and this issue would be critical for exporting of peanut into Thailand; and (5) human resouce development would be very important factor for the success of a development project.

Figure 113. Mr.Supoj and Mr. Nawin visiting Lao Ngyam (Pictures taken on 12.09.2013)


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248. The other problems that worth to mention are: (1) farmers have been using mixed variety seeds which have different maturity periods so by the time they harvest peanut some of the peanut has not reach maturity period; (2) farmers do not have post-harvest technology and facilities at their places to keep dry peanut in good quality; (3) farmers do not have information on market requirements on individual variety and quality; (4) although farmers may work as a group, they sell their products individually. There is no central organisation or any producer cooperative which could support them technically or financially; and (5) there has been rather limited market infrastructure in rural areas. This issue is complicated and may require contribution from government policies and suitable interventions. It also takes time to develop market infrastructure especially in remote areas.

249. The researcher visited some local agricultural product collectors in Lao Ngyam with consultants from PPO Salavanh. These collectors have been selling peanut to Thai buyers. They complained that sometimes Thai buyers had placed orders but did not collect products from them. The Thai markets were sometimes unpredictable. Many of peanut collectors in Lao Ngyam have their own milling facilities. When they receive orders from Thai buyers, normally over the phone, they will contact growers who are in their connection to supply either fresh (if the order is for fresh peanut), or dry pods to their premises. If level of moisture in dried peanut pods is high, they will let farmer dry their peanut under the sun before the peanut could be milled. Farmers and collectors who attended the meetings organised in Bachieng and Lao Ngyam had raised a similar problem on limited drying facility. The lack of drying facility is one of the problems leading to high level of moisture in the peanut and shelled peanut which is related to the risks of alpha toxin contaminations.

(1) Farmers delivered peanut to a local mill

(2) Drying peanut before milling at a local mill (3) Milled peanut

Figure 114. Peanut growers in Lao Ngyam (Pictures taken on 07.09.2013)


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250. After milling the collectors will hire local women to hand sort the seeds. These workers are paid around 100,000 kip/person per time which they are called to work until the whole milled peanuts are ready to send to Thai traders. After sorting process is finished, peanut collectors pack peanut into jute sacks which they receive from Thai buyers and send the peanut to the Thai trader at collecting point near Chongmek border crossing.

(1) Milled peanut before sorting (2) Local workers sorting peanut seeds


(3) Left: unsorted peanut; Right: sorted peanut

(4-6) Sorted peanut seeds are packed into jute sacks provided by Thai buyers

Figure 115. Milled peanut and sorting process at Lao Ngyam (Pictures taken on 07.09.2013)


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251. The researcher together with Mr. Supoj and Mr. Nawin visited a Thai peanut trader at the collecting point close to Wangtao border crossing. Most Thai traders always come to this point in early morning to check quality of peanut which they have placed the order. Peanut products will be loaded into Thai trucks and cross the border to Thailand after having been checked by the traders. These traders have to be very careful with quality of products; otherwise their shipments could be rejected and returned by the buyers in Thailand.

Figure 116. Thai peanut trader at collection centre close to Wangtao border crossing


252. We found a Thai truck loading peanut for a Thai company called Raitip. The truck travel from Wangtao border crossing to Chongmek and then to a factory in Nakornpathom province the next day. The truck driver said he charged this company 14,000 baht for this shipment because the company has been his regular customer.

Figure 117. Peanut loading onto a truck for Thai customer


III.2.9. Savannakhet Province, Nong District: Banana

253. PPO Savannakhet has selected target sites in Nong and Sepone districts for value chain study of banana. The researcher visited both districts to meet with local line agencies, and villagers to assess potential for commercial productions and outbound logistics between Nong and Sepone to Savannakhet. Field visits to Nong and Sepone districts were organised in late October 2013.

254. The researcher and a consultant from PPO Savannakhet met with the Head of DAFO in Nong district who gave us information that banana producers in Nong district are mostly smallholders who are subsistence farmers. They have been selling banana to Vietnamese traders. However, incomes received from selling banana to Vietnamese small traders were not good and rather unpredictable because in some period there was no trader coming to buy


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banana at all. Sometimes fresh produce were left rotten or used to feed animals. During other meeting with the Customs office in Savannakhet, the Director told us that some transportation companies or truck drivers who delivered products to Nong district would buy banana from Nong or Sepone on their way back to sell in Vientiane.

255. The roads between Savannakhet and Nong were in poor condition after the rains in the rainy season. We visited a village in Nong with an officer from DAFO of Nong district. The roads connecting the village to Nong were small and some parts were difficult to get through. The conditions of roads and bridges have posed questions on transportation of perishable products in the rainy season. We met with villagers and asked whether they would be interested in producing processed banana products apart from selling fresh produces. The consultant from PPO Savannahket had brought some samples of processed banana products for them to try. Although they liked these banana products, they were not certain about markets and their ability or time to produce processed products.

256. Households in this village used solar cell as source of electricity because they were not covered in electricity grid. There might be a possibility for them to produce solar dried banana in small lots (not more than 100 kg/time) to sell in local markets or other nearby areas. There was limited number of villagers who attended the meeting. Most of the villagers went out to work in the field. The field visit was too short to check or observe whether there would be any real interest in participating in food processing activities in this banana value chain development or not.

257. If PPO Savannahket wants to introduce some intervention in this village, it should carry out a full assessment on local capability and willingness to participate in the proposed activities. The inbound and outbound logistics of this village have to be taken into account; otherwise the Project will not be able to implement a sustainable development. If the PPO Savannakhet wants to include Nong in commercial production of banana, PPO Savannkhet should consider Vietnamese markets as the target area because it will be closer to Nong district than Thai markets and there will be fewer problems on logistics of the products.

Figure 118. Meeting with Villagers in Nong District (Pictures taken on 25.10.2013)


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Figure 119. Banana gardens in Nong district (Pictures taken on 25.10.2013)

258. We left this village and travelled back to DAFO office in Nong. The roads linking this village to Nong were small and in some parts we had to divert to other roads to get to Nong. The local bridges have a maximum load of 8 tons. Only small trucks can be used for transportation of products. The unit cost on transportation will be higher than other areas in the province such as Sepone which has better road conditions to the border crossing to Thailand as they can use trucks which can load up to 15-17 tons of bananas.

(1) Road from the selected village to Nong district (2) Bridge (8 ton loading capicity)

(3) Difficult road conditions for trucks with perishable products

Figure 120. Roads connecting a selected village to Nong district (Pictures taken on 25.10.2013)


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III.2.10. Savannakhet Province, Sepone District: Banana

259. Sepone is one of banana production in Lao PDR. Currently the main market for banana in Sepone is Vietnam because of its close proximity. Vietnamese traders not only buy banana from Sepone to sell in Vietnam, some traders have been renting banana gardens from Laotian farmers to produce banana to sell to Vietnam and Thailand. They generally rent the gardens for a three-year contract and start commercial production of banana. Bananas from Sepone sold in Ubonrachthani in Thailand which were produced and sold by Vietnamese traders were called “Vietnamese Banana”. These bananas were considered to be of better quality than banana from Bachieng and Lao Ngyam. A Thai trader said bananas from Sepone were cut when they were more matured and met with Thai consumers’ preferences.

260. However, farmers in Sepone whom we met felt that Vietnamese traders who bought banana from them did not give good prices. In the rainy season they did not show up to buy banana and if they bought banana the prices might go down to 500 kip/kg. In some periods the prices might go up to 2,000-2,400 kip/kg. During the second field visit, a Thai trader joined us and started buying banana directly from Sepone. He told the researcher that there were other Thai traders who were interested to buy from Sepone as the quality of banana was good. The Thai traders who bought banana from Sepone said the competition in Sepone have driven farm gate prices of banana in Sepone from 1,100-1,300 kip/kg in September 2013 to close to 2,500 kip/kg in December 2013.

261. On the way from Nong to Sepone in the third field visit, we accidentally met with a Laotian trader who bought banana in Sepone for a Thai trader in Ubonrachthani. The Laotian trader was buying banana from Vietnamese operated gardens. The Vietnamese producers brought banana by their trucks to wait along roadside. The Laotian trader told us that he bought banana at the price of 1,100 kip/kg and sold to a Thai trader at the price of 1,300 kip/kg. We observed how banana had been loaded into a Laotian truck. Workers who uploaded banana stood on the heap of banana while packing banana bunches into the truck. Although they used some banana leaves to line the side of the truck, the impact on heavy loading and road conditions had caused considerable damages to the fruits33.

262. We saw another banana seller waiting for the truck to collect her banana as we travelled down the road. After the Laotian trader collected bananas to the full load of 15 ton, the truck would travel to a collecting point close to Wangtao border crossing and bananas were transferred into a Thai truck to travel to Chongmek and then to the Thai trader at Charoensri Wholesale Market in Ubonrachthani. The round trip between Chongmek and Sepone is estimated to be around 1,100 Km. The Thai trader who bought this shipment said the distance between Sepone and Ubonrachthani was much longer than the distance between Bachieng and Lao Ngyam to Ubonrachthani and he had to pay more for transportation cost. He would be interested to buy more bananas from Sepone because the overall qualities of banana from Sepone were better than those produced in Lao Ngyam and Bachieng. 33 The researcher visited the Thai trader’s stall at Charoensri Wholesale Market when three trucks of banana from Sepone arrived. Workers on the Thai side were loading bananas into the stalls in into a customer’s truck. There were considerable amount of fruits that were broken or bruised from the transportation processes.


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(1) A truck collecting banana (2) Vietnamese seller and workers (3) Preparing to upload banana

(4) Over ripen banana in the centre (5) Banana bunches (6) Prepare to weigh banana

(7) Placing wooden plank on scale (8) Weighing banana (9) Lining leaves at the side of the truck

(10) and (11) Workers standing on banana while uploading into the truck

Figure 121. Uploading of banana from Sepone for Thai market (Pictures taken on 25.10.2013)

Figure 122. Another producer waiting for a trader to collect banana (Pictures taken on 25.10.2013)


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263. There was no record of export of banana from Savannakhet to Thailand as bananas from Sepone were sent to Wangtao-Chongmek border crossing points and recorded under products from Laos at Piboonmungsakarn Customs Office. From a discussion with a senior officer at the Department of Industry and Commerce, he mentioned that there were exports of banana from Savannakhet to Vietnam around 20 ton/day. 80% of banana exported to Vietnam was unripe banana. As Vietnamese border is close to Nong and Sepone districts, the Vietnamese traders would bring Hyundai trucks which could carry around 6 ton of banana to buy banana from small growers. They might buy around 50-60 bunches at the price of approximately 15,000 -30,000 kip/bunch. The average price per kilogram of banana sold to Vietnamese buyers fluctuated between 500 kip/kg to 2,500 kip/kg depending on season and availability of products in Sepone and Vietnam. Farmers who were interviewed said these Vietnamese buyers would pick the best quality banana in their gardens. The good quality bunches would have around 7-10 hands or tiers per bunch but Vietnamese buyers or traders insisted that they would pay farmers for only 7 tiers per bunch. However, these buyers actually took the whole bunch with them.

264. We visited a target banana producer group led by Mr. Khalum who is the headman of the village in Sepone. There are 33 households in this village. Each of these subsistence households has around 1-2 ha to grow banana. Their main income came from growing agricultural products including banana. Some of them also raise cattle. They have to take their cattle for grazing every day. There was not enough land close to their household which can be used as a common pasture land for the cattle.

265. We visited Mr. Khalum’s banana garden while he was out taking his cattle for grazing. His garden was rather dense and unkempt as he has too many tasks to perform and not enough time to spend to tend his banana garden. He sold banana to Vietnamese traders who came to the garden and picked what they wanted to buy. We visited him twice and had discussed with him what he has been doing and wanted the project to support his group. He mentioned that there were limited buyers in rainy season, and the unsatisfactory prices he got from Vietnamese traders. In some periods the Vietnamese paid him as low as 500 kip/tier. When the research asked what satisfactory prices he would expect from potential buyers, he said he would prefer to sell banana at 2,000 kip/tier or 1,500 kip/kg.

(1) Picture taken from outside of his garden (2) Large grove of banana plants


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(1) Densed & unweeded banana garden (2) Large grove of banana plants with dead leaves

(3) Pheaoseptoria leaf spot (4) Pheaoseptoria leaf spot

Figure 123. Mr. Khalum’s banana garden (Pictures taken on 25.10.2013)

(1) Banana trees clost to Mr. Khalum’s house (2) Bunch of banana (3) Texture of banana

Figure 124. Banana at Mr. Khalum’s house (Pictures taken on 05.09.2013)

Figure 125. A meeting with banana producers in Sepone



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266. We had a meeting with banana growers in the selected village and asked what they would like to do and whether they would be interested in processing banana into more value added products. They had a discussion among members and came to conclude that they would prefer to sell fresh banana under contract or agreement with buyers. If farmers in this group would like to commercially produce fresh banana, they may have to change some of their current practices and work as a group to produce and sell their banana collectively. We asked them to consider whether they could grow Napier or other types of grass to produce fodders for their cattle. By not having to take their cattle for grazing every day, they would have more time left to look after their banana gardens. The other areas which the Project could help them were to transfer technologies for production and post-harvest handling.

267. A local agricultural product collector in Savannakhet who sold banana to Vietnamese buyers said he could collect banana around one truckload of 10-wheel truck per day to send to Savan border crossing point for any Thai buyer who would be interested to buy banana from Sepone. He later called the researcher and said that he had helped a Thai broker from Mukdaharn to buy banana from Sepone. This Thai broker bought banana from Sepone on behalf of a Thai banana trader in Ubonrachthani. He only provided service on transportation between Sepone and Chongmek to the Thai Broker in this case.

III.2.11. Savannakhet Province, Xaiphouthong District: Peanut

268. Xaiphouthong was selected for value chain development of peanut. The researcher visited Xaiphouthong three times between September and October 2013. In the first field visit in early September, the researcher met with a farmer group and in the second visit the owner of Mitchaorai Company and his manager had join the mission to explore whether the company could partner with farmers in the peanut value chain development. In the third visit in October 2013, the researcher visited the first group in Khanthachan and another peanut producer group in Thapho to discuss what they expected from the Project.

269. During the first field visit, we met with farmers who were harvesting peanut and visited their peanut storage for next season’s propagation. The soils in the area are mainly sandy loam or silt loam with low organic matter level and inherent fertility. These soils have low water holding capacity and high infiltration rates. It seemed that yields were relatively low as the result of relatively poor soil quality.

(1) Peanut plot in Xaiphouthong (2) Newly harvested peanut

Figure 126. Peanut in Xiaphouthong district (Pictures taken on 05.09.2013)


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Figure 127. Newly harvested peanut in Xaiphouthong (Pictures taken on 05.09.2013)

(1) Three varieties of peanut seeds harvested at the same time

Seeds with different matuarity levels

Figure 128. Samples of peanut seeds in Xaiphouthong (Pictures taken on 05.09.2013)

270. Farmers in Xaiphouthong have kept this newly harvested seeds for cultivation in the next crop season. Farmers have kept their seeds quite well and we found they have been able to keep seed in good condition. When asked whether they sold these seeds to other growers or not, they said they might sell some amount of seeds to friends or relatives but they did not have enough seeds to sell for consumption. They have been growing local varieties, Tainan 6 and recently they bought some seeds from Thailand which they called “Jumbo” as the sizes of the pods and seeds were larger than those of local varieties or Tainan 9. In the previous crop for commercial, they had learnt that their Jumbo variety was popular with buyers because the size of the seeds and the flavor. They planned to grow more Jumbo variety for commercial in the near future.


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Figure 129. Storage and drying space for peanut in Khanthachan, Xaiphouthong


(a) Mr. Supoj checking quality of seeds (b) Samples of peanut seeds

(c) Pods of Jumbo vareity (b) Jumbo seeds on the top

Figure 130. Peanut cultivation area in Xaiphouthong (Pictures taken on 11.09.2013)


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271. After visiting farmers in Xaiphouthong we visited a temporary border crossing point at Tha Makhood which is opposite to a temporary crossing point in Amnartcharoen province of Thailand. The distant between Amnartcharoen and Nakornsawan province is shorter than that of Mukdaharn and Nakornsawan. However, products have to been transported by a pulley system down to the bank of the river before taken across Khong River by small boats. After crossing the river products will have to use another pulley system on the Thai side to bring it up from the river bank and upload into a Thai truck. Although we observed workers bringing products imported from Thailand up to the customs office, it was not an ideal route for outbound logistic of peanut from Savannkhet to Thailand. After comparing Tha Makhood with International permanent border crossing points at Sawan and Wangtao border crossings, Wangtao seemed to be the best choice because it has more service providers and less complication in export documentations and customs clearance than the other two border crossing points.

(1) Going down to the river bank (2) Uploading from the boat (3) bringing products up by pulley

Figure 131. Pulley system to transport goods (Pictures taken on 11.09.2013)

(1) Customs Office at Lao Makhood (2) Uploading goods into a truck

Figure 132. Uploading products from Thailand at Lao Makhood (Pictures taken on 11.09.2013)


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272. In late October 2013 the researcher visited Khanthachan and Thapho villages in Xaiphouthong with the consultant from PPO Salavanh and DAFO officer to meet with peanut growers. Farmers in the area grow wet season rice in April and harvest rice between the end of October to 15 November. Normally after rice is harvested, they start preparing the plots for a few days and grow peanut in their rice field between 11-20 November. During the rainy season they grow peanuts in separated plots. Yields at the rainy season are relatively low; so they would keep seeds for reproduction rather than to sell to traders.

273. We asked peanut growers in Khanthachan whether they could change from their current practice of using mixed variety seeds to separating seeds into individual variety and grow each variety in different plots. This would allow them to harvest each variety at it full maturity than the current practices. Currently cultivation areas in the target village are relatively small to produce for export. However, if they can sort the seeds and grow each variety separately, they should be able to produce seeds for reproduction and earn better income. Seeds for reproduction are sold at higher price than seeds for consumption. In addition there are high demands for seeds for reproduction in local and internal markets. They will not have to rely on buyers from Thailand. Farmers agreed that they would select peanut into individual variety and were interested to produce seeds for reproduction.

274. Farmers in Thapho started growing Tainan 9 variety in 2012 in the dry season. Yield was around 1.8 ton/ha. They used to grow a peanut variety from Vietnam which had the yield of 1.2 ton/ha. They bought some seeds from Thailand from time to time and in small amount34. They said they would be interested in seeds production for local and internal markets. The group will expand cultivation areas to 50 ha in areas which have sufficient water supply. So far they have had limited seeds for reproduction. We asked them to contact peanut growers in Khanthachan for seeds of Tainan 9 and Khon Kean 6 or Jumbo.

III.2.12. Snack Market in the Three Target Provinces

275. While travelling in the field visits the researcher also surveyed snacks selling in the target provinces. There were various types of snack imported from China, Thailand, and Vietnam selling in the shops but very few locally made sweets and snacks available. The locally produced snacks found in the retail shops were rice-based snacks such as rice crackers (Khao Khob) and crispy rice curl (Thong Muan). The researcher found Khao Khob35 which is one of the traditional snacks in Laos was sold at 10,000 Kip per bag in a shop in Savannakhet. The researcher asked some young ladies who were buying snack at the shop on their preferences. They said they preferred snacks which have attractive packaging, easy to carry, made them look fashionable, and tasty. When asked why they bought Thai products, they said the products carried good image on quality and tastes. When asked whether they would buy Khao Khob or not, they said they would not because it was too big to consume in one time and it difficult to carry or keep for future consumption after opening the package.

34 Thailand allows export of peanut seeds for consumption but not seeds for reproduction. 35 This type of snack is also found in Thailand and is called Khao Tan. Khao Tan in Thailand is produced at much smaller sizes (around 7-10 cm diameter or at a smaller size around 2-3 cam diameter per piece.).


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Figure 133. Khao Khob and crispy rice curl from Savannakhet (Pictures taken on 06.09.2013)

276. Snacks from Thailand seemed to meet with the tastes of Laotian younger generations. They recognised Thai products that were advertised when they watched movies or dramas from Thai television programmes. This IFAD-ADB project on value chain development should help smallholder to develop not only fresh perishable products but also some processed products which have more value added to them. These products may help smallholders reduce the risk of oversupply and fluctuation of prices. Samples of snacks found in Lao market are showed in Figures 134-135.

(1) Peanut bars (2) Boiled peanut

Figure 134. Locally produced snacks at Pakse market (Pictures taken on 20.10.2013)


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Figure 135. Snacks imported from China, Vietnam, and Thailand (Pictures taken during 6-7. 09.2013)


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CHAPTER IV. VALUE CHAIN ANALYSES

IV.1. Value Chain of Agricultural Products

277. Many poverty reduction and development projects focused mainly on improvement on productivity and expansion of production areas without paying attention to other components related to value chain of agricultural products such as developments on logistic or market infrastructures. Some executing agents of these development projects viewed outputs of their implementations as being able to use budget and resources according to what had been planned and approved by the donors. Some executing agents could go further to help smallholders of target beneficiaries to improve their livelihoods significantly and they were able to maintain sustainable development project even after the funding ended. Some development projects were designed and focused on poverty reduction, while the others emphasised on commercial production or linking smallholder producers to market. Recently many development projects have shifted to value chain development. Value chain approach is widely used as a supporting tool for decision making (Porter, 1985), or a conceptual tool to employ when developing strategic plans for agribusiness (Gloy, 2005).

278. Michael E. Porter (1985) pointed out that value chain could be used as a decision support tool. He suggested that components of the value chain could grouped into primary activities and supporting activities and used as strategic management tool. Many development projects had not paid attention to the supporting activities which were important in making the value chain of agriculture products become sustainable. Without proper firm or organization infrastructure, human resource management, technology and procurement, the development projects may not have good foundation to become sustainable development projects.

Figure 136. Value Chain Developed by Porter (1985) Source: http://en.wikipedia.org/wiki/Value_chain 279. Gloy (2005)36 mentioned that value chain could be a very useful conceptual tool to be employed to understand the factors that impact the long-term profitability. It can be used when developing a successful strategic plan for agribusiness. He stressed that the value chain was a set of activities, services, and products that lead to products or services which

36 For more detail, please see: http://www.agofthemiddle.org/pubs/ValueChainGuide.pdf

http://en.wikipedia.org/wiki/Value_chain


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reach the final consumer. Figure 137 is adapted from value chain of agribusiness suggested by Gloy. It is expected that the proposed value chain could help to bring to attention some questions regarding: (1) how the selected product could reach the final consumer; (2) the structure or economic relationships between players in the chain; (3) how this structure would change over time; (4) the key threats to the entire value chain; and (5) the key determinants of the share of the profits created by the value chain.

Figure 137. Key processes and inputs of value chain of agricultural products Source: Adapted from Gloy (2005)

280. List of some questions related primary and supporting activities in the analyses of the value chain:

Primary activities: Inbound

logistics What are agricultural inputs required to bring into the selected areas? What are the costs involved in inbound logistics of these inputs? What are customs procedures, taxes, and duties involved?

Operations What are the production plans? What are the targets and outcomes of the operations? Who will be involved in each activity and what types of labour are required? What are the cost and timeline of the operations?

Agricultural Input Supply

Agricultural Production

Post-harvest Handling

Trading

Processing

Distribution

Wholesalers

Retailers

Consumers

Farmers, farmer groups, producers associations, agriculture cooperatives, or community enterprises

Producer groups/associations, agriculture cooperatives, or community enterprises, technical staff, extension staff, research station, consultants, and academic Subcontractors, brokers, buyers, product collectors, community enterprises, government enterprises, importers, exporters, wholesaler, and retailers

Millers, refiners, food processors, manufacturing plants, women groups, local producers, and small households

Distributors, shipping agents, forwarders, buying agents, packing houses, and distribution

Wholesale markets, local markets, local vendors, other wholesalers, modern trade, supermarkets and department store chains

Local agricultural product sellers, local shops, specialised food shops, supermarkets, and department stores.

Land, labour, farm equipment, seeds/propagation material, fertilisers/chemical inputs, fuels, water, and financial services


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Primary activities: Outbound

logistics How to bring products to other stakeholders and end customers? What are the conditions and routes required for outbound logistics? How far and what are the costs of bringing products to local and export markets? What are regulations that hinder activities related to outbound logistic operations?

Marketing and sales

Who will be responsible for marketing and sales? What channels to be used? What are the costs of marketing and sales and who will pay for them? What are the target markets and buyers and how to reach them? What are the positions that the selected products aim to be? What are required promotional activities related to marketing and sales?

Service What services are required? Who will provide them and at what cost? Can we do it ourselves, or outsource it, or have partner doing it for us?

Margin What are the margins expected in primary activities? How to allocate profits among stakeholders fairly?

Supporting activities: Procurement What are the results of need assessment?

What will be the most efficient methods to get what are required? Will the benefit be higher than the cost of the procurement? How long would it take to get the products or services? How to keep procurements clean and in line with the guidelines and regulations? When problem happens, what should be done and who will be accountable?

Technology Can the existing technology meet the current requirements? What types of suitable technologies and inputs are required? Who will provide these technologies and to whom? How often does evaluation of technologies take place?

Human resource

What are human resource development plans for targeted groups? What key capability and skills are needed to be developed?

Firm infrastructure

What types of organization structure are required for the value chain development of the selected products? What are the roles and responsibilities of stakeholders?

Margin What are the margins of the supporting activities? How to distribute profit among stakeholders?

281. CIRAD’s Handbook of Participatory Actor-Based CADIAC Approach has suggested five stages of commodity chain analysis (Figure 138) which comprises of: (a) The first stage which looks at international environment (market, agreements); (b) The second stage which looks at national environment (technical, national economic, socio-politic); (c) The third and fourth stages which look at structure and functionality (actors and activities), production, agro-industry, trade, consumption, provision of inputs and services; (d) The last stage which looks at factors on competitiveness, indicators, scenarios and simulation which lead to proposal for action and policy orientation.

Thoroughly analyses of these stages would help to select proper measures and interventions for the selected products and areas which can help linking smallholders to market.


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Figure 138. Stages of commodity chain analysis Source: From Figure 2, CGPRT No.29, CIRAD

282. Diagram in Figure 139 has been adapted from Torero (2011)’s Figure 2. Torero identified markets into three groups which are local and self consumption, provincial and national markets, and lastly international markets. There are three groups of farmers operating in these markets from (1) subsistence farmers, (2) local market oriented farmers, and (3) globally competitive and market oriented farmers. The proposed model in this study is different from the model suggested by Torero. Direction of the arrow from farmers with low income moving toward farmers with high income when they move from subsistence farmers in local market to provincial or national market is in opposite direction to that of Torero’s.

INTERNATIONAL MARKETS

PROVINCIAL AND NATIONAL MARKETS

LOCAL MARKETS AND SELF CONSUMPTION

HIGH INCOME SMALL FARMERS LOW INCOME SMALL FARMERS

Figure 139. Small farmer heterogeneity Source: Adapted from Figure 2, Torero (2011)

3. Globally competitive and market

oriented farmers

2. Local market oriented farmers

1. Subsistence farmers


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283. In Thailand the three types of farmers co-exist. Subsistence farmers sell their excess produces to local markets or traders. At the same time there are farmers who produce these three products as local market oriented farmers, and some advanced farmers or farmer groups can produce products which the national or international markets require. The Thai local market oriented farmers used to be subsistence farmers who have gradually earned enough income and skills to expand their production and being able to further supply provincial and national markets. Among many factors that help those farmers to move away from being only subsistence farmers are Thai government’s policies on transfer of production technologies to improve productivity and to reduce cost of production.

284. There are various government measures to support the formation of community enterprises (CE) and to work collectively. These CEs get government supports in productions and market accesses. They can join promotional activities organized by the government and their local administrators in product development. They receive subsidies to attend trade fair and promotional activities. In many cases they can obtain technical and financial supports on processing methods and product development as well as assistance on packaging development for both fresh and processed products. In many rural development projects, the public supports include business matching with potential buyers.

285. Local market oriented farmers can work as members of agricultural cooperatives or CE. Some of them can export agricultural products to international markets. Thayang Agricultural Cooperative and Banlard Agricultural Cooperatives in Petchburi province are two of the outstanding of producer groups which export Hom Thong banana to markets in Japan and sell fresh produce to supermarkets and modern trade in the country such as Tesco Lotus, Tops, and Big C chain stores37. Collective bargaining power and working on production planning are important for the success of these two groups. There are some individual farmers who export Khai banana to China38 as well as banana producers in Surathani and Chumporn in the south of Thailand who can sell banana to national and international markets.

286. While encouraging smallholders who are subsistence farmers to become market oriented farmers, the IFAD-ADB Project needs to assess their willingness to embrace on the added requirements and responsibilities. Good strategic plan on human resource management and capacity building for farmers and other stakeholders as well as assurances on financial rewards from doing better farm management and related activities are all essential for the success of the project.

IV.1.1. SWOT Analysis

287. SWOT Analysis is another tool to assess viability of business operations. This Project may use SWOT analysis to analyse strength, weakness, opportunity, and threat involved in value chain development of the three selected products. A thorough analysis would help policy makers to understand and support operations and implements of the Project. The well

37 Please see Annex I for Thayang Agricultural Cooperative’s operations. 38 Please see Annex 2 on Khai banana producer in Chanthaburi province


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designed measures or interventions may turn weakness into strength and reduce impact from threats and promote activities which increase opportunity for smallholder farmers.

288. A brief SWOT analysis of the value chain of the three products in Champasak, Salavanh, and Savannakhet is shown as follows:

Table 53. SWOT Analysis for value chain development

STRENGHT

Meet with government policies Benefits for smallholders and other stakeholders in the value chains Large production areas Organic production Fertile soil Product availability Financial supports from IFAD-ADB

OPPORTUNITY

Moving towards new varieties that meet market requirements and higher value added products New markets for raw materials for processing plants in other countries New market for semi-processed products for processing in other countries Generate more income for smallholders

WEAKNESS

Limited access to production inputs Limited modern technology for production and post-harvest management Production are in remote areas which have poor logistics Lack of market information, market access, and financial services No grading system or product standards Limited stakeholders in processing

THREAT

Poor product images/reputations Pest and epidemic outbreaks in banana production (panama disease, wilts, stock weevil, leaf spots and rollers Alpha toxin contamination in peanut Loss of Thai market to other Asian competitors Processing plants reject products from Laos due to unmet quality requirements

289. The objectives and goals of this IFAD-ADB project are in line with policies of the Government of Lao PDR. The three products selected are under the Contract Farming Agreements between Lao PDR and Thailand. This Project has selected Thailand as a main importing country. There have been high demands for quality products in Thailand for all of the three products as production areas in Thailand have reduced over the years while demands for fresh and processed products have increased.

290. Although some of the products from Laos arrived in good quality, there were some of them which were not in good qualities as there were no grading systems or standards to select them at farm gate. Thai buyers have to sell them at relatively low prices. Thai buyers also imported some of the three products from other neighbouring countries and Asian countries such as Cambodia, China, Indonesia, India, Japan and Korea, and recently volume of trade between Thailand and Myanmar increased significantly. After the end of 2015, the AEC market will be opened up. Competitions from other ASEAN countries will be intense. Smallholder producers have to be well prepared.

291. Thailand and Laos also signed a Subsidiary Agreement Specifying Road Transport Arrangements on 17 August 2001 which has clauses cover transportation of passengers and


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transportation of goods between Lao PDR and Thailand. This Agreement has been renewed automatically from year to year. As Laos is also a member of ASEAN countries, the three products also enjoy tax and duties privileges from Thailand.

292. In terms of technical aspects, there are still rooms for improvement on commercial production such as selections of crop varieties, production techniques, post-harvest handling, and marketing in local and international markets. Currently most of farm households are subsistence farmers which produce for consumption and local markets in their areas. To encourage smallholders to move upward to provincial and national or international markets will require sufficient transfer of technical knowledge and skills to these farmers. Farm households that sold some produces increased from 35% in the 1989/99 Census to 71% in the 2010/11 Census, while the percentage of farm households that produce with the main purpose for sale increased from 6% in the 1989/99 Census to 30% of farm households surveyed in the 2010/11 Census. This means that less than one third of total small farm households have been active in commercial production.

293. During the field surveys in the three provinces in Laos, the researcher found that farmers who live closer to the main cities or closer to border crossing areas tend to produce for commercial than farmers who live further away. They tended to have more market information than those in the more remote areas. Subsistence farmers in remote areas still have to perform various farming activities in producing main agricultural products for consumption and local markets. They considered banana, sweet potato, or peanut as supplements to their main farming activities.

294. There are misperceptions among farmers and some staff of local line agencies that these three selected crops needs little attention or can be left to grow without much effort. This practice does not support commercial production which requires planning of production with proper agricultural production inputs and timely farm management to ensure quality and availability of products. Most smallholder farmers have faced problems on over-supply and cyclical drops of prices when their products came to the market at the same time. They also do not have bargaining power as most of the products were sold without any grading system or standards on quality. For example, peanut has been sold as mixed varieties which have different maturity time and sizes; banana and sweet potato have been sold without standards on size or quality.

295. We visited a farmer group in Sepone which members have very little time to look after their banana gardens as they have to spend time on raising cattle. When asked whether they would be interested in growing fodders in the area close to their farms or gardens collectively to reduce time to take the cattle for grazing and spend time to tend their banana gardens, they were interested to do so. When asked whether they would be interested to produce some processed products, if the project provided instructors to teach them. They were reluctant and said they would prefer to sell fresh produces to buyers. Although processed products might generate additional income, they were not willing to do so because it might be conflicting with the time they have to do other farm or household works. They were also uncertain with production and market of these new products.


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296. Limited technical production knowledge also can create problems on quality of products. For examples growing mixed variety seeds, which smallholders have been using continuously meant it would be difficult for them to harvest fully matured peanut. Drying process and proper storage of seeds have to be improved to ensure that peanut seeds would not have fungus and suffered from alpha toxin contamination. Thailand has regulations on level of alpha toxin which food manufacturers have to comply to. The high level of moisture in seeds would cause imported products to be rejected by the Thai buyers. Education on production, farm management, and post-harvest handling will help to avoid these risks.

297. Technical shortage we found during the survey is limited knowledge on post-harvest management handling. Proper knowledge should have helped farmers to reduce agricultural wastes during harvest, storage, and transportation. If the IFAD-ADB Project wants farmers to move away from being subsistence farmers to becoming farmers who can produce for national and international markets, it is imperative to pay attention to how to reduce losses by using modern production technologies to improve quality of products and to reduce cost of production. Competitive farm management requires farmers or growers to plan their productions and produce what markets require. They will have to increase yields and reduce cost of production. To produce products at the right time and meet with market requirements are essentials for commercial production of agricultural products.

298. If farmers still use conventional and unplanned methods, they would not be able to compete with market oriented farmers. Banana, sweet potato, and peanut from Laos have been exported to Thailand; however, the prices were not as good as farmers expected. The majority of Laotian farmers are still subsistence farmers and produce for local market rather than becoming market oriented farmers or the globally competitive, or market oriented farmers. Trading and exporting have been carried out mostly by other players in the value chain such as local agricultural product collectors or commodity product traders/brokers in Laos who work closely with their Thai counterparts.

299. During one of the field visits we were accompanied by potential Thai buyers who wanted to export fresh peanut and banana from Laos to Thailand. However, business registrations for foreigners are complicated, difficult, and take long time to do. One of the suggestions these potential partners received from local officers was to work with Laotian partners, normally traders pr product collectors, who already have business registration and export under their Laotian partners’ names. To find a business partners who are willing to work with Thai partners need times, study, and arrangements. Currently local agricultural product collectors felt that Thai business investors or traders might become their competitors by buying products directly from farmers. Resistance from local operators has become an issue of concerns for Thai investors who wanted to work with farmers in Laos.

IV.2. Stakeholders’ Roles and Responsibilities

IV.2.1. Agricultural input suppliers

300. Although there are shops selling agricultural inputs in some villages or Khum Bans, there are still limited numbers of suppliers of quality seeds, or propagation materials. One of the important inputs in commercial agricultural production is water supply. In some villages


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which are not in irrigated areas, the number of crops will rely mostly on rain or natural source such river or canals. Investment in irrigation is far beyond the reach of smallholders and should be in the responsible of the public sector. Many activities in the value chain require input suppliers such as financial service in order to support production or other related activities which help smallholders and other stakeholders to perform activities in the value chain. Developments, supports, or assurances for these input suppliers are essential in the value chain development.

IV.2.2. Producers of Agricultural Products

301. Smallholder farmers in the selected areas cannot work individually, if they want to participate actively and profitably in the value chain. They will have to work collectively to increase their competitiveness in the markets. By working collectively they can share best practices, technologies, production planning, and also have more bargaining power to deal with brokers or buyers. The recent trends in Thailand indicate that farmers who are members of producer groups tend to become more successful in producing and marketing of their products. Many agricultural cooperatives or small community enterprises can develop more processed products which are value added in addition to their original products. By combined wisdom and operations, they can have more division of labour than individual farmers who have to perform many tasks by themselves. Producer groups can buy agricultural inputs cheaper as the combined volume makes it cheaper than to buy as individual buyers. Some groups share farm machinery and equipment, or even exchange labour among the members.

IV.2.3. Agricultural Product Collectors/Brokers

302. Agricultural product collectors in the three target provinces have been working with farmers and buyers. Collectors are performing the roles of service providers or middlemen for farmers and buyers of agricultural products. They can also transmit information between producer and buyers. The roles of agricultural product collectors are essential when the producers are smallholders and have limited access to market and information. As we can see in Thailand and Laos, product collectors can sometimes provide financial supports as small loan or cash advance to growers, and in some cases they get money from buyers and then lend the money to growers. The relationships of agricultural products collectors and smallholder farmers also have social contexts in addition to their roles as buyers or brokers in the value chain of agricultural products.

303. The IFAD-ADB project may consider some interventions related to these agricultural product collectors who have more exposure to market, information, and connections with buyers than farmers. Most of them might start working as growers and moved up to become product collectors. This Project which is focused on value chain development should encourage local collectors to actively participate in the value chain as partners of the producer groups. Technical knowledge can be transferred to agricultural product collectors who can share or passé them on to smallholder farmers who sell products to them for examples: collecting and receiving agricultural products, transport management, storage management, supply management, work planning, and risk management.


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IV.2.4. Buyers and Brokers of Agricultural Products

304. In most cases agricultural products at local, provincial, national, or international markets need buyers or brokers who collect or buy and send these products from farmers to consumers or other product processors. They normally work closely with local agricultural products collectors who know farmers in the target production areas. These buyers can be the native of Laos or Thais. Buyers or brokers have information on requirements of customers and manufacturers which they transfer to producers before buying and sending products to other players in the value chain.

305. Findings from the field visits showed that local collectors said they understood issues related to quality of products which Thai buyers complained on products from Laos. Some Thai buyers said they lost money when qualities of products received were poorer than the expectation of consumers or manufacturers and the products were rejected. At the same time some agricultural product collectors said sometimes buyers ordered products from them and cancelled the order after they had paid farmers, or refused to take some of the products, or rejected the whole lots. When farmers were asked whether they could provide good quality products or not, they said they could provide good quality products, if they were paid more for the better quality. The current system of paying fixed prices for all quality did not motivate them to produce better quality products. There may be many explanations offered by each of the players in supply chain. However, it seemed that the centre of the problem is the issue on quality of products.

306. In Thailand there are grading systems for products related to wholesale prices of them. This Project may explore the existing standards or grading systems and adapt some of them to the three selected agriculture products. For example bananas at Talad Thai are classified by variety of banana, size, and level of ripeness. Sweet potato is classified by varieties, origin of products, sizes, and colour of texture. Peanut are classified by varieties of products, quality and physical properties such as sizes of pods or seeds, colour of husks, fresh or dried or cooked, and shelled or not shelled. Currently there is no detailed information on standards available to be used by Laotian agricultural product collectors, or growers.

IV.2.5. Wholesalers and Traders

307. Wholesalers and traders buy products for sale to other wholesalers, retailers, manufacturers, and other professional buyers such as restaurants, hotels or food shops. They buy products in larger lots, then sort and assemble into required lots, or break the bulk and repack the goods into smaller lots for buyers39. From the field visits in Thailand, there are wholesale markets and wholesalers of agricultural products in most provinces. These wholesale markets and wholesalers are active players in the value chain. In Champasak, Pakse New Market is a mixed market for wholesale and consumers. It is a trading place for agricultural products not only from the southern provinces of Laos but also from other parts of the countries. Khua Din Market in Vientiane is also served as wholesale and retail market similar to that of Pakse New Market. 39 http://en.wikipedia.org/wiki/Wholesale


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308. The Department of Internal Trade40 of the Ministry of Commerce in Thailand announces daily retail and wholesale prices of some agriculture products in Bangkok on its website and in other public media such as radios and newspapers. The Office of Agricultural Economic41under the Ministry of Agriculture and Cooperative also publishes prices of some agricultural products providing daily, monthly and annual average prices. The larger wholesale market for agricultural products such as Talad Thai and Simummuang markets also publish and broadcast daily average wholesale prices of agricultural products. These two markets also present information on average wholesale prices annually and biannually.

IV.2.6. Retailers

309. Retailers who sell agricultural products to end-users or consumers are retail shops, department stores, retail chains, supermarket chains, hypermarkets, convenient stores, and shops in shopping malls or local markets. The modern trade operators are becoming major players in retail business in Thailand. Department stores and supermarket chains are buying fresh agriculture produces not directly from individual farmers but they may buy products from producer groups or packing houses who process agriculture products into consumer packs for them, or buy fresh produces in bulk and sell them in loose form to be weighed and packed at selling points. They may buy products to sell from other buyers, brokers, wholesalers, traders, or from packing houses which have contracts with them.

310. Of the three selected products in this study, fresh bananas are sold in supermarket, department stores, or shops of retail chains at the average prices 60-90 percent higher than in normal local markets. Fresh sweet potatoes which are sold in these modern trade chains are also premium or imported products. However, peanuts are sold mostly in cooked or processed products rather than as fresh pods.

311. Supermarket chains in Thailand buys banana under an annual contract with suppliers. The contracts specify amount to be delivered in a year time and with strict specification on quality and physical appearance of the products. Wholesaling prices can be adjusted by the two parties every month according to supply and market going prices. Retail prices are set according to market prices of each product plus transportation cost, management expenses, and margins in the supply chain.

312. Currently most modern trade operators are buying locally produced fresh banana from many sources in the central parts of Thailand such as Pathumthani, Rajburi, Suphanburi, Pracheubkirikhan, Petchburi, and Chanthaburi. Banana can be sold as a whole tier either as green or semi-ripen, or ripe banana, or in a package of 3-4 banana/bag. The average sizes of Thai families especially in urban areas have becoming smaller or a nucleus family. Processed banana products which are sold in modern trade can come from individual small processors, community enterprises, small producer groups, or manufacturers.

313. Convenient stores such as 7-11, Tesco Express, and Family Mart are among major buyers of process banana and peanut products. Processed banana and peanut products selling in these convenient stores which open 24 hours per day come from all parts of Thailand to 40 http://www.dit.go.th/ 41 http://www.oae.go.th/main.php?filename=price


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serve diverse tastes and preferences of customers. Producers or suppliers have to work with product development specialists and/or the chain’s buyers to improve products or packaging to meet with the stores’ requirements. Processors may get advices on types of products, flavours, and packaging from buyers before their products can be bought to sell in the convenient store chains.

IV.2.7. Other Service Providers in the Value Chain

314. Service providers such as financial institutes, shipping agents, forwarders, logistic companies are providing services which facilitate the movements of products from producers and other stakeholders to consumers. They provide services in exchange for fees. Currently there are rather limited numbers of service providers in the three provinces.

315. Some Thai buyers work closely with their local product collectors on whether who will be responsible for transportation of the products. Normally buyers or wholesalers pay the price of transportation from border crossing points to designated places in Thailand. Current outbound logistic management of perishable fresh produces requires urgent improvements. Amounts of damages or wastes from transportation have been quite high and require some remedies.

316. This Project should consider how to reduce the number of loadings from the current practices especially in the case of fresh banana. It may be important that logistic companies or service providers in Laos work for solution together with the Thai buyers and wholesalers in loading practices and whether they can agree on using Thai trucks to transport products from collecting points or collection centers set up by the Projects to Thailand instead of using various vehicles which involved many uploads and downloads of fresh produces.

IV.2.8. Local Line Government Agencies

317. Government line agencies are important players in value chain development, for example MAF, DOA, DIC are responsible for regulations regarding issuances of the phytosanitary, C/O certificates, and Form D, and on speed in getting these documents ready for shipment which are important for perishable products. Meetings with PAFO and DAFO offices showed that there are technology transfers from local line agencies of MAF on selection of varieties of cash crops, production techniques to farmers. However, there were still limited transfer of knowledge on post and harvest handling. During the field visits, the researcher also met with Officers of the Customs Offices in Savannakhet to get information on border trade of Savannakhet-Mukdaharn border crossings.

318. In some target areas the Heads of DIC have been active in supporting potential opportunities on initiatives on processing of agricultural products and capacity building for smallholder producers, especially with women unions or associations in their areas.


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IV.3. Flows of Agricultural Products

319. Along the value chain there are value added at each stage. Those who has more control over costs related to production and logistics and having good management on quality of products may get better profits than those who do not. Apart from farmers, agricultural product collectors of banana, sweet potato, and peanut in the three provinces there are other active players who provide services in bringing products to market either at local areas, national and export markets. Farmers bring their produces to the collectors’ premises or the points they agreed upon. The collectors buy products normally in cash from farmers and sell to buyers or traders. The local agricultural products collectors arrange for transportation from the collecting points to the border crossing or delivery points. They may act as brokers or agents of buyers on both sides of the border. These local collectors, especially in the case of peanut, can be the millers who provide screening activities or quality control for dry peanut seeds before they send the seeds to Thai buyers. In banana and sweet potato, we did not see any type of screening activity.

320. Agricultural product collectors have to register with the MAF. They can register in more than one province and some of them work with importers of agricultural products either from Vietnam, Thailand, or other countries. These collectors have information on products and prices and export quantities. They also provide some small loans or seeds to farmers who sell regularly to them which may be considered as cash advance for the fresh produces from farmers. These collectors normally do not prepared export related documents by themselves. They sort help from logistic service providers, or shipping agents, or other bigger traders who have staff to prepare export documents such as phytosanitary, Form D, Certificate of Origin (C/O) and apply for permission or getting signatures from local line agencies for them. Collectors pay fees for the preparation of these export documentations.

321. As mentioned, there are a lot of activities and players who participate in the movement of products from producers/growers to either the manufacturers who use products for further processing products or the consumers in the markets. Each of them has concerns on issues related to their activities and profit margin or benefits that they may receive.

Figure 140. Main players in the flow of agricultural products

322. Diagram in Figure 141 shows some concerns of the main players in the flows of products from producers to consumers.

Logistic Service Providers


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Figure 141. Concerns of key players in the value chain

IV.4. Border Trade between Lao PDR and Thailand

IV.4.1. Border Crossing Points

323. Logistic service provider will transport products from agricultural product collectors close to border crossing points and either send to designated factories of customers or send to buyers or traders at wholesale markets. The service provides are responsible for the outbound logistics from buyers to retailers, especially when the companies or buyers do not own or run transportation fleets. There are two major permanent border crossing points between the three target provinces and Thailand. Products from Champasak and Salavanh provinces normally pass through Wangtao border crossing in Laos to Chongmek border crossing in Piboonmungsaharn in Ubonrachthani province.

324. It should be noted that during this study there was no record on export statistics of the three selected products at the Customs Offices in Savannakhet and Mukdaharn. All of the three selected products have been exported through Wangtao-Chongmek border crossing points even though products come from Savannakhet province. Thai traders interviewed in this study said it was easier and cheaper to export products from Wangtao-Chongmek border crossing points than the Savannakhet-Mukdaharn border crossing points.

Logistic Service

Providers

Cost of products increases and affects demands in the markets; cyclical shortages of products; unreliable suppliers; poor quality of products increases cost, increases prices and reduces profit; increase cost of logistic, etc.

Cost of products bought and profit received; cost of transportation of products to shops; fluctuated demands; food safety issues; standards, quality, and packaging to meet customers’ expectation, products’ shelf-life, etc.

Quality of products and prices do not meet expectation; limited availability or accessibility to products; limited information about products, food safety issues and health concerns, perishable nature of products, shelf-life of products, etc.

Changes in government policies or regulations or agreements with partner countries; cost of fuel; labour cost; conditions of roads and load level; cost of vehicles and maintenances; insurance cost; road or toll fees; natural disasters; accidents; changes in demands of customers, etc.

Higher cost of agricultural inputs; limited assistances on production and post-harvest technologies; limited credit; low profit; no markets/buyers; climate changes, outbreaks of diseases, natural disaster, etc.

Complicated regulations related to trading and exporting of products; fluctuation of prices and unpredictable demands for products; limited funds to buy products; risks of rejection of products; unmet quality of products; high costs of transporting products to buyers; competition from other buyers, etc.

High quality requirements from manufacturers or consumers markets; unpredictable quantity; risks of products being rejected; limited source of funds; complicated export procedures or documentations; increased logistic costs; competition from other buyers, etc.


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325. Border crossing points in Savannakhet in Laos and Mukdaharn in Thailand are on the East-West Economic Corridor, which links Dong Ha and Lao Bound in Vietnam to Savannakhet in Laos, and in Thailand it passes through Mukdaharn, Khon Kean, Phitsanulok, Sukhothai, Tak, and Maesot to Mywaddy and Mawalamyine in Myanmar.

326. Potential buyers of banana are located in Bangkrathum district of Phitsanulok, and the nearby Sukhothai province. Another potential buyer of peanut has a factory in Nakornsawan which is not far from the East West Economic Corridor. The distance between Mukdaharn to Bangkrathum district in Phitsanulok is 598 km, while the distance between Ubonrachthani to Bangrathum is longer at 750 km. However, the higher expenses and limited logistic service providers in Savannakhet-Mukdaharn border crossings make Wangtao-Chongmek border crossing to be a better choice for Thai buyers. So far volume of trade in agricultural and other products between Lao and Thailand at Wangtao-Chongmek border crossings has been higher than the volume of trade at Savannakhet-Mukdaharn border crossings.

Figure 142. East-West Economic Corridor Source: Associate Professor Somchai Pornchaivivat, (July, 2008)

327. The East West Economic Corridor can be a potential route for exporting banana and peanut from Laos to Thailand. If trade between Savannakhet-Mukdaharn is continuously promoted and expenses associated with export procedures decrease, it should give more opportunities for banana and peanut growers in Savannakhet to export to Thai markets. As


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this study is focus mainly on Thai market another study on trade between Laos and Vietnam in exportation of banana and peanut should provide good insights in this trading route.

Figure 143. Border crossing points and locations of potential Thai buyers Source: Adapted from a map of Associate. Prof. Dr. Ruth Banomyong (July, 2008)

IV.5. Costs and Expenses related to Selected Products

IV.5.1. Cost of Products in the Value Chain

328. Table 54 provides a summary of average buying and selling prices offered by the main players in banana, sweet potato, and peanut from Bachieng district in Champasak, Lao Ngyam district in Salavanh, and Xaiphouthong, Sepone, Nong districts in Savannkhet, Vientiane, and Charoensri market in Ubonrachthani. Information was collected from interviews with farmer groups, agricultural product collectors, local line government agencies, and retailers in the markets between September to October 2013.

Champasak – Ubonrachthani

Border Crossing Points

Savannakhet –Mukdaharn

Border Crossing Points Nakornsawan:

Peanut buyer

Bangkok and surrounding provinces:

Wholesale Market for Agriculture Products

Phitsanulok: Banana buyers

Ubonrachthani: Agricultural

Wholesale Markets


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Table 54. Selling and buying prices of the three selected produces

Banana Sweet potato Peanut Yield 400-500 ton/ha

Harvest 24 times/year for 3 ha garden; earning between 1-2 million kip/ha/time

25-35 ton/ha Two crops/year First crop harvest in Aug.-Sep. Second crop harvest in Mar.-Apr.

1.8 ton/ha-2.05 yon/ha for Tainan 9 Two crops/year First crop harvest in Sep. Second crop harvest in Dec.

Prices at farm gate for farmers

1,000-1,100 kip/kg In Sepone 500 kip/tier when selling to Vietnamese traders

1,200-1,300 kip/kg at Lao Ngyam 1,000-1,500 kip/kg at Kengkia in Bachieng Collectors deduct 4% for wastes

Sell fresh pods at 2,000-2,500 kip/kg; dry seeds around 7,000 kip/kg in Lao Ngyam and 5,000 kip/kg in Xaiphouthong Collectors deduct 3% for waste in general and if low quality will deduct up to 5%

Collectors in Laos and Thailand

Sell around 1,300 kip/kg Cheapest selling price 700 kip/kg and highest buying price 3,500 kip/kg at the beginning of season. Transportation cost to Chongmek is 100-120 kip/kg.

Around 10 local collectors working in Lao Ngyam and Bachieng: Buy fresh pods at 2,000-2,500 kip/kg and semi-dried seeds at 9,500-10,000 Kip/kg at moisture level of 18%, or 50,000 kip/7 kg, if seeds have been dried 1-2 days Sell fresh pods 10-12 baht/kg Transportation cost to Chongmek is 600 kip/kg. Sell fresh pods 10 baht/kg and dry seeds at 32 baht/kg at Chongmek Sell to Thai buyer in Saraburi province 12 baht/kg for fresh pods. Thai buyers have profit of 1 baht/kg.

Local retailers who buy directly from farmers

Buy Namwa at 9,500-10,000 kip/bunch in Lao Ngyam Sell to consumer at 3,000-4,000 kip per tier. Buy from Bachieng between 10,000-15,000 kip/bunch, when expensive buy at 20,000 kip/bunch

Local retailers (Pakse market)

Buy Namwa 15,000 -25,000 kip/bunch depending on sizes Sell around 3,000-5,000 kip/tier Buy banana flowers at 8,000 kip/kg Sell banana flowers around 13,000-17,000 kip/kg or 2,000-3,000 kip/piece; profit around 2,000 kip/kg Sell banana leaves at 2,000 kip/pack

Buy Mun daang 2,000-4,000 kip/kg from Lao Ngyam Sell Mun daang 3,000- 5,000 kip/kg

Buy at 4,500 kip/kg in high season from Bachieng Buy at 2,000-4,000 kip/kg from Lao Ngyam Sell 5,000 kip/kg

Local retailers (Vientiane):

Buying banana from gardens close to Vientiane Other sources goods delivery trucks to Sepone and Nong districts buy banana to fill up the trucks before coming back to Vientiane. Buying prices were slightly higher than those of Vietnamese traders.

Buy Mun daang 4,000 kip/kg Mun Khai 6,000-7,000 kip/kg (Mun Daang from south of Laos; Mun Kai from close to Vientiane) Sell Mun daang 5,000 kip/kg Mun Khai 8,000 kip/kg

Buy Peanut from Sarakham or areas close to Vientiane

Source: Data from interviews in the three provinces by the researcher


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IV.5.2. Expense involved in Exporting Products to Thailand

329. The development of value chain for perishable product requires good planning on logistic management. Expenses involved in outbound logistics take places at various steps in the value chain. This section shows cost of arranging export documents at the border crossings in Savannakhet and Champasak provinces. The following information shows expenses from an interview conducted in another project in early June 2008:

Findings on logistic matters from meetings with freight forwarder, PAFO, and the Department of Planning and Investment (DPI), Champasak province:

According to freight forwarder called Societe Mixte de Transport42, fees required for documentation and border crossing for 1 truck (size unspecified) amounts to THB 11,300 which consisted of:

o Fee for 1 truck to cross border: THB 4,800 o Documentation (Export permit & Certificate of origin) fees: THB 3,000 o Customs fee at border: THB 3,500

A company in Thailand arranged for a Thai truck to carry the fresh produces from Laos to Bangkok. In total the company paid for transportation including export documentation and fees of Societe Mixte de Transport around 45,000 baht/consignment. According to PAFO, fees for documentation for each consignment would be:

o Fees for Ministry of Finance: Kip 35,000 o Inspection fee: Kip 10,000 o Phytosanitary certificate: Kip 50,000 o Import/export permit: Kip 2,000

Each type of vegetable43 will require one set of export related documentation which would cost 97,000 Kip per set.

According to Industry and Commerce Department, fees for documentation required for Certificate of Origin, and AISP Form, or Form A, or Form D, according to country of destination, would be:

o Fee for consignment up to USD 10,000 : Kip 40,000 o Fee for consignment between USD 10,001-30,000: Kip 60,000 o Fee for consignment between USD 30,001-60,000: Kip 80,000 o Fee for consignment over USD 60,000: Kip 100,000

Fees are paid before exporting products out of Laos. Although some exporters said they had to pay these fees, some Thai buyers said they normally had to shoulder these expenses.

42 Societe Mixte de Transport is a Laotian company. Information was collected in 2008 and is used here to show the cost which a private service provider charged its customer in commercial rates to cover its expenses and personnel. It did not intend to show or imply any misconduct. Fees collecting from government agencies were also shown to information and comparison. 43 This study was conducted in 2008 for a project on exporting organic vegetables to Thailand. The practice to have one set of documentation for each product was different to the normal practice in Thailand where one set of export document can consist of more than one type of vegetables or fruits. If the exporter is exporting three products at the same time, in Champasak he or she will have to present three sets of documents while in Thailand only one set showing the list of three products is required and issued. This means the cost in Laos is higher than the comparable export documents in Thailand.


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Table 55. Expenses in exporting agricultural products to Thailand (2013)

Savannakhet- Mukdaharn Wangtao-Chongmek LAK THB THB

Cost of hiring a truck 20,0001 Based on weight and distance 2

Other expenses: - X-ray of truck or container3 250,000 1,000 - Fee 110,000 440 - Fee for crossing bridge 94,000 376 - Signature of export document 200,000 800 - Weighting of truck 100,000 400 - Plant protection inspection 100,000 400 400 - Fees for vehicle and passengers 100,000 400 400 - Phytosanitary preparation4 1,500 1,500 - Expense on preparation of Form D Not exceeding 80 tons 5 700 700 Not exceeding 100 tons 900 Not exceeding 150 tons 1,000

Note: 1 An empty Thai truck from Ubonrachthani travelled to Sepone to collect banana and travelled between Sepone to Pakse to use Wangtao-Chongmek border crossing and delivered banana at Charoensri market in Ubon. The cost of petrol in Thailand was cheaper than in Laos.

2 Transportation cost from Lao Ngyam to Wangtao was around 120-140 LAK per kg of product, and between Lao Ngyam to Charoensri was around 22,000 baht/truck using Laotian truck which carried around 15-17 tons of products. Transportation cost between Chongmek to Ubon and other places by a Thai truck was calculated based on travelling distance. For example the cost of renting a truck from Chongmek to Nakornpathom province was around 14,000 -15,000 baht per trip inclusive of petrol.

3 Truck or container will be randomly selected for X-ray. Expense incurs only when the truck is selected. The Thai buyers said they had never been asked to have their trucks x-rayed at Chongmek border crossing.

4 This expense was paid as a lump sum amount of fee to a Laotian company who arranged to get a Phytosanitary certificate signed by PAFO for the exporter.

5 This expense was paid to a Laotian company who arranged the Form D. Expense will depend on quantity of product per shipment. Normally each shipment is less than 80 tons/day. On weekdays the fee would be 700 baht/day and on weekends the fee would be 900 baht/day.

IV.5.3. Import duties

330. Since 1 January 2010, there has been no tax and import duties imposed on banana, sweet potato, and peanut imported from Laos into Thailand.

IV.6. Trade of Banana, Sweet Potato, and Peanut

IV.6.1. Banana 331. Of the three selected products (banana, sweet potato, and peanut) only sweet potato and peanut from Laos could reach wholesalers at Talad Thai and Simummuang market in the


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central part of Thailand before being redistributed to other provinces in Thailand for local consumption and for processing. Banana from Laos does not fare well at long distance transportation due to its perishable nature. Lack of proper post-harvest handling and many loadings on and off the trucks also contributed to damages on quality. On the contrary, Hom Thong banana, and Khai banana, which were produced in the central part of Thailand and travelled around 150-250 km from producers to Talad Thai and Simummung Market in Pathumthani and then being redistributed for another 700 km to Charoensri wholesale market in Ubonrachthani, were still in good conditions when they reached Ubonrachthani.

332. Pathumthani, Nongkhai, Tak, Sukhothai, Phitchit, and Phitsanulok are among major provinces that produce Namwa banana for local markets. Sukhothai and Phitsanulok are major producers of processed banana products. These two provinces use banana supplies in central and northern parts of Thailand. Sukhothai is famous for its crispy banana chips and banana candy while Bangkrathum in Phitsanulok is famous for solar dried banana and other premium dried banana products. Bangkrathum is called the capital of solar dried banana in Thailand. The researcher met with three groups of banana processors in Phitsanulok and two of them were interested in using fresh banana from Laos. A leader of one group was interested to buy fresh and dried banana from Laos. However, he warned that fresh banana for processing into dried banana has to be in very good quality and at competitive prices. Bruised and immaturely harvested banana could not be used to produce premium dried banana. Bananas from Laos also have to compete with locally grown bananas, which have comparative advantages on closer proximity, and more local suppliers who can deliver products at very short notices.

333. At the time of the field visits prices of banana in the three provinces in Laos are relatively low. If post-harvest handling management of banana has not been improved and the numbers of uploads and downloads remain high, producer from Laos will not be able to compete or get better prices from Thai buyers. Players in the value chain will have to keep their cost as low as possible to get a better margin. If the quality was not good, buyers would reduce their buying prices to compensate for wastes that incurred in the transportation processes44. Problems on quality not only came from limited knowledge of workers who uploaded and downloaded banana, it also came from farmers who harvested bananas which were not matured or over-ripened. The substandard bananas which were transported to Thai markets which were not in good quality would damage reputation of banana from Laos.

334. A simple grading system based on the size of banana bunch which local agricultural product collectors use when they buy banana from smallholder farmers is: (a) A large bunch with 8-9 tiers is called 1 big bunch (between 25,000-40,000 kip); (b) Two slightly smaller bunches are equal to 1 big bunch (c) 3-4 of much smaller bunches are equal to 1 big bunch

335. Interviews with Thai buyers at Charoensri wholesale market showed that Thai buyers knew that they might have to take a risk on quality when buying banana from Laos. The high demands from Thai banana buyers and intense competitions among Thai traders at Charoensri market to get banana have forced local agricultural product collectors to buy 44 Please see pictures of banana from Laos when they arrived at Charoensri Market in Ubonrachthani


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banana for them without paying attention to quality other than counting number of tiers of bananas. When a Thai trader was asked why he did not select only good quality bananas, he said, if he did not buy whatsoever quality available at that time, other Thai buyers would do, and he would not be able to supply bananas to his regular customers. Agricultural product collectors would have to pay farmers at going prices in local market to ensure that he could supply banana to Thai traders. When farmers were asked why they did not select only mature banana, they said they did not have to do so because local collectors would buy all qualities of banana using the coarse grading system mentioned previously. Collectors pay fixed prices for all qualities, so farmers did not get any incentive or premium prices to select only better quality banana.

336. Movements of banana and sweet potato from Laos to buyers and wholesale markets in Thailand are similar as shown in Figure 144. There are at least five uploads and five downloads of banana from various vehicles used in transporting banana from farmers to wholesalers. Pictures taken during the field visits showed that the handling of each upload and download of banana involved pressures and caused bruised banana and wastes. Bruised and broken banana cannot be sold at good prices; they are sold at discounted prices or thrown away.

Figure 144. Number of loadings in transporting fresh produces to Thai market

337. Apart from local markets, banana producers in Sepone and Nong districts also sell banana to Vietnamese45. Vietnamese traders/buyers either bought banana at farmers’ gardens or rented banana garden with a fixed fee for duration of three years. Vietnamese traders who rented the gardens sold banana to local collectors, Vietnamese traders and Thai

45 A local collector in Savannakhet said he exported banana to Vietnam around 600 ton/year.

4. When fresh produces arrive either download into stalls for sales or upload directly into a retailer’s van

5. Upload produces at wholesale market and travel to his or her shop and download into shops

1. Harvest produces and upload into small cart or van and download at collectors’ place or along roadside

2. Upload fresh produces collected from farmers into a truck then travel to buyer’s place close to border crossing and download from Laotian truck

3. Upload fresh produces into a Thai truck and travel across the border to arrive at Wholesaler’s place and download


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buyers/traders. In general the Vietnamese rented banana gardens have been managed better than the gardens belonged to local banana producers. Vietnamese operators have more skills in commercial production and harvest banana at better maturity levels. At Charoensri market in Ubonrachthani, bananas from Sepone which came from the Vietnamese rented gardens would normally be called “Vietnamese banana”. They have been perceived by Thai buyers in Ubonrachthani and other nearby provinces as having a better quality, taste, and texture than bananas from Lao Ngyam and Banchieng. However, these Vietnamese bananas tended to have darker and spotty skins.

338. At the time of the field visits in September 2013, Thai buyers would pay Laotian collectors around 1,300 kip/kg, while these collectors paid farmer around 1,000-1,100 kip/kg. Prices paid by Vietnamese traders at farm gate in some periods might be lower such as during the rainy season price dropped to 500-1,000 kip/tier, and buying prices would be higher at the end of the year. Some farmers in Sepone were not happy with the prices they received but they did not have many choices or buyers to sell to. They would have to sell at the prices set by Vietnamese buyers. In the past if Vietnamese traders did not show up, farmers might have to leave banana decomposed or use them to feed animals. After some Thai buyers started buying banana from Sepone, the farm gate prices slightly increased.

339. The 2010/11 Census shows that total national cultivation areas for banana decreased 30.6% and the numbers of growers decreased 35.4% from the amounts in the 1989/99 Census. During the field visits, we found that not all bananas were being harvested for commercial. Farmers who were interviewed could provide only partial cost of production. It was difficult to find what were the average production costs, and the real financial profits of the current commercial production of banana. What these smallholder farmers would like to have was a more secured contract from collectors and/or buyers to ensure steady income. When asked whether they could improve quality of their products to meet market requirements, they said that they were willing to do so, if local collectors or buyers paid premium price for the better quality banana.

340. The researcher showed pictures of banana from Sepone to potential Thai buyers who are producers of solar dried banana in Bangkrathum district in Phitsanulok as asked them whether they would like to buy these banana for production or not. They pointed out that around 80% of banana in the pictures had the right maturity and might fit well for production of solar dried banana while around 20% was either too young or over-ripen. They would prefer banana varieties which have thinner skin and fruits should have minimum bruises. Bruised spots on banana would turn into white and hardened parts on the dried fruits and made them being graded as substandard dried banana. In Phitsanulok dried banana processors normally use an average of 1.4 kg for a tier of banana. Prices of banana are around 5-14 baht/tier depending on season and supplies in the local market. The average prices are normally inclusive of transportation cost from farms to their factories.

341. There are many varieties of banana in Laos for local consumption such as Kyaue Nam or Namwa in Thai, Kyuae Ngyaw, Kyaue Tani and other local varieties which are grown for local consumption. However, the only variety which has been exported to Thai market is Kyuae Nam. Laotian farmers in Lao Ngyam and Bachieng sell only fresh Kyuae


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Nam for Thai market. They may have to move toward other varieties which have better prices such as Hom Thong or Khai banana, and/or producing more value added banana products to help them from cyclical drops of prices for fresh produces.

342. In Thai markets there are processed products from banana which are food and non food products. For example there are more varieties of banana which can serve diverse preferences of local customers and export markets. Fresh bananas are used for desert or table fruits and can be processed into various types of snacks. Parts of banana such as flowers can be used as ingredients for cooking; leaves and fiber from pseudo stem can be used as material for wrapping and packaging, or as fibers for textiles and paper making. Fruits can be processed into flour which can be used as food ingredients. However, there were very few processed products found in the local markets in Laos.

343. During the field visits in Champasak and Salavanh provinces, farmers complained that they lost income drastically when their plants suffered from wilt and died. The outbreaks of diseases may expand to wider areas and cause long term damages to commercial banana productions. During 2007-2008 Thailand had severe problems from panama disease in many areas which produced Namwa banana. Some Thai farmers had to stop growing banana in the infected areas and changed to other crops, or grew other varieties of banana which have more resistance to panama disease.

IV.6.2. Sweet Potato

344. Most farmers in Bachieng and Lao Ngyam produced Mun Daang or Mun Thorpheug rather than other varieties which may have better prices in Thai markets. Sweet potatoes from Champasak and Salavanh have been exported to Thailand via Wangtao-Chongmek border crossings to Ubonrachthani in plastic sacks. From Chongmek in Piboonmungsaharn district these sweet potatoes are sent to packing houses in Warinchamrarp district to be washed and repacked into plastic bags of around 10 kg/bag before sending to Charoensri Wholesale Market in Ubonrachthani and some were sent to Talad Thai Wholesale Market in Pathumthani which is around 700 km from Ubonrachthani. However, these washed and repacked sweet potatoes have become “Kanthoraluk sweet potatoes” when they arrive in Talad Thai or Simummuang markets.

345. A local food manufacturer, Dao Huang Company, buys sweet potatoes which have white texture to produce snack. Mun Daang from the two selected provinces is sold mainly for consumption in local markets and Pakse new market, and export to Thailand via Wangtao-Chongmek border crossings. Mun Daang is also sent to Khua Din market in Vientiane by local agricultural product collectors/traders.

IV.6.3. Peanut

346. Currently farmers have limited knowledge on post-harvest management. Drying process at farm households has to be improved to avoid product being rejected by Thai buyers due to high level of alpha toxin. Some parts of the problems came from the usages of mixed variety seeds which the maturities are different; the other part came from the


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inadequate drying process farmers used. Local extension staff should be a good source of information and transfer technologies for improvement in production, selection of better quality seeds, and post-harvest management. Improvements in these areas will be critical for the success in export markets.

347. Peanut producers from Kengkia in Champasak and Lao Ngyam in Salavanh province have the benefits of being relatively close to Wangtao-Chongmek border crossings and they also have larger quantity of peanut for export than farmers in target sites in Savannakhet. Although the distance between Champasak’s Wangtao border crossings to buyers’ factories in the central part of Thailand may be longer than the R9 Route or the East West Economic Corridor, the condition of internal roads in Thailand and the large numbers of shipping companies in Wangtao and Chongmek offer Thai buyers/traders more choices than the Savannakhet-Mukdaharn border crossings.

348. The researcher met an owner of a Thai company46 who has been importing close to 1,000 tons of peanut from Laos through traders in Laos and in Thailand at a national conference on legume. He and one of his managers agreed to join a field visit to Savannakhet and Salavanh provinces in September 2013. His company uses both locally grown and imported peanut to process into snack products. The company has been established more than 60 years and paid high attention to quality of products, especially level of alpha toxin in peanut. He has been interested to buy fresh peanut from farmers in the IFAD-ADB project on conditions that peanut should arrive at the factory in Nakornsawan province, which is close to the East West Economic Corridor, within 24 hours after harvested. The company is also interested to work with local farmers to improve productivity and to move from mixed varieties to selected individual varieties. The company is willing to transfer technology and become a buyer of fresh produces from members of its registered groups. After the field survey, it was likely that the company was more interested in buying peanut from Salavanh or Champasak47 rather than Savannakhet when considered quantity of products, export related documents, and services availability.

349. Farmers in Khanthachan of Savannakhet have demonstrated that they could keep their peanut for reproduction in good condition. However, in some other areas we visited, the dry peanut pods were covered with fungus in the storage areas. Currently they have been drying peanut under direct sun by putting peanut on plastic sheet spreading above the ground. On the rainy or cloudy days, their produces would have problems due to high level of moisture. Post-harvest management is essential for commercial peanut production. From many meetings with peanut producers in Bachieng and Lao Ngyam which were arranged by local PAFO/DAFO and PPOs, farmers have expressed their interests in having drying facilities48.

46 This Thai company used to join a development project on growing peanut in Bokeo province of Lao PDR. It trained farmers and local government officers in Bokeo. However, the company withdrew from the project after they found that farmers had no interest in growing peanut and they did not want to look after the plots. 47 He could not visit Bachieng district in Champasak which is also has large numbers of peanut growers due to limited time. However, some technical staff of this company had previously visited Bachieng and knew peanut cultivation areas and local product collectors. 48 The IFAD-ADB project has recently provided a peanut milling facility for a site in Salavanh province.


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350. The Thai Department of Agriculture used to provide technical assistance to MAF in a project in Champasak. A Thai Senior Post-harvest Expert told the researcher that the Thai DOA has developed test kits for testing alpha toxin. The Thai DOA had provided training for 7 Laotian officials from MAF and Department of Health on alpha toxin testing. There was a laboratory in Champasak which belonged to the Ministry of Industry and Commerce49 in Pakse, Champasak. The IFAD-ADB project should explore possibility to collaborate with this laboratory for future analyses.

351. Local market for snack products in Laos is currently full of imported products from China, Vietnam, and Thailand. There were some locally produced roasted peanut products in supermarkets in Vientiane and Champasak. Productions of processed peanut products are quite and can be done at household level. If the IFAD-ADB project can provide training sessions for women’s groups in the target areas to produce some types of processed peanut products for local markets, it should be a good starting point for them to move towards more value added products. Some successful Thai peanut processors came from small producers who started processing simple products such as sand roasted or sugar glazed peanut and later extended the ranges of products when they have had more skills and better packaging for their products. Some of these small producers can export their products to other countries.

IV.7. Other Findings from the Field Visits

IV.7.1. Limited Market Linkage

352. Smallholders in the target areas have to depend mostly on local agricultural product collectors. Currently there is limited direct market linkage for smallholder farmers to markets. Farmer heterogeneity means interventions for market integration to support smallholder farmers who are subsistence or semi-subsistence farmers and market oriented farmers have to be designed differently. For instance subsistence or semi-subsistence farmers may be able to participate in local markets, while market oriented farmers, who have more abilities and skills for commercial production, may want to be integrated into different sectors such as provincial, or national markets. The IFAD-ADB project has to take into account their willingness and capabilities to participate in the value chain development project.

353. Enabling environment for market integration will need strong supports from policy makers. Infrastructure development for market integration would help to reduce market access gaps which smallholder farmers are facing now. For example, collection centre for agricultural products at village level may help smallholder farmers to meet with buyers and give them opportunities to integrate into local market. The policy to increase productivity without proper link to market will put smallholder farmers at risk for producing more products which they do not have market to not sell to, or cannot process into more value added products. They may neither have funds to transport these products to suitable markets nor having storage facilities to keep products to sell at the right time.

49 It was not clear why this Laboratory belonged to MOIC and not the MAF. This laboratory is close to the building of Shiseido Beauty Salon.


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354. Farmer formation is one of essential tools to help smallholder farmers to work collectively in production, or getting loan to invest in improvement of productivity, or help them to be able to sell product collectively. This initiative also needs supports from public sector and the development project.

IV.7.2. Market Information

355. Although local agricultural product collectors communicate with Thai buyers or traders regularly, they do not have in-depth information regarding trends, or customer preferences in the Thai markets, or requirements of food manufacturers. What information they received from Thai buyers should be continuously communicated to local producers. The Thai buyers and traders interviewed commented that they had urged local product collectors to communicate with producers or growers on quality improvement, but there has been very little improvement on quality so far. Currently there is no leading organisation or local agency that can provide smallholder farmers with up-to-date information on daily or week prices, market requirements, and demands in the markets.

IV.7.3. Post-harvest Management and Quality Issue

356. The common problems which producers of banana, sweet potato, and peanut share are limited knowledge on post-harvest handling, and quality control measures. These three products are susceptible to poor post-harvest handling. We observed that most players in the value chain do not know how to keep products in good conditions before their products reach buyers or consumers. Wastes from poor handling and lack of quality control can be as high as 20-35 percent of products harvested.

357. Dissemination of knowledge on production planning, collecting and receiving agricultural products, storage management, and transport management has been rather limited. As the results we found products from the three provinces in this project arrived at Thai markets in Ubonrachthani or in the central parts of Thailand with deteriorating conditions than what they should have been. The IFAD-ADB project may need to support capacity building in smallholder farmers as well as other stakeholders in the value chain of the three selected products such as agricultural product collectors and their workers, including transportation companies and their workers.

IV.7.4. Images of Agricultural Products from Lao PDR

358. Coffee from Boloven Plateau has been perceived as quality product from Lao PDR. However, even though banana, sweet potato, and peanut from Laos can were produced in environments which are chemical free or in some parts of the country they can be called as organic products, they are not perceived as premium or quality products from Laos. These three products do not command better prices for being grown organically as other products in Thai markets. When products arrive in Thailand, their quality deteriorated due to lack of post-harvest treatments, and poor handling in transportation processes.

359. Banana, sweet potato, and peanut products from Laos have limited varieties and supplies to offer to buyers. For example, export of banana is limited to only Kyuae Nam or


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Namwa, sweet potato is limited to Mun Thorpheug, and peanut is exported in mixed variety and grade. Lack of propagation materials such as quality seeds, suckers, saplings, or shoots, or other agricultural inputs such as irrigation system to cover the majority of production areas. In addition most smallholder farmers use conventional production method and do not have modern post-harvest handling or quality control technologies. They do not have information on market ad may not be able to incorporate production planning to select proper production periods to meet with demands in the potential markets.

360. Thai buyers and traders said that buying prices of the three selected products were directly and positively related to qualities of fresh produces. Prices of agricultural products from Laos are normally lower than those produced in Thailand because of qualities. These Thai buyers said if there were abundant of locally produced agricultural products in the market, they would pay less to Laotian products to offset the expenses incurred from rotten or unsellable products which they could not make profit. Only when products were scared they would pay market prices to Laotian products.

IV.7.5. Technical Cooperation with Other Institutes

361. The IFAD-ADB project has collaborated with ICRSAI of India in the development of commercial production of peanut. It also has connections with some Provincial Agricultural Extension Officers in the northeastern parts of Thailand. However, in commercial production of banana and sweet potato, the IFAD-ADB project has to form official cooperation with institutes outside Lao PDR. It should be noted that for commercial production and to create a profitable value chain for the selected products, modern technologies related to agricultural inputs, production, post-harvest, processing, storage, packaging, and logistics are all required to increase yields, reduce cost of production, create more value added, and reduce avoidable losses.

IV.7.6. Public Private Partnerships

362. During the field surveys, two Thai potential partners had joined one of the field visits. However, the duration for the visits was rather short and there were difficulties in arrangements for internal overland transportation which made it difficult for these potential partners to visit all target areas and had in depth discussions with producer groups.

363. Although the Project would like to promote Public Private Partnership (PPP), there was no action plans or clear preparations in working with potential private partners. The Provincial Project Offices seemed to have limited up-to-date information on the target areas, investment policies, regulations, and assistances which they can offer to potential private partners. Times during the field visits were spent on courtesy calls to various local government agencies and on introductions and details of the Project to local government agencies. If the IFAD-ADB wants to persuade potential partners to participate in PPP, it has to prepare: (1) what kind of assistance the Project can offer to help private partners to work in the value chain development; (2) what kind of assistance and support the Project can offer to local producer groups and other stakeholders and the promotional activities in the value chain; (3) who would be the focal point of the collaborations when partners participate in


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more than one site; (4) who would prepare supporting documents which potential partners can study before they make any decision; (5) what kind of outcomes that the Project expects from private partners and what goals it wants to achieve; and (6) if there is an issue or a dispute or delays in the planned operations, who would be responsible for the remedies, etc.

IV.7.7. Capacity Building for Stakeholders in the Value Chain

364. Capacity building for smallholder farmers and local agricultural product collects are important for them in order to meet with competition in commercial productions. Farmers not only have to know about production technologies, they may need some skills in quality control, basic book keepings, planning, accounting, negotiation, and business operations.

365. Most of the extension officers from DAFO or PAFO or PPOs who accompanied the researcher in the field visits have demonstrated commitment in working with farmers. Many of them have been working well in agricultural aspects50. However, in term of marketing and processing components, the IFAD-ADB may need to collaborate with the Department of Industry and Commerce (DIC), and other relevant local line government agencies to support in capacity building for stakeholders in the value chain. The increasing roles of agricultural extension staff from MAF, the provincial or district offices of DIC, and the women associations in the project sites are important in the value chain development.

IV.7.8. Contract Farming Agreements

366. One issue which had been raised during the field visits by various PPOs project officers or local line government agencies was contract farming agreement with Thai buyers. There have been annual signing ceremonies between the southern provinces of Lao PDR and some northeastern provinces in Thailand on contract farming agreements of selected agricultural products. However, these contract farming agreements have been agreed in principles and in most cases they did not give any specific detail on quantity or quality of products or clauses on price adjustments. Many of these contract farming agreements signed in the past were not practically implemented or legally bound for the participating partners. Farmers still could not get fair prices for their products when the prices in the market dropped below the guaranteed prices in the contract, and buyers complained of side-selling especially when market prices were higher than the guaranteed prices, or when other buyers offered to pay the participating producers more than the guaranteed prices.

367. Margaret Will (2013, p.19) presented details of five basic models of contract farming arrangements and defining characteristics which were developed from Technoserve and IFAD (2011, p.3) as: Informal, Intermediary, Multipartite, Centralized, and Nucleus Models. The five contract farming models appear to present from perspectives of the buyer’s investment and control over supply of products. Details of each model and its defining characteristics are shown in Table 56.

50 During the field visits the researcher found that some senior local officers did not understand the content or details of this IFAD-ADB project or the concept of value chain development. They were more interested to find buyers for agriculture products in their areas, or to get financial supports to build some facilities or buildings, or to get money to do some training courses without having to use money from their normal government budgets.


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Table 56. Contract farming models and defining characteristics

Informal Model

Intermediary Model

Multipartite Model

Centralized Model

Nucleus Model

Summary: speculative, seasonal sourcing on an ad-hoc or semi-formal basis and spot-market transactions; few if any inputs/ services provided to farmers; minimal firm/farmer coordination; little to no product specification by buyer

Summary: semi-formal to formal subcontracting by buyers to partner intermediaries (e.g. lead farmers, farmer groups, buying agents) who manage outgrowers & provide services; limited direct firm/farmer interaction; enhanced but limited product specification

Summary: buyer sources from farmers & farmer groups; technical assistance/ input/credit provision & grower management via 3rd parties; limited firm/ farmer coordination; higher level of product specification necessitates close monitoring/ supervision of production

Summary: buyer provides technical assistance/inputs directly, purchases crop, handles many post-harvest activities; farmers provide land & labor; high degree of firm/farmer coordination; strict product specifications monitored by in-house technical staff; often linked to processing

Summary: buyer operates centralized production and processing (estate), supplementing throughput via direct contracting with outgrowers; buyers often own/control land used by farmers who supply labor; buyer provides technical assistance/ inputs/ credit; close monitoring/ supervision

Pros: little to no buyer investment in technical/ financial support; low operational costs; high level of sourcing flexibility

Pros: reduced risk, assuming effective management; minimal buyer investment in technical/ financial support; marginally improved supply chain management; low cost of switching to new partners

Pros: limited investment & reduced costs due to partner cost-sharing; reduced risks (vs. commercial production) due to geo-dispersal of outgrowers

Pros: enables high level of control over product quality & volumes; frequent interaction with farmer inhibits side-selling

Pros: high level of control over supply chain; simplified technical assistance/ extension/farmer oversight; reduced risk of supply rupture

Cons: limited control over production (i.e. products, varieties, quality, etc.); high risk of supply ruptures; strong buyer competition

Cons: lower buyer visibility among farmers; marginal control over production (volumes, quality)

Cons: greater risk of side-selling; no core production, reliant on smallholder production; high transport costs

Cons: high level of investment for in-house technical assistance and pre- and post-harvest logistics and related infrastructure

Cons: requires heavy investments (land, labor) in production; higher crop-related risks; limited flexibility/ options in selecting outgrowers

Increasing buyer investment

Increasing risk of inconsistent supply

Input/credit Never Rarely Rarely Sometimes Sometimes Extension service Never Sometimes Always Sometimes Sometimes Use of contracts Never Sometimes Always Always Sometimes Farmer grouping Never Sometimes Sometimes Sometimes Sometimes Grower management Never Rarely Always Sometimes Often Centralized production/ processing Sometimes Sometimes Sometimes Sometimes Always Post-harvest logistics (packing, transport) Sometimes Rarely Rarely Often Always

Source: Taken from Gill (2013, Figure 1, p.19)

368. The contract farming model in Laos which smallholder farmers and local agricultural product collectors and Thai buyers have been using is close to the “Informal Model” rather than other models. Thai buyers or local agricultural product collectors sometimes provided


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embedded services such as production inputs (seeds, fertilisers, plant protection products), minimum pre-financing of input delivery (explicit rates not always charged to motivate farmers), and rarely provided non-financial services (technical assistances, extension, training, transport, and logistics). Buying prices are based on spot-market transactions.

369. There are some cases of successful contract farming agreements in Thailand51. Most of the successful cases used formal contractual agreements and required strong commitments from all parties involved to honour the contents and clauses specified in the contract. Abilities of producer or producer groups to produce according to quantities and qualities were normally stipulated in the contracts. However, it would not always be easy for subsistence and semi-subsistence smallholder farmers to participate individually in the contract farming agreement52 without full knowledge and understanding of their roles and responsibilities in the agreement. Will (2013) has rightfully mentioned that “For designing the best possible contract farming arrangement under given local conditions, there is hence a need to analyse the opportunities and limitations for building trustful, reliable and sustainable coordination and cooperation linkages between farmers and buyers.”

IV.7.9. Farmer Group Formation

370. The roles of PPOs and local line government agencies in supporting smallholder farmers to work as farmer groups are necessary. Other than only focusing on contract farming the IFAD-ADB Project can consider other options for instance vertical integration which relates to a merger of two or several nodes of the value chain. The Project can support forward integration of farmers into trading and/or processing. A report compiled by Ling (2009) on VECO’s experiences on Farmer Group Enterprise (FGE) in Bokeo province53 may provide useful insights for this IFAD-ADB Project.

51 The contract farming agreements between Swift and farmers in Thailand are mostly centralised model and in some cases the company may use an intermediary model or a multipartite model. 52 Apart from successful cases, there have been many cases in Thailand that farmers who entered into contract farming agreement and ended up as being a modern day slaves when the contracts they signed put them in disadvantageous conditions and they were heavily in debts from investments required in the contracts. 53 Please find additional information from Mid-term Review of the Market Access for Farmer Organisations Project, Key findings and Recommendations, by Tiago Wandschneider, Thipavong Boupha and Alison Wilson (CIAT), April 2009, and The development of Farmer’s Agro-enterprises in Laos, June 2009 (an abridged version of this article was published in LEISA magazine in June 2009 (volume 25, number 2).


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CHAPTER V. CONCLUSION AND RECOMMENDATIONS

V.1. Conclusion

371. This study aims to offer some recommendations on value chain development which the Project may employ. It is expected that the implementations of this IFAD-ADB Project meet with requirements of ADB and GoL safeguards issues like environmental safeguards, indigenous people and gender and resettlement safeguards. There should not be any adverse effects on the above safeguards because this Project should support transfer of suitable technologies for better environment, better gender mainstreaming, and improve livelihood of the indigenous people who are targeted beneficiaries of the project.

372. The implementations and activities designed in this IFAD-ADB project should meet with realistic expectations, tangible resources, and capabilities of smallholders and other stakeholders in the value chain. The selected interventions should take into account the heterogeneity of smallholder farmers and their abilities to participate in the development of the value chain. Stakeholders in the value chain development should be encouraged to contribute in activities which should improve their livelihoods. Consultations with stakeholders in the value chain on possible interventions and required assistances should be carried out before any investment54 in each area takes place and the whole time of the implementation period.

373. Porter has rightly pointed out that one of the important supporting activities in the value chain is human resource development. Local line government agencies have to do not only their normal tasks, but also the tasks of development projects in their areas. There could be 2-3 assignments at the same time and also many meetings to attend which caused them to have limited time to support tasks or activities of development projects. In general most of the extension staff met during the current study have been working closely with farmers and knew agricultural product collectors in the areas quite well. They were able to provide technical assistant to farmers. The IFAD-ADB should invest in human resource development of line agencies so that they can support farmers to produce products with reducing cost of production and increasing of yields. Human resource development is also important for other stakeholders in the value chain. Farmer formation and how to bring children from farming or collectors’ families to work in development projects. These children have formal education and some have attended universities. They have computer skills more than their parents and should be able to support their parents in acquiring production technologies and market information.

374. This development project covers 31 villages in 14 Khum Bans in Champasak, Salavanh, and Savannakhet provinces. Some of these selected villages are located in remote area with limited infrastructure and irrigation system. Most of the target areas have been producing banana, sweet potato, and peanut for local consumption and provincial markets. Recently some smallholder farmers in the target areas have increased their share of production for commercial purposes. 54 Prior feasibility study of this project provided information on Economic Internal Rate of Return.


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375. The majorities in the targeted villages mainly produce agricultural products using traditional methods of cultivation with simple tools and have limited knowledge of modern production and post-harvest management. Transportation management has not been geared for perishable products which resulted in deteriorated quality of products when they arrived in export markets. Market infrastructure and market information in the target areas need improvement to help smallholder farmers in linking them to market. Production areas of these selected areas are shown in Table 57.

Table 57. Total cultivation areas in the targeted villages

Unit in HA Banana Sweet potato Peanut Champasak 312.30 36.80 1,488.50 Salavanh 1,527.45 674.00 799.60 Savannakhet 29.25 - 210.00

Total 1,869.00 710.80 2,498.10

Source: Information from PPOs Champasak, Salavanh, and Savannakhet

376. The scattered nature of farms and the small cultivation plots make these smallholders have fewer accesses to market and market information. Traders and buyers have to consider costs involved in collection of small quantity of products and the travel expenses that it may incur. The proposed models in this study emphasis on farmer formation as producer groups to give them more collective productions and bargaining power. One of the options that this IFAD-ADB Project may consider is to help farmers and product collectors to form an organisation which works collectively with potential buyers. The new producer organisation may consist of farmers and other local stakeholders in the value chain, or it can be purely consist of farmers.

377. The IFAD-ADB project can also support business matching between producers and buyers either in provincial or national markets or international markets. The Project should not emphasis only on exporting fresh products to other countries; it should also look at improving agricultural production inputs for internal markets55. At the same time it can promote processing of processed products to supply markets in the country. Please find more information on some Thai women groups and small producer groups who use agicultural products in their areas to produce more value added products at village level in Annex III.

378. Laos has a smaller internal market than Thailand. Farmers in the Project may have to change their production from only producing traditional varieties to producing higher value varieties which are suitable for other countries and have sufficient profit margins for stakeholders, or producing processed products which have more value added to them. During the surveys in the three provinces and in Vientiane, there have been very few processed food and non-food products available in the markets or supermarkets. There should be rooms for processed products in Laos. There can be two level of processing 55 Thayang Agricultural Cooperatives in Thailand have been exporting Hom Thong banana to Japan for more than 12 years. In some years the Cooperative did not get profit from exporting banana as the exchange rates fluctuated and caused them to get less profit or no profit at all. They have to maintain exporting to keep Japanese customer even with less profit. Selling banana in local markets has become one of the steady income generators and provided profits for Thayang Cooperatives and its members.


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activities in the target areas. Processing products at household level can be done with small investment and equipment for local markets and in some selected areas, and processing product at a larger scale which can be done only when there is financial subsidy for facility in processing plant and equipments. Please see more information in Figures 145-147 and Tables 58-60.

379. The 2010/11 Census showed that Village Development Fund and private banks are available in rural villages in the three target provinces. Although the IFAD-ADB Project can provide subsidy for the start up of the project; these farmers will have to find source of credit for their ongoing business operations. The Project should help linking farmers with village development funds or private banks. Capacity building for smallholders or producer groups to present business proposal to get loans from local financial institutes will be helpful.

380. Human resource management and development for stakeholders from farmers to service providers in the value chain are required to ensure sustainability of the development project. For example, most of farmers are subsistence farmers who have to perform many tasks for their living. To help them to focus on market oriented or commercial production requires comprehensive capacity building on technical and marketing assistances from local line government extension staff. Leadership development for the managers of the business operations (collection center, packing house, and/or processing facilities) is also important. According to Harper (MATCOM Project 1978-2001) these managers of agricultural cooperatives or producer groups should be trained on collecting and receiving agricultural produce, transport management, storage management, supply management, rural saving and credit schemes, staff management, work planning, financial management, cost accounting and control, risk management, project preparation and appraisal, export marketing, management of agricultural cooperative, cooperative audit and control, and management of multipurpose cooperatives.

381. Technological upgrading in terms of selections of varieties that meet market demands, improved production, and post-harvest handling management, better farm management, storage facilities, the setting up of grading systems or standards of products, collecting points or collection centres, logistic management are among many measures or interventions that this IFAD-ADB project and policy makers should consider. In the near future when the ASEAN Economic Community is operated in full force, the Thai market will have products not only from Laos but also from Cambodia, and Myanmar to compete fiercely for market share.

382. Collecting points or collection centers are essential for linking smallholders to market. It does not need to be a fancy building. It can be a simple building which serves the required functions. It should help farmers to bring products to a trading place and built up for larger quantity before they are sold for provincial and national markets or to be exported. It can be a working and meeting places for farmers and local traders to meet with potential buyers. For economy of scale, collection centers built in the selected areas can improve market infrastructure. It can be a trading place for banana, sweet potato, peanut, and other agricultural products in the areas. Collecting points or collection centers should have loading areas, weighting scales, cleaning, processing, and storages facilities.


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383. If a small packing house for agricultural products is built attached to the collecting point it would reduce transportation cost as only selected quality products will be transported to intended markets. On the other hand a packing house can be built close to the border crossing points. This will support business transactions for Laotian transportation service companies to deliver products to the packing houses, and may help to reduce time spent for customs inspection of products or containers/vehicle before clearing products through customs procedures.

384. The IFAD-ADB project should decide from the beginning that who is or are responsible for the ownership and operations of each collecting point or collection center. It would be best to consider the public-private partnership in the establishment of the collecting points or collection center but the day-to-day business operation should be run by private group which are formed under the collaborations between farmers, collectors and buyers. The consortium should be responsible for the long term investment even the IFAD-ADB can provide some subsidies for the buildings and start-up fund for the operations. Each business unit in this development project should appoint or have a manager or a leader, who is capable to work professionally, to ensure that the operation is run in the way that the unit can be a self-financed unit and generates fair incomes for members.

385. It should be noted, with due respect, that local government agencies should not be the owner of the collection center, a packing house, or a processing facility, or directly manage business operations. The design and functions of government agencies do not fit well with the rapidly changes in business environments. Protocols in government operations require more times for approvals than those of the private business practices. The role of line government agencies in the target areas should be focused on being promoters, supporters in technology transfers, and facilitators in dealing with other government units rather than being the owners, or controllers, or business operators.

386. The IFAD-ADB Project has some targeted areas selected before any commodity or supply chain analyses had taken place. In some cases, provincial government agencies selected very remote areas with good intention on poverty reduction for farmers in the areas. However, these remote areas with poor market infrastructure may not be suitable for commercial production of perishable products which have relatively low value and require good outbound logistics to reach the market as soon as possible. For example Nong district of Savannakhet province has been selected in this project based on the information that it has large areas where smallholder farmers are growing banana.

387. However, smallholder farmers’ subsistence productions of banana are different from commercial banana productions which require manageable controls over production, quantities/supplies, quality, cost of production, and outbound logistics to meet customers’ requirements. It is strongly recommended that the IFAD-ADB Project should carry out meticulously analyses on cost benefit and Economic Internal Rate of Return on any investment in each of selected areas again. Each PPO should set a priority list based on potential commercial production in the value chain rather than based on only political intention. Evaluation and monitoring system should be based on realistic achievement of each PPO in supporting smallholder farmers in their areas to integrate into market system


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and generate outcomes which improve their livelihoods. Interventions activities and implementations of the project should be designed to meet with needs and capabilities of the target beneficiaries56 and not only to meet with the desires of the executing agents or local government agencies. Procurement of equipment and services for the Project should be carried out after cost-benefit analyses, and consultations with stakeholders in the value chain. Speedily procurements of required machinery, equipment or buildings alone are not sufficient for the success and sustainability of any development project.

388. The IFAD-ADB Project should be a focal point for linking local resources to support formation of producer groups or FGEs and the start up of business operations. It should consider proper level of subsidy which will be provided to these producer groups. Instead of providing full financial subsidy, the Project should encourage investments from stakeholders in the value chain development. To promote sense of ownership and long term sustainability of the operations, the Project may provide partial subsidy in the constructions of collection centers, packing houses, and processing facilities in each project site and help stakeholders to secure low interest rate loans from village development funds or private banks to invest in business operations of the groups.

V.2. Recommendations

V.2.1. Value Chain Development of Banana

389. Farmers and local collectors can still use existing channel in selling fresh banana but they should consider improving their productivity, moving towards better quality, and better price markets. They may increase more varieties57 of Namwa banana for Thai markets. They can start by: (1) not harvesting immature banana or over-ripe bananas, (2) implementing proper post-harvest handling management, (3) reducing the numbers of uploads and downloads of banana and working with Thai buyers on what trucks to be used to reduce damages or wastes incurred during transportation, and (4) training workers on both sides of the border to change their current loading practices. Thai markets require large quantity of quality banana and various varieties. Farmers should consider adding more varieties of banana and changing cultivation practices to reduce the size of banana grove, and replace their old plants with new suckers.

390. The proposed model for banana value chain focuses on: (1) investment of the stakeholders in the value chain; (2) formation of new organisation(s) to implement business operation; (3) lessening of factors that hinder business operation either at government level or in business practices, and (4) opportunities to create more value added products through improvements in facilities such as collection centre, packing house, and solar dryers.

56 There had been some buildings and equipments of development projects which ended up being “the monuments” left unused after the projects or funding ended. Most of these full financial subsidised buildings and equipments provided by donors of development projects were not in operations because the recipients did not have sufficient capabilities to use them for commercial purposes, nor have sufficient knowledge or funds to maintain them in working conditions, and most importantly they did not have any sense of ownership because they received the donated buildings and equipment for free. 57 Please see more information at: http://www.youtube.com/watch?v=7j85jmMVW2o

http://www.youtube.com/watch?v=7j85jmMVW2o


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391. In Bachieng and Lao Ngyam farmers have been complaining about epidemic in their banana gardens. In some cases their yields had dropped more than 50%. Stock weevils, leaf spots, and leaf rollers had been found in these affected areas. However, at the time for the field surveys, it was not clear whether these gardens were affected by panama disease or not. Management of wastes in the farm after bananas are harvested still requires improvement. Their current practices have provided breeding ground for outbreaks in the areas58.

392. Bananas can be simply processed and packed to sell through modern trade or supermarket chains. The Project should consider this sector which buys more value added trimmed and packed bananas in the three targeted provinces. Information in Annex I and Annex II shows two types of packing houses in Thailand. Annex I shows the more developed operations of Thayang Agricultural Cooperative in Petchburi province. This agricultural cooperative has been producing commercial Hom Thong banana for local markets and exporting banana to an agricultural cooperative in Japan. It has a competent manager, a packing house, a management team, and production technology and inspection teams. Equipment and facilities are modern and in compliance with GAP, GMP, and HACCP standards. This Cooperative has been selling premium quality banana to high-end markets. Annex II shows a small firm exporting Khai banana. This company in Chanthaburi province uses very simple tools and equipments in their packing house. The company hires local labour force to clean, trim, prepare, and pack Khai banana to export to China. The two models of packing houses show that it is possible for the IFAD-ADB project to support farmers to move from selling banana in bulk with low quality and low prices to more value added bananas.

393. An international modern trade operator in Thailand who wants to buy banana59 for desert fruits has planned to setup a distribution centre in Khon Kean province in 2014. This Project should consider possibilities of selling premium quality fresh produces to department stores or supermarket chains in Thailand. Products from Laos are produced without using chemical inputs and this should be a strong point for selling. However, to meet quality specifications required by these buyers, farmers have to work collectively to be able to supply products according to agreed quantity in the contracts. They will have to improve farm managements, post-harvest handling, and may some partial subsidy to establish a packing house which should be accredited with GAP (Good Agriculture Practices), and GMP (Good Manufacturing Practices). In most contracts the modern trade operators put penalty clauses. Except in the case of force majeure, if suppliers cannot deliver products as agreed, they may be fined for breaching the contract.

394. Apart from processing fresh banana at packing houses and processed banana products at household level, there is an option of a larger scale of investment on solar greenhouse 58 Sungkome district in Nongkhai province of Thailand used to have banana production areas around 30,000 rai (4,800 ha). Currently the production areas has reduced to 8,000 rai (1,280 ha) due to outbreaks of panama disease in 2007. The outbreaks forced farmers to change from banana to rubber, oil palm, and other fruit trees. Namwa banana or Kyuae Nam is highly susceptible for panama disease. The disease can affect soils and prevent farmers from using the infected soil to grow Namwa banana for a long period of time 59 From informal communications with the Manager of this supermarket chain, the company could buy banana close to 1,000 tons/year. It will not buy directly from smallholder farmers and prefers to buy from producer groups or packing houses who can meet with the standards set by the company.


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dryers to produce solar dried banana for local and export markets. A solar greenhouse dryer can be built in a selected area in Lao Ngyam due to its larger production areas of banana and a close proximity between Bachieng in Champasak and Lao Ngyam in Salavanh. Even though there might be other types of machinery or equipment to be used to process dried banana, a solar greenhouse dryer uses renewable energy which is cheaper than using oven with gas or other type of fuels.

395. The side-loading solar tunnel dryer60 can be used to dry various kinds of agricultural products such as banana, chilli, herbs, tomato, glanga, cashew nuts, and tobacco leaves. For Sepone and Nong districts in Savannakhet province, the solar greenhouse dryer may be too large for the production in small sites. PPO Savannakhet should evaluate the willingness of smallholder banana producers whether they are interested in producing processed products and have commitment to use the side-loading solar tunnel dryer or not. If they are not interested in processing activities, Savannakhet PPO should not introduce investment in the side-loading solar tunnel dryer.

Figure 145. Proposed model for value chain development of banana

60 Side-loading solar tunnel dryer can dry up to 100 kg of banana per time, while the solar greenhouse dryer can dry banana between 1,000-1,400 kg/time.

Form producer groups or cooperative to have more collective supplies and bargaining power

1. Working with farmers on quality supplies; 2. Working with Thai buyers on prices and efficient logistic arrangements

1. Working with local collectors on quality supplies; 2. Working with local collectors on prices, quality, supplies, and logistic arrangements

IFAD-ADB Project invests or provides subsidies in: 1. Setting up collection centers for agricultural products 2. Revolving funds for start up business 3. Equipments for processing of products at village level 4. Buildings and equipments for solar dried banana facilities

1. A solar greenhouse dryer in Lao Ngyam to be used for dried banana processing in Lao Ngyam and Bachieng districts; 2. Two side-loading solar dryers: one in Sepone and the other in Nong districts.

2. Processing processed

products at household level for

local markets

1. Packing house for banana as table fruits

for Thai markets


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396. Champasak and Salavanh can use the solar greenhouse dryer to dry not only banana but also sweet potatoes and other agricultural products. The owner of the solar greenhouse dryer should consider using the solar dryer to its full capacity by producing banana or sweet potato processed products for its member producer groups in this project, and other groups which have agricultural products which needed to be dried on fee paying basis61. The designated owner of the solar greenhouse dryer should prepare annual business plan to ensure that the solar dryer can generate sufficient income to cover its operation and maintenance expenses. Most parts of banana can be used for commercial. Table 58 offers usages of fresh and processed banana products in the IFAD-ADB project.

Table 58. Proposals to move toward more value added banana products

Part Current usages Proposal Remarks Flowers Use in cooking Use in cooking but they

plan more to harvest for commercial

Most farmers have not paid attention to cut flowers at the proper time. If well managed, they can generate more income.

Leaves Use for wrapping Very few farmers sell leaves for income

Use for wrapping but farmers should be planned to get more income from selling leaves

Good quality banana leaves can be exported to Thailand as there are a lot of demands for banana leaves. Farmers may consider growing Tani banana for commercial production of banana leaves.

Pseudo stem

Throw away or use as feed for animals

Produce banana strings for craft production

(1) Simple process and required small investment in equipments; (2) it can be done at village level; (3) does not need high technology; (4) can be used in the same ways as weaving bamboo; (5) can create local products using existing basket weaving knowledge.

Produce fiber for paper making

(1) Simple process and required small investment in equipments; (2) it can be done at village level; (3) does not need high technology; (4) can be used to produce banana fiber paper

Produce fiber for textile (1) Require more investment and need technology; (2) may not be suitable for smallholders but more suitable for working with partner who can invest in machinery and capable of marketing

Fruits Selling as fresh produce

Selling as fresh produce locally to food processor (Dao Huang) and export markets

(1) Need improvement of production technology, post-harvest management and good handling on transportation; (2) need to reduce the number and change the method of uploading and downloading to the minimum to reduce wastes; (3) need more banana varieties such as Khai or Hom thong to offer to the markets

Selling at fresh produces but trimmed

(1) Need more capability and some investment in planning system and

61 Producer groups in Bangkrathum in Phitsanulok province use solar greenhouse dryers to produce their own solar dried bananas and also produce dried banana for other producer groups. They charge 3 baht/kg or 750 kip/kg of banana for the drying services.


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Part Current usages Proposal Remarks and packed for supermarket chains

operation of the packing house; (2) can be done at village level and does not require high investment and technology; (3) can create value added to fresh produce; can provide stable income from secure contracts with potential buyers; (4) can create employment in the packing house; (5) may need packaging material and simple equipments (please see Annex II)

Processed products: (1) Solar dried banana (1) Require high investment n the solar

dome; (2) need commitment from farmers and partners to operate; (3) need training and technical skills to dry banana to meet standards; (4) there are demands in Thailand and potential markets in the country; (5) can absorb local produce and change into more value added products; (6) can be kept for longer period; (7) need investment in human resources to run it as a real on-going business operation; need technologies in production and packaging

(2) Banana flour (1) Simple process and need small investment; (2) can share the solar drying dome with other type of processed products; (3) can be used as substitution of wheat flour in making bread and confectionery products (up to 50% of wheat replacement)

(3) Deep fried banana or chips with flavours

(1) Simple process and require small investment in equipments; (2) need less skills and time to get income; (3) can be done at household level; (4) there are provincial and national markets to absorb as snack products

(4) Banana candy (1) Simple process and require small investment in equipments; (2) need less skills and time to get income; (3) can be done at household level; (4) there are provincial and national markets to absorb as snack products

(5) Banana syrup (1) Need more technology, skills, and investment; (2) need to operate in manufacturing plant under GMP and HACCP which is difficult for smallholder farmers; (3) need proper partner to invest and sell the products

(6) Cereal bar using dried banana

(1) Need more technology, skills, and investment; (2) need to operate in manufacturing plant under GMP and HACCP which is difficult for smallholder farmers; (3) need proper partner to invest and sell the products


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397. There has been a complete system of solar dryers which consists of a roof-integrated solar dryer, a solar greenhouse, and a side-loading solar tunnel dryer at the demonstration park of Champasak Agricultural and Forestry College. This solar dryer development project was joint collaborations between the Department of Energy Development and Efficiency (DEDE) of Thailand and the Department of Electricity of Lao PDR with technical support and building of the drying facilities by the Solar Energy Research Laboratory of the Department of Physics, Silpakorn University. The facility in Pakse, Champasak has not been used for commercial production other than being used occasionally for demonstration for students since its completion in 200862.

398. During the same period the EDED also provided financial subsidies to Thai traditionally dried banana producers in Bangkrathum district of Phitsanulok in Thailand. Bangkrathum is one of the major producing areas of Namwa banana. The EDED and the Department of Physics have collaborated to change these dried banana producers to use solar dryer system. These producers have kept their solar greenhouse dryers working on daily basis and most of the solar dryers are still in good working condition. These solar dyers continue to generate income from its operations not only enough to cover the maintenance cost, but also provide sufficient profits for these producer groups63. Apart from the technical assistances of Dr. Serm and his team and financial subsidy from the DEDE, The entrepreneurial spirits of the Thai dried banana producers in Bangkrathum are among the major factors contributing to their huge success to turn a normal district which has banana into a major producer of solar dried banana. These dried bananas are sold all over Thailand and have been processed into more value added dried banana products for export.

V.2.2. Value Chain Development for Sweet Potato

399. Currently growers of sweet potato in Lao Ngyam produce Mun Daang in large quantity for local markets and to export to Thailand. However, they do not have sufficient market information on other varieties which are used in Thai markets. If they can select more varieties of sweet potatoes which have demands in Thailand, they may have wider markets and better income. Well planned crop calendar is important for commercial production. The varieties which could be harvested at the right periods will give Laotian farmers better prices than to produce only one variety which is harvested at the same periods as those grown in Thailand. Farmers in the Project may add more varieties for Thai markets either for consumption or processing purposes. For example farmers may try Phichit 166-5, and PROC No. 65-16 which have white texture and higher starch content, or varieties which have high

62 The researcher visited the solar dryer facilities in 2008 when it was newly built and twice recently in 2013. The three solar dryers are in deteriorated conditions and have to be repaired before they could be used again. The whole facilities have been transferred from the Department of Electricity to Champasak Agricultural and Forestry College. The researcher had consulted Dr. Serm Janjai of Silpakorn University on possibility to repair and use these dryers again. His advice was that it would be cheaper to build new dryers which fit with the selected project areas. 63 Most of them have expanded from one unit of the subsidy to 2-3 units built by their own with profits from the operation of first solar greenhouse dryers. Some large producers in Bangkrathum have invested in more than 30 units of solar greenhouses or what they simply called “Solar Dome”.


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yields such as Phichit 265-1 (yellow texture), and T 101 (orange texture). It is not difficult to find propagation shoots or tubers of other varieties of sweet potatoes from Thailand.

400. Sweet potatoes which has lighter colour are used as ingredients in home cooking, making deserts, and in food processing industry in Thailand. Currently there is no export of the lighter colour sweet potato from Lao Ngyam and Bachieng. Sweet potatoes which have white, yellow or orange texture can be processed into various products. Sweet potato flour is widely used in food processing products such as baked goods (bread, cookies, muffin, pancakes, and crapes) and as thickening agent for sauces and gravies. The Project may consider producing sweet potato flour, if there is market for it in Thai market. There are possibilities for farmers to produce different varieties that can be used as raw material for other processed products. Information in Tables 41-43 shows that there are many varieties of sweet potato which are used for commercial production in Thailand.

401. The solar greenhouse dryer (solar dome) can be used to dry many crops including banana, sweet potato in this Project. It can be used in productions of flours from banana and sweet potato. Banana flour has been as substitution of wheat flour in making confectionery products such as bread, cookies, brownie, and noodle. Sweet potatoes are used for animal feeds in some countries or to be produced as processed animal food products. A proposed model for value chain of sweet potato in Champasak and Salavanh is shown in Figure 146.

Figure 146. Proposed model for value chain development of sweet potato


1. Working with farmers on quality & supplies; 2. Working with Thai buyers on prices and efficient logistic arrangements

1. Working with local collectors on quality & supplies; 2. Working with local collectors on prices, quality, quantities, and logistic arrangements

IFAD-ADB Project invests or provides subsidies in: 1. Setting up collection centers for agricultural products 2. Revolving funds for start up business 3. Equipments for processing of products at village level 4. Sharing solar crop dryer with banana value chain project

A solar greenhouse dryer in Lao Ngyam to be used to dry banana and other crops such as sweet potato in Lao Ngyam and Bachieng districts

2. Processing of processed products at household level for

local markets

1. Packing house for

sweet potato

for Thai markets


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Table 59. Proposals to move toward more value added sweet potato products

Item Current Proposal Remarks Mun Daang Use in cooking

for snack and sell to local collector

Use in cooking but should be planed to add more varieties to be able to harvest for commercial at different time in the years

Thai markets use more than varieties of sweet potato and there are demands for sweet potato which have texture in white, yellow, and orange colour

Japanese sweet potato (tubers)

No commercial production

Produce Japanese sweet potato for Thai markets. Farm gate price of Japanese sweet potato is around 2-3 times higher than those of Mun Daang

(1) Need areas which have sufficient water and well drained sandy soil; (2) Need more attention and care in the production than local varieties; (3) Japanese sweet potato has less resistance to disease than local varieties; (4) Need improvement of production technology, post-harvest management and good handling on transportation; (5) Packing house to prepare Japanese sweet potato for Thai markets will add more value to the products and more income for farmers; (6) Need more capability in production and some investment in planning system and operation of the packing house

Shoots of Japanese Sweet potato for propagation


Farmers can produce shoots to sell for propagation.

(1) It can add more income for farmers. In Thailand growers sell shoots at the prices around 5-15 baht/shoot depending on the quantity; (2) Shoots of some varieties of Japanese sweet potato can be use for cooking as green vegetables.

White or yellow texture sweet potato


Offer more varieties for Thai market and increase more product ranges for quality products from Laos

(1) Some varieties have high yields and harvest at different time to the local varieties; (2) Thai markets use lighter colour sweet potato for cooking food and deserts; (3) production of sweet potato flour need lighter colour texture and higher starch content.

Sweet potato flour


Produce to use as wheat substitution in local markets and to export to Thailand

(1) Simple process and required small investment in equipments; (2) it can be done at village level; (3) does not need high technology; (4) can share the solar drying dome with other type of processed products; (5) can be used as substitution of wheat flour in making bread and confectionery products, and in making glass noodle or noodle which is currently made from tapioca

Sweet potato vinegar


Can be used as substation of rice vinegar for local markets

(1) Simple process and required small investment in equipments; (2) it can be done at village level; (3) does not need high technology.

Chilli sauce used sweet potato vinegar


Can be used as substitution of Sriracha chilli sauces in noodle shops in local markets

(1) Need some small investment; (2) can be done at village level and does not require high technology; (3) can create more value added than fresh produce

Sweet potato snacks

Limited product ranges

Sweet potato processed as deep fried sweet potato chips with flavours for local markets

(some good quality snacks in Vientiane) (1) Simple process and require small investment in equipments; (2) need less skills and time to get income; (3) can be done at household level; (4) there are provincial and national markets to absorb as snack products

Sweet potato syrup


Syrup can be used in the same way as honey

(1) Need more technology, skills, and investment; (2) need to operate in manufacturing plant under GMP and HACCP which is difficult for smallholder farmers; (3) need proper partner to invest and sell the products


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402. Apart from adding Mun Khai and other varieties of sweet potatoes, farmers have another option to grow Japanese sweet potato for Thai markets. The demands for Japanese sweet potato in Thailand are higher than what local producers can supply to. Thailand has been importing Japanese sweet potato from Vietnam and other countries such as Japan, Australia, Taiwan, and Korea. Vietnamese produced Japanese sweet potatoes are sold either as a pack of one kilogram or loose at the same price of 125 baht/kg.

403. Productions of Japanese sweet potatoes require more attention than native varieties as they have less resistance to diseases and needed to be well looked after. They have to be cultivated alternately with other crop to prevent outbreaks of diseases. Salavanh PPO has started growing two varieties of Japanese sweet potatoes in October 2013 for trial. Farmers in the two target provinces (Champasak and Salavanh) should be able to earn more income from growing Japanese sweet potato alternately with sunflowers, peanut, or cabbage. There are traders in Thailand who are willing to work with Laotian farmers in production and marketing of the fresh Japanese sweet potatoes in Thai markets.

404. During the field visits, we found very little local processed products other than steamed, baked, or boiled sweet potatoes selling as snack. There are other possibilities to produce some processed product in the two provinces, if farmers can grow more varieties of sweet potatoes which have lighter colour than the current variety. For example potato chips, vinegar made from sweet potato, and sweet potato flour. The technologies to produce these processed products are relatively simple and do not require large investment.

V.2.3. Value Chain Development of Peanut

405. Farmers in the target areas harvested peanut which had different sizes and maturities due to the mixed variety seeds which they used in production. Actually farmers can identify the differences of peanut varieties from physical appearances of the pods. However, they have been using mixed seeds from previous seasons without market information that their production practices have made their products more difficult to be used by Thai food processors. Some buyers, especially those who are producing roasted peanut, will not pay high prices for the mixed variety peanut as these mixed varieties would have to be sorted before processing starts. This sorting process increases cost of production for them.

406. Import statistic of Thailand shows that Thailand imported raw peanut from Laos and exported processed peanut products back to Laos. Imported peanut products from Thailand can be found even in small village shops in rural areas. One of the well-known peanut products is “Koh Kae” peanut products from Thailand. The lack of local processed peanut products while there are demands in the market should provide opportunities for this IFAD-ADB project to work with smallholders especially women unions or associations or groups in producing processed peanut products for internal markets64.

407. The current problems on lack of seeds for reproduction and mixed variety seeds in peanut production in the country indicate that there are demands for quality seeds in Lao

64 There was a development project of VECO in Bokeo which successfully supported villagers to produce peanut for snack. Income from selling peanut snack of this group was better than selling fresh peanut.


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PDR. Yield per ha and total quantities of peanut from the selected project sites in Savannnakhet were relatively small. It might be difficult to export due to limited economy of scale and high outbound logistic cost. However, peanut growers in Khanthanchan and Thapo villages of Xaiphouthong district are still in strong position to produce quality peanut seeds for local productions. Farmers in these two villages were willing to select seeds into individual variety from the second crop season of 2013.

408. In addition to sorting of the seeds into selected varieties for production, farmers may have to employ more technologies in their cultivation and they should have production plan. The owner of the Thai company mentioned that: (1) to avoid selling peanut at low prices, farmers should plant peanut before January to be able to harvest before July which was the time when Thai peanut would be harvested and available in Thai markets; (2) the distance between the rows of peanut planted in Laos was higher than those used in Thailand and farmers should increase density of peanut to increase yields; and (3) seeds used in commercial production should be a single variety on specific plots or areas to allow full maturity of peanut when harvested.

409. There is a high potential that selected quality seeds from Savannakhet can be sold to other farmers at local, provincial, and national markets. These two villages should focus on producing seeds for internal markets in Laos rather than export markets. The local market can easily absorb their good quality seeds. These two villages are close to Mukdaharn in Thailand which means they could get quality seeds of Tainan 9 and Khon Kean 6, or other varieties for seed production without much difficulty. To be part of the peanut value chain development, it does not require that growers have to always produce for export market65. They can specialise in production of seeds for other farmers who may produce at commercial scale for export.

410. Kengkia in Bachieng Chaleunsouk should emphasis on value chain development of peanut for export. Currently the average yield is estimated to be 1-1.2 ton/ha which is relatively low. Farmers have been using mixed variety seeds in their production for a long time. Post-harvest management and storage of peanut required technical assistance from the extension staff. The IFAD-ADB Project can assist smallholder producers on:

1) Improvement on agricultural inputs: i. Separation of seeds into individual varieties;

ii. Introduction of more varieties of peanut which can meet with demands in different markets such as fresh or dry pods, and shelled seeds;

iii. Introduction of varieties which can be used for production of edible oil; iv. Improvement in irrigation and waterways in the target areas to allow them

to have more cycles in commercial production; 2) Introduction of cultivation calendar for export market of peanut and alternate

crops;

65 Rice farmers who produce quality seed for production can sell rice seeds at much better prices than those who produce paddy to sell for export. These seed producers many have to work neatly and use more technology in production and post-harvest than conventional farmers who produce for consumption or for sales as paddy.


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3) Establishment of collecting points to increase market access for smallholders; 4) Improvement on drying facilities which can be attached to the collecting points; 5) Formation of agricultural cooperatives or community enterprise, or FGEs; 6) Revolving funds for:

i. Acquisition of farm machinery and other production inputs; ii. Processing equipment and materials for processed products for farm

household levels; iii. Seed banks for producer groups.

7) Assistance in setting up a quality control system for producer groups.

411. The following diagram presents a proposed model for value chain development of peanut.

Figure 147. Proposed model for value chain development of peanut

412. Table 60 offers some options for peanut growers and producer groups in the selected sites.


1. Working with farmers on quality & supplies; 2. Working with Thai buyers on prices and efficient logistic arrangements

1. Working with local collectors on quality & supplies; 2. Working with local collectors on prices, quality, quantities, and logistic arrangements

IFAD-ADB Project invests or provides subsidies in: 1. Setting up collection centers for agricultural products 2. Revolving funds for start up business for smallholders 3. Equipments for processing of products at village level 4. Supports for seed producers groups 5. Equipment for drying peanut at collection center 6. Improve peanut drying process at household level

1. Develop a measure to help peanut growers produce and sell quality dry peanut (pods and seeds) which have less risks on alpha toxin contamination 2. Work with local and partners’ laboratories on alpha toxin testing kits

1. Production of pods and

seeds to sell to local & Thai

markets

2. Seeds production to sell to famers

in Laos

3. Production of processed

products at household level

for local markets


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Table 60. Proposals to move toward more value added sweet potato products

Item Current Proposal Remarks Fresh peanut pods

Mixed variety and grade

Sorted seeds into individual variety and use sorted seeds in commercial peanut productions

(1) Increase value and attractiveness to products from Laos; (2) need improvement on production plans, and post-harvest handling management; (3) need good planning for speedily transportation to avoid deterioration of quality; (4) need to rotate crop to avoid outbreaks of diseases.

Seeds for production

Farmers used mixed variety seeds in production

Sorted seeds into individual variety and use in seed productions

(1) Seeds can be sold to other farmers who are in commercial peanut production; (2) it can improve quality of peanut for export; (3) it can reduce risk in alpha toxin contamination as seeds are collected at the right and full maturity; (4) farmers can earn good income in selling seeds for production and do not have to rely on export markets.

Shelled dry seeds

Mixed variety and grade; high level of moisture

Improve planning for cultivation; set standards for quality and grading systems; improve drying process

(1) Need to select proper varieties to be used in production; (2) change from mixed variety seeds in peanut production to separated varieties; (3) improve production technique and post-harvest handling; (4) introduce better seed storage practices; (5) grading system of peanut.

Seeds to produce edible oil


Peanut oil can be used in cooking and help reducing importation of edible oil

(1) Need to consider varieties which suitable or processing edible oil; (2) technology are not complicated and can be done in rural areas; (3) may need support on buying machinery

Processed products at household level

Limited types of processed peanut products

Processed peanut into more value added products such as:

(1) Boiled peanut Instead of selling raw fresh pods, local household should try producing boil peanut for commercial

(2) Roasted peanut (1) easy to produce and require simple skills; (2) equipments are not expensive and can be done at village level; (3) can fill the gap in the snack market and can be sold in shop, restaurant, and drinking places as snack

(3) Fried battered peanut products

(1) easy to produce and require simple skills; (2) equipments are not expensive and can be done at village level; (3) can fill the gap in the snack market and can be sold in shop, restaurant, and drinking places as snack

(4) Coated or sugar grazed roasted peanut

(1) easy to produce and require simple skills; (2) equipments are not expensive and can be done at village level; (3) can fill the gap in the snack market

413. There are small producers or producer groups in Thailand who buy fresh peanut in large quantity to boil and sell at wholesale prices to other small vendors or retailers who sell boiled peanut to end customers. There are around 5-6 large producers of boiled peanut who are active in the wholesale markets. One of these producers is Mrs. Amporn Suphasit, a Thai entrepreneur in Saraburi province of Thailand, who uses around 10-15 tons of fresh peanut66

66 She has average income of 68 million baht/year from selling boiled peanut. Thai varieties which Mrs. Amporn buys are Khon Kean, Kalasin 1 and 2; Myanmar local variety has big pink seeds and cultivation period is around 4 months; peanut from Laos are mixed varieties which consist of local variety, Tainan 9 and some other


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per day. She bought fresh peanut produced in Thailand, Myanmar, and Lao PDR. Prices of fresh peanut are around 11-12 baht/kg. Thai fresh peanut are available all year round with the high season starting from July. Peanuts from Myanmar are available in Thai markets around December to January. Peanuts from Laos are available mostly between June to August. She normally buys locally produce peanut first and then peanut from Myanmar. Peanut from Laos is imported after the stocks of Thai and Myanmar run out. After being cooked and packed, peanut are kept in cold storage and shipped to wholesalers including wholesale markets such as Talad Thai and Talad Simummung. The boiled peanuts are normally sold in Talad Thai at the retail prices between 40-46 baht/kg. Small vendors of boiled peanut can either buy fresh peanut to boil by themselves or buy the cooked peanut. Most vendors preferred to buy cooked peanut as they can cut many time consuming processes in washing and boiling of peanut.

414. One of the suggestions for farmer groups is to consider whether they can produce boiled peanut in addition to selling only fresh peanut. There are a lot of small vendors who sell boiled peanut in local markets and along the roads in Laos. These small vendors buy fresh peanut to boil and sell as snacks. The researcher asked some of them about cost and profit they got. One of them said she bought around 70 kg/day but could get less than 50 kg of good peanut to boil. The other 20 kg of waste were soil and debris which came with the peanut. She sold three small glasses of boiled peanut for 5,000 kip and revealed that she still satisfied with the profit she received.

415. Processed peanut products found in local markets were boiled peanut, roasted peanut and sweet peanut sticks or bars. The other form of peanut used in local market was roasted seeds which are used as food ingredient or as part of condiments in noodle or food shops. Peanut can be processed into snack products at village level and does not need high investment or technology. However to encourage smallholders to move from selling fresh peanut to be processors of processed peanut products needs their willingness to do so.

V.3. Financial and non financial benefits

V.3.1. Financial benefits

416. This project should improve financial benefits for stakeholders in the value chain. It should increase income for producers, agricultural product collectors, and local service providers through the improvement of quality or products, additional varieties of products to offer to the target market, and more values added products which can reduce the risk to rely only on fresh produces of perishable products.

417. Statistics presented in Chapter II and III shows that ability to produce quality products at the right times of the year may increase demands and prices for products from Lao PDR and increase profits around 20-50% of what farmers get now. Processed products can increase income to producers between 40-70% more than selling mass or bulk fresh

varieties they got from Thai traders. Please find information of peanut from these three countries and other varieties in Chapters II and III.


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produces. Increases in volume of trade between Laos and the main markets in Thailand will help traders and local service producers to have more business as a consequence.

V.3.2. Other non-quantified benefit of the Project:

418. As well as quantified, monetized benefits, there are a number of other key benefits of revolving funds and agricultural demonstrations in this value chain development. These non-monetized benefits include of:

1) Economic benefit from reducing high financial costs imposed by banks and unofficial loans to farmers when farmers work collectively and have more funds from their own groups;

2) Spillover effects on technical improvement and trade67 of agricultural products in nearby villages which are not in the Project;

3) Environmental benefits from using more environmental-friendly inputs such as bio pesticide and green manure in their production or using renewable energy in processing processes;

4) Revolving fund resources may be used to support acquisition of new production or to expand existing agricultural production, or improve machinery used in production;

5) Creation of new jobs or retention of existing jobs when the value chain is developed; 6) Benefits for landholders and for the sustainability and long-term variability of

agricultural systems and other rural-based businesses.

419. According to the data survey of the National Agricultural Consensus, MAF, PAFOs and PPOs, in the selected project areas, the poverty rates in these areas are relatively high. The poverty indicators include limited access to basic infrastructure such as school, hospital, road, irrigation, credit service, etc. Value chain development of this Project should raise awareness in the public sector that improvements in the said areas are required, if the government wants to achieve the goals of poverty reduction and commercialisation of agricultural products in the target areas.

420. In the targeted area, nearly 100 % of population is working in agricultural activities; around 85% involves in rice cultivation. Subsistence and semi-subsistence farmers, who engage in agriculture for self-supply and have limited access to basic welfare or higher education other than primary school. If they have opportunities to be linked to markets, they may be able to improve their livelihoods. Women are easily to be vulnerable; although hard at work they lack times and financial sources to access to social services or be able to have savings to use when in difficulties. This project should offer them opportunities to participate in the processing of agricultural products in their areas and generate additional income for their households.

421. According to farmers, lack or passive supply of irrigation water has resulted in low agricultural productivity and yield; and consequently, low profits generated from their farm production. It is hoped that this Project will lead to awareness of the public sector in 67 Processing plants or even at household level in the target areas can increase voloume of trade in other villages. These producers can buy fresh produce for processing in their areas and from neighbouring villages.


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supporting irrigation and waterway system in the target areas. Although many people believe that banana, sweet potato, and peanut are crops that require minimum water supply and farm management. However, for commercial production to supply products throughout the year, water supply and waterways are important factors in the production plans and operations.

422. Government policies to reduce impediment in terms of regulations, and support for required market infrastructure and business development in the target areas are essential for the success of sustainable development projects. Capacity buildings for various stakeholders in the value chain are critical factors in supporting activities in the value chain development. Without competent players in the value chain and suitable interventions, it would be difficult to develop and sustain this IFAD-ADB development project.

V.4. Environmental impacts

423. This Project will provide support to improve the operation quality of irrigation system and ensure environmental hygiene in rainy season of each year and can help farm households to have appropriate arrangement of crop calendar. The investment by local authority in supporting irrigation system, irrigation management, revolving fund for agricultural input, capacity building for villages and farmers aimed at contributing in stabilization of the water source will help cash crop cultivations and allow development of sufficient quantity of cash crop products for local market and for export.

424. The introduction of solar crop dryers for product processing will be in line with the policy of the government on promotion of renewable energy and less dependence on other imported and depleting sources of energy.

V.5. Vulnerable groups

425. In rural areas, most households are living on agriculture. Women play an important role in the family in terms of economy, culture and education. In difficult and remote areas, women, children and handicapped people belong to vulnerable groups due to their limitation of access to services of health care, education and market. So, this Project should have positive impacts on women, children and other vulnerable groups through economic development, poverty alleviation, and income generation for the local people, and at the same time, create favorable conditions for easy access to other social benefits.

426. Women in rural areas are often passive and have fewer proposals for social issues. This often makes them more vulnerable to the negative impact of development initiatives. This IFAD-ADB project should encourage women, through the Women’s Union or Association, to assume more active roles in the formation of agricultural cooperative or community enterprise participation. They can be the major force in processing of agricultural products at household level for local and provincial markets.

V.6. Ethnic minority group

427. In general all ethnic groups in the selected areas are the main beneficiaries of the development subproject.


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V.7. Financing plan

428. There has been an allocation of 90,000 US$ for peanut processing and 150,000 US$ for banana processing in Salavanh province. This study assumed that these funds will partially covered procurement and start up operation of the Project in Salavanh and Champasak provinces and other source of investment in the Project should come from stakeholders in the value chain or the partners in the Public Private Partnership scheme. For Savannakhet, the Project will be using additional fund allocated later for the province.

429. Investments are needed for the following items:

1) Improvement on market infrastructure in target areas: i. Collection centers for agricultural products in Bachieng, Lao Ngyam,

Xaiphouthong, Sepone, and Nong68 districts; ii. Machinery and equipments for the collection centers;

iii. Packing houses in Lao Ngyam for banana and sweet potato, and in Sepone or Savannakhet for banana;

iv. Machinery and equipments for the packing houses; v. Access to village development fund or financial institutes for loan and

investment for producer groups; vi. Irrigation and waterways improvement;

2) Supports to help linking producer groups to markets: i. Development of up-to-date marketing information system;

ii. Networks of producer groups to share best practices; iii. Development of post-harvest technologies, and storage facilities to

improve quality of products; iv. Improvement in logistics and transportation in the selected sites; v. Interventions in quality control and food safety in the regulatory systems;

vi. Certification system for export markets (GAP, GMP, HACCP, Organic, Fair Trade, etc.);

3) Processing facilities and equipment for banana and sweet potato: i. Solar greenhouse dryer in Lao Ngyam to be shared between Lao Ngyam

and Bachieng districts; ii. Side-loading solar tunnel dryer for Sepone and Nong69 districts

iii. Packaging machinery and materials for processed products; iv. Oven, scales, and other required disposable supplies.

68 PPO Savannakhet has to carry out an assessment on willingness of farm households to participate in the project and Economic Internal Rate of Return of the investment. If there is no real interest from farm households, the PPO should not push for the investment in the initial stage but can wait until project in Sepone is fully developed and can be used as a role model for the investment in Nong district. 69 Please see previous note on Nong district


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4) Processing facilities and equipment for peanut processing: i. Drying and storage facilities for peanut in Bachieng, Lao Ngyam, and

Xaiphouthong districts; ii. Processing facilities for peanut oil, and peanut oil expeller only when the

Project could find public private partnership for the operation; iii. Test kits for testing alpha toxin.

5) Revolving funds for producer groups for: i. Acquisition of farm machinery and other production inputs;

ii. Procurement of quality seeds (seed bank), propagation material, suckers, or shoots of new varieties of selected crops which can meet requirements and demands in the target markets;

iii. Investment in processing equipment and materials to produce more value added processed products at household levels (pot, pan, stove, bags, scale, packaging equipment, labels and etc.)

6) Capacity building for stakeholders on: i. Production, farm management, and post-harvest technologies;

ii. Business, marketing, and accounting skills for producer groups and other relevant stakeholders in the value chain;

iii. Training for trainers for extension staff and key stakeholders in the value chain;

iv. Processing of value added processed products for women’s groups or producers of processed products;

v. Leaders and managers development; vi. Contract farming as tool to link farmers to market;

vii. Supply chain management.

430. Some interventions in this Project require improvement in infrastructure which are under the investment of the Governement and the local line agencies; for example improvement of irrigation system and waterways, bridges, roads, transportation, and logistics. In addition the accreditation and certification systems which this Project may employ70 will have to be supported by relevant government agencies.

431. The detailed procurement plan should be prepared by the DAFOs (with support and guidance from PPOs) and based on the procurement guidelines71 and approved by the PAFO through PPO in line with the current regulations on construction investment management in Lao PDR and relevant regulations of the ADB and IFAD. Some of the items listed above can be locally procured in Lao PDR, while some items may have to use direct contracting such as the case of solar crop dryers which the Project should consider procurement from the SERL of Silpakorn University in Thailand.

70 In case this Project wants to participate actively and competitively in international markets. 71 Procurement guidelines prepared by the NPCO based on the ADB guidelines of procurement and updated time to time.


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V.8. Implementation arrangements

V.8.1. Government agencies 432. Under the guidance of the NCPO and PPOs, the DAFOs will assist the production groups for overall implementation of the subproject. DAFOs should collaborate with other local line government agencies such as DIC, and relevant agencies or association to support on processing and marketing of products. The NPCO is the main link between the PPOs and the national and international level agencies responsible for funding and oversight of the Project and its components.

433. The DAFOs together with the producer groups and technical support of the PPO and NPCO will be responsible for preparation of work plans, tender documents, bid evaluation, contracting, procurement, monitoring, supervision and quality control of the works. DAFOs will also coordinate with district support teams and Kumb Ban supervision boards, regarding actual implementation of activities in the field. The DAFOs together with the steering committee of the producer groups will be responsible to recruit and supervise the work of detailed design and supervision consultants, if required.

434. Apart from the civil works, the major contracts to be conducted by using the procurement method of “Shopping”, “SOE”, and direct contracting. Funds will be transferred to the bank accounts of the producer groups. DAFOs and PPOs will provide the training for the management of the revolving funds. These funds will be used as revolving fund by the community. DAFOs will help only for the technical guidance and will not handle the funds for any kind of purchase for farmers. Farmers will be linked with the commercial bank or village development funds to borrow for the crop loan and other loan for the productivity enhancement, farm mechanization, and processing of more value added products.

435. DAFO and PPOs will support farmers’ capacity building to help them to prepare relevant financial document for any bankable projects for the farmers. The DAFOs may act as moderators and facilitators to liaise with departments, management, companies, district and Kumb Ban authorities and user groups responsible for post-handover management – on project design, pre-handover design inspections and preparation of the O&M plan.

436. There are some issues which require supports from policy makers such as: improvement in infrastructure such as irrigation and waterways, and other overland transportation; technologies transfer to increase productivity and reduce cost of production; capacity building on technical skills and communications for local line government agencies and other stakeholders; enhancement of entrepreneurial spirits and skills in younger generations; development of market infrastructure and market information systems in remote areas; lessening of red tape in business registrations and increasing good governance; introduction of proper incentives for stakeholders in the value chain; and monitoring and evaluation systems for outcomes of development projects, especially the progress of the projects in terms of tangible outcomes and sustainable livelihood improvements for target beneficiaries.


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437. The local line agencies should be part of the steering committee together with other stakeholders in setting up standards or grading systems for agricultural products in the three provinces. This Project should pay attention to the main issues on quality and standards of products. It should support participants in the value chain to come up with workable standards or grading systems which are acceptable to all stakeholders in the value chain.

438. This Project and its public sector partners should emphasis on improvement in sustainable agricultural production, quality improvement, and increasing variety of quality products more than only focusing on expansion of production areas. When there are no real markets or potential demands for the products, smallholder farmers will have more financial risks in the expansion production areas.

439. Most development projects have funds which are not unlimited. The allocated funds should be used in integrated, comprehensive, and efficient approaches. Funds should be used and managed to support capacity building for stakeholders and to improve market infrastructure for the value chain of the selected products; for example, building systems on standards and grading or products, and establishment of collecting points or collection centers and packing houses in suitable targeted areas. Details of interventions should be communicated to stakeholders in the value chain clearly. The emphasis should also be placed on how to link smallholder farmers or producer groups and other stakeholders to markets and how to bring modern production and telecommunication technologies to support sustainable development of the value chain. Competent implementers and participants in the value chain should work collectively to ensure that this Project can achieve its objectives and goals.

440. It is important that business operations should be responsible by the private sector (producer groups, collectors, private partners in the Project, and relevant services providers, etc.) and not the public sector. These key players in the value chain should have autonomy to make decisions on business management and operations. The local line government agencies should provide active supporting roles and should not act as the controllers or decision maker for business operations in the value chain.

V.8.2. Private Partners

441. Most of the main activities in the value chain should be operated in sustainable manners and for profit. The Project should consider Public Private Partnership (PPP) with the public partners. The Project may provide some types of financial subsidy in the business start up in the collaborations between the producer groups and the participating private sector. The private partners should come from experienced and energetic buyers, operators, manufacturers, or traders who have knowledge and skills in business operations. The private partners should bring in their know-how, business expertise, and connections for the benefits of their collaborations with the producer groups and other stakeholders in the value chain.

442. The NPCO and PPOs should act as matchmakers or facilitators for the potential public partners and producer groups in reaching agreements on the PPP in their responsible target areas. They should oversee that the collaborations will be ethical, fair, and bring mututal benefits to all participants. Contract farming agreements or other types of collaborations should be studied thoroughly. Forward integration for smallholder farmers or


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producer groups to participate in trade and commercial activites should be good options in linking them to markets.

V.8.3. Smallholder Farmers/Producer Groups

443. The NPCO and PPOs should focus on the formation of farmer/producer groups or Farmer Group Enterprise (FGE). These producer associations should give farmers more collective production and negotiation power than working as individual farmers. With proper teachology transfers and assistance on capacity building, these producer groups or FGEs can take active roles in the development of commercial productions and producing of more value added products.

444. The Project should encourage farmers to integrate into market by supporting them to improve sustainable production and using more technologies and innovations to have better quality of products. Some subsistence farmers and semi-subsistence farmers may need more technical supports to assist them to have better crop planning and to have more time to produce for commercial purposes. Smallholder farmers should not be encouraged to expand their production, if there are no demands or markets for their products.

V.9. Consultant requirements

445. The PAFO and DAFOs will be responsible for supervision consultants and other small consultancy packages (if needed). SNRMPEP Consultants based in the provinces will help the PAFO and DAFO to prepare all documents related to the implementations.

a) Consultants are needed as follows:

Investment preparation phase: consultants for survey and preparation of investment in selected sites; examination and assessment of initial environmental impacts; project appraisal. Resident Consultant of extension staff can assist farmers to analyses the soil for the nutrients availability, organic matter, pH., Soil salinity, and etc., and develop the land use plan for the plantation of the different crops following the crop rotation, green manuring etc. He/she will help farmers to develop crop calendar, calendar of operation etc. He/she also develops the technical literatures, training manual, leaflets etc to be used by the farmers and technical staff for the activities to be implemented in the project sites.

o Provincial Project Management consultant will assist the DAFO and farmers production groups/Water User Groups in preparation of the proposal for the getting the advance from the PPOs for the implementation of the activities, establish the systems for the group revolving fund management, linkages with the financial institutions to get the crop and other productive loan, establish the market information system and value chain for the products to be produced under the subproject.

o NPCO and PPO/PAFO in the selected Province will collaborate in search for consultants from research organization such as:

1) For banana production and processing—Pakchong Research Station, Inseechandratiya Institute, Kasesart University, Nakornrachsima, Thailand


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2) For solar crop dryer—Department of Physics, Silpakorn University, Nakornpathom, Thailand

3) For improvement on peanut varieties—Khon Kean Field Crops Research Station, Khon Kean, Thailand

4) For sweet potato product development—Institute of Nutrition, Midol University, Nakornpathom, Thailand

5) For peanut production and buyer—Mr. Supoj Pongwachararak (Mitchairai Co.), Nakornsawan, Thailand

6) For post-harvest and product management—Postharvest ad Products Processing Research and Development Office, Department of Agriculture, Bangkok, Thailand

Investment implementation phase: Consultants for:

1) Business and management consultant for: (a) capacity building for local agencies and relevant stakeholders involving in business planning and operations of the processing of the three selected products; (b) leadership development for leaders of the producer groups and members of the community enterprise so that they will have sufficient business management skills to their operations.

2) Marketing consultant to: (a) support the selected producer groups in marketing activities of fresh produces and processed products and linking or matching potential buyers or importers with producer groups in the project; (b) support the selected producer groups to find proper market mix and help to develop products and services make the producer groups to be self-financed business units with sufficient profits to share fairly among stakeholders.

b) General requirements for consultants:

1) Consultants must ensure the legal status and follow strictly their functions and assignments as mentioned in their TOR attached with bidding invitation documents;

2) Obey all current regulations of the Government and the Province; as well as requirements of the investment owner.


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ANNEXES

Annex I. Learning from Thayang Agricultural Coperative on Exporting Hom Thong Banana to Japan

Annext II. Learning from A Thai company Exporting Khai Banana to China

Annex III. Useful Information

Annex IV. Implementation Schedule for Value Chain Development of Banana

Annex V. Implementation Schedule for Value Chain Development of Sweet Potato

Annex VI. Implementation Schedule for Value Chain Development of Peanut Annex VII. Monitoring Framework


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Annex I. Learning from Thayang Agricultural Coperative on Exporting Banana to Japan

(1) Tha Yang Agricultural Cooperatives in Petchburi

(2) Chemical free Hom Thong Banana

(3) Planning with a buyer on production of banana

(4) Standards for export (5) Maturity 70% for export (6) Length around 15 cm.

(7) Using Good Agriculture

Practice (8) Land preparation for

cultivation (9) Farmers working with an Officer from the Cooperative

(10) Growing new plant every year (11) Cultivation plot (12) Name tag of each plot


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(13) Inspection by Coop officer

(14) Taking records of each farm (15) Trimming leaves regularly

(16) Cover bunch with plastic bag (17) Keeping records of operation

in the log book

(18) Record of the administration of water and fertiliser

(16) Harvest of banana by Coop (17) Harvest of banana

(18) Taking banana from farm

(19) Holding the bunch downward (20) Wrapping each bunch (21) Wrapping with foam sheet


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(22) Loading to Co-op’s truck (23) Co-op’s truck

(24) Sitting on a wooden plank

(25) Bananas arrived at Co-op (26) Downloading

(27) Taking bunches down

(28) Record of banana delivery (29) Information on each farmer

(30) Cutting tiers from bunches

(31) Weighting of banana (32) Weighting of banana (33) Washing done at Coop


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(34) Washing in water 6 times (25) Trimming

(36) Blow dry each tier & section

(37) Blow dry and checking (38) Insert foam sheet in between

(39) Pack with foam sheets in box

(40) Packing into boxes (41) Packing into boxes

(42) Weight and print sticker

(43) Weighting each box (44) Putting sticker on top of box (45) Return box to production line


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(46) Sucking air out (47) Storage at 13° C (48) Keeping in cold storage

(49) Convey into a temperature

controlled container (50) Stacking up box of banana

in the container (51) Checking export documents

(52) Leaving Co-op for shipping by

sea (53) Banana for local markets (54) Ripen chamber for local

market

(55) Packing for local market (56) Banana for supermarket (57) Bunches for local market

Source: http://www.youtube.com/watch?v=Cz7lLDAlKEE, http://www.youtube.com/watch?v=h9G1yKyYG0U, http://www.youtube.com/watch?v=Ev98iR0ZUm8

http://www.youtube.com/watch?v=Cz7lLDAlKEE

http://www.youtube.com/watch?v=h9G1yKyYG0U

http://www.youtube.com/watch?v=Ev98iR0ZUm8


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Annex II. Learning from a Thai Company Exporting Khai Banana to China Chanthaburi province, Thailand Average price between 45-65 baht/kg

(1) Kyuae Khai garden for export to

China (2) Covering each bunch with an open

end bag to protect from dust (3) Banana after separated from

bunches into tiers

(4) Checking quality of banana (5) Banana waiting for washing (6) Washing with soap solution

(7) Washing each tier of banana (8) Trimming the dead end of fruit (9) After the washing up and trimmed

(10) Packing into boxes (11) Using thin foam sheets to separate

each tier (12) Thai Exporter of Khai banana to

China Source: http://www.youtube.com/watch?v=D0sVZC7_1rg

http://www.youtube.com/watch?v=D0sVZC7_1rg


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Annex III. Useful information

Information given below comes from various organisations and individuals who posted them on Youtube. Apart from processed food products, there are non-food processed products which generated income for these small producer groups.

Banana and banana products

Pakchong 50 Banana, Pakchong Research Station http://www.youtube.com/watch?v=l7MhoeKePp4

7 Varieties of Namwa Bananaby Pakchong Research Station, Nov 2012


15 Years of Exporting Banana to Japan by Thayang Agricultural Cooperative


Banana for export (1) Thayang Coop. http://www.youtube.com/watch?v=wVT35x8el6A

Banana for export (2) Thayang Coop. http://www.youtube.com/watch?v=WEnPb9-ugaE

TV documentary on Thayang Agricultural Cooperative


How to grow Hom Thong banana, Thayang Coop. http://www.youtube.com/watch?v=Ev98iR0ZUm8

Khai banana for China market, Chanthaburi http://www.youtube.com/watch?v=D0sVZC7_1rg

Hom Thong banana for export, Banlard Agricultural Cooperative, Aug 2012

http://www.youtube.com/watch?v=7vlWSjsHsQE

Banlard Agricultural Cooperative, 2010 http://www.youtube.com/watch?v=caIDpuYGwjU

Production of Banana crisps, Nakornsawan http://www.youtube.com/watch?v=1qZKCwBCfZY

Banana candies from Banrai Pattana Community Enterprise, Ban Srapathum, Phichit

http://www.youtube.com/watch?v=yppCL5jZnoo

Crispy banana fries from Pattani http://www.youtube.com/watch?v=qvhEPvM_x54

Dried banana roll, by Pakchong Research Station, Nov 2012

http://www.youtube.com/watch?v=44_qAK41Yts

Bangkrathum dried banana http://www.youtube.com/watch?v=H72sDxR0jZY

Side loading solar dried banana http://www.youtube.com/watch?v=uJhtIs7Lr9g

Solar dried banana http://www.youtube.com/watch?v=hYMCpYWbA70

Non-food banana products

Craft products made from dried banana psudostem by a women group in Yala

http://www.youtube.com/watch?v=-lEMs1CNNTI

Product from banana rope by a women group in Songkhla

http://www.youtube.com/watch?v=SZ9_Ykw8q9k

Export products from banana fiber by a women group in Payao

http://www.youtube.com/watch?v=Dc6vfuBpwtk

Woven craft products from banana rope by a women group in Surathani

http://www.youtube.com/watch?v=zaI6OAzwfJY

Woven basket from banana pseudostem by a women group in Trung

http://www.youtube.com/watch?v=U8DIS3k3pG0

Curtain made from banana fiber paper, by Sarun Ukongdi

http://www.youtube.com/watch?v=1lnJkxCdZ2Y

http://www.youtube.com/watch?v=Fe6USNtkJqs

http://www.youtube.com/watch?v=l7MhoeKePp4



http://www.youtube.com/watch?v=wVT35x8el6A

http://www.youtube.com/watch?v=WEnPb9-ugaE


http://www.youtube.com/watch?v=Ev98iR0ZUm8

http://www.youtube.com/watch?v=D0sVZC7_1rg

http://www.youtube.com/watch?v=7vlWSjsHsQE

http://www.youtube.com/watch?v=caIDpuYGwjU

http://www.youtube.com/watch?v=1qZKCwBCfZY

http://www.youtube.com/watch?v=yppCL5jZnoo

http://www.youtube.com/watch?v=qvhEPvM_x54


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Sweet potato products

Sweet potato fries (Bird nest) http://www.youtube.com/watch?v=PP4zM52lUyc

Sweet potato snack (Quail eggs) http://www.youtube.com/watch?v=f_WpAcx47c8

Peanut and peanut products

Kasetsart 50 variety peanut (large seeds) including training for extension staff

http://www.youtube.com/watch?v=ScDEAYhLbA0

Khon Kean 84-7 peanut, 2012 http://www.youtube.com/watch?v=1oZU9B4zRgY

TV documentary on Peanut 08/05/2013 http://www.youtube.com/watch?v=2PHrZBHIsH0

Peanut processing village, Ban Paan, Roi-et http://www.youtube.com/watch?NR=1&v=_088in85xLc&feature=endscreen

Peanut processing bt Jay Kee http://www.youtube.com/watch?v=lcZw2f1oZ10

Singburi peanut growers earn more income from peanut than rice

http://www.youtube.com/watch?v=BXcwhCM1vOA

Processed peanut products from Ban Kong in Udonthani

http://www.youtube.com/watch?v=dxdhlWoEqJ4

Peanut battered snack, 2011 http://www.youtube.com/watch?v=J7M-fVC9siA

http://www.youtube.com/watch?v=1oZU9B4zRgY

http://www.youtube.com/watch?NR=1&v=_088in85xLc&feature=endscreen

http://www.youtube.com/watch?NR=1&v=_088in85xLc&feature=endscreen

http://www.youtube.com/watch?v=dxdhlWoEqJ4

http://www.youtube.com/watch?v=J7M-fVC9siA


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Annex IV. Implementation Schedule for Value Chain Development of Selected Products

No. ACTIVITIES

2014 2015 2016

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

1. Report presented to policy makers 2. Meeting of NPCO and PPO on clustering of products and priority setting 3. Need assessments of stakeholders in the value chain development 4. Negotiations with potential private partners for PPP agreements 5. Formation of producer groups in selected areas and selection of leaders of the groups

6. Training on production and post-harvest management for producer groups. (1-2 days training sessions)

7. Implementations of commercial production and transfer technologies on improved post-harvest managment to smallholder farmers nad logistic operators

8. Selections of target sites for collection centres and packing houses. The three PPOs should work together with local line agencies and producer groups.

9. Construction of collection centres and packing houses 10. Training on production of processed products at household level 11. Construction of solar crop dryers in selected areas (between 25-35 days)

12. Training for producer groups on using solar crop dryers (either in Thailand or Laos) (10 days on-the-job training session)

13. Training on basic business and management skills for producer groups 14. Processing of processed products at larger scale of producting 15. Proceesing of processed products at household level 16. Meeting for planning of action plans, budget, and business operations 17. Mid-term review 18. Monitoring and Evaluation of implementation


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Annex V. Monitoring Framework

Project Description Performance Targets /Verifiable Indicators Means of Verification/ Reporting Mechanisms

Important Assumptions/Risks

Livelihoods of smallholders inthe selected project areas are improved through their participations in the value chain development of banana, sweet potato, and peanut. Other stakeholders in the value chain received fair share of the profits in the operations.

By 2016: Household income of farmers in selected project target villages increased by 25%.

Household survey data

HH don’t migrate from the target areas and no major outbreak or severe drought in the areas Banks’ willingness to cooperate in providing loans and data

Number of households participate in project activities increases at least 20% per year

Support from national & provincial authorities Farmers’ willingness to learn new production and post-harvest techniques Availability of quality extension trainers

By 2016: 50% decrease in farmers who lack own resources to use in their household spending

Families adopt long term approach to cash management

Families trained in financial literacy & planning skills

By 2016: 25% increase in health & education spending

By 2016: Farmers’ network established for marketing of fresh and processed products, and by-products

Support from national & provincial authorities Availability of quality extension to work with smallholders

By 2015: 70% of farmers should be able to increase income from selling imporved quality and more value added products

SNRMPEP M&E reports

Household survey data Availability

Families trained in financial literacy & planning skills Farmers willing to learn new techniques Support from national & provincial authorities of quality extension

By mid of 2015: 25% of farmers in the target areas should become market oriented farmers.


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Outcomes/Outputs Performance Targets /Verifiable Indicators Means Of Verification/

Reporting Mechanisms Important Assumptions/Risks

Farmers living in selected target villages are offered more opportunities for income generation from participation in the Project

By 2015: 25% increase in HH income from selling fresh and processed products

Household surveys and interviews SNRMPEP M&E reports

Families trained in financial literacy & planning skills

Families treated fairly by officials Farmers understand long term benefits of good maintenance and active

Smallholders and producer groups can produce better quality and having better yeilds

By 2015: 80 % of Households in the target areas can benefit from improved irrigated land

Support from local government agencies Quality engineering construction firms available

Number of well established producer groups expanded

By 2015: 80% of producer groups can expand the number of members

Good role model in the producer groups Good leaderships of the producer groups Income from selling products increase Support from PPO, national & provincial authorities

By the end of 2015: The number of producer groups in each district increase by 30% and they can be linked or networked with other groups

Each project site can produce more varieties of quality products for local and export market

By 2014: Each village should have at least 2 producer groups

Support from PPO, national & provincial authorities Availability of quality extension

Capability of local line officials in technical acquisition and transfer increase

By 2014: Each district should have at least 2 officials working closely and provide technical backstopping to villages in their coverage

Imporve market infrastructure in target areas By 2015: 50 % of smallholders in the project

sites can be linked to market

Support from PPO, national & provincial authorities and policy makers at national level

Increase number of local enterpreuers

By 2016: 35% increase in number of local business operators and 40 % of smallholders produce for commercial purposes through forward integration

Support from PPO, national & provincial authorities and policy makers at national level. Capablility of private partners in PPP


Page 218

REFERENCE

Actor-Led Change for Efficient AgriFood Systems: Handbook of Participatory Actor-Based CADIAC Approach, CGPRT No.29, CIRAD.

Arias, Pedro et al., 2013. Smallholder integration in changing food markets, FAO, Rome.

Will, Margaret, 2013, Contract farming handbook: A practical guide for linking small-scale producers and buyers through business model innovation, GIZ

Gloy, Brent, A Guide to Understanding the Value Chain, Smart Marketing (September 2005), Department of Applied Economics and Management, Cornell University, Ithaca, NY 14853.

How Can Collection Centers Effectively Link Smallholder Farmers to Bulk Market? Some Lessons from RLD’s Experience, Rural Livelihood Development Company, Tanzania.


Jaffee, S., Henson, S., and Diaz-Rios, L. 2011. Making the Grade: Smallholder Farmers, Emerging Standards, and Development Assistance Programs in Africa, A Research Synthesis, World Bank

Ling, Stuart, 2009, Farmer Group Enterprise in Bokeo Province, Learning from VECO’s Experiences, Vredeseilanden.

Porter, Michael E., 1985. Competitive Advantage: Creating and Sustaining Superior Performance, New York.

Principles for Responsible Agricultural Investment that Respects Rights, Livelihoods and Resources, Synoptic Version, A discussion note prepared by FAO, IFAD, the UNCTAD Secretariat and the World Bank Group to contribute to an ongoing global dialogue, February 22, 2010.

Randy C. Ploetz, Randy C. et al, 2007. Banana and plantain—an overview with emphasis on Pacific island cultivars Musaceae (banana family), Species Profiles for Pacific Island Agroforestry, http://www.traditionaltree.org/

Torero, Maximo, A framework for Linking Small Farmers to Markets, Paper presented at the IFAD Conference on New Directions for Smallholder Agriculture, 24-25 January, 2011.

Value Chain Analysis Report: Cambodia, Philippines, and Vietnam, 2008, Asian Partnership for the Development of Human Resources in Rural Asia and the ASEAN Foundation, Manila, Philippines.

Wiggins, S. and Keats S., 2013. Leaping and Learning: Linking smallholders to markets in Africa. London: Agriculture for Impact, Imperial College and Overseas Development Institute


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