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Agriculture Growth Rate Falls Below Target

Source: Vientiane Times

The agriculture sector is expected to grow at a rate of just 0.9-1.7 percent this year, well below the target of 2.8-3 percent, according to the National Economic Research Institute.

The shortfall is attributed to various factors including the Covid-19 pandemic, disease outbreaks and natural disasters, which have resulted in lower yields.

According to the World Bank report, the agriculture sector rebounds, but at a moderate pace, subject to export market disruption and weather-related risks.

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Although the government has done more to try to boost food production for domestic consumption and export, the volume of produce has not increased as anticipated.

Some agricultural products are still being imported from neighbouring countries to meet the domestic demand.

Chairman of the National Assembly’s Planning, Finance and Audit Committee and a respected economist, Dr Leeber Leebouapao, told Vientiane Times there were several challenges hampering the development of agriculture.

“As you may be aware, we cannot expand the area of agricultural production because much of the country’s farmland has been taken for development projects,” he said.

“What we can do is to use appropriate techniques and modernise production to improve the quantity and quality of crops produced for export.”

Although the government has attempted to assist producers to access financing, growers still suffer from high costs as they have to buy machinery, equipment and fertilisers from other countries.

One of the most meaningful statistics is that 64 percent of the Lao population works in agriculture but this sector has grown by only 3 percent over the past two decades.

It is essential to attract more domestic and foreign investment in agriculture in order to boost yields while ensuring that crops grown for export are of high quality.

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Dr Leeber acknowledged that the government needed to help producers overcome their challenges, not only to boost the quality of their produce but also by assisting them to find markets for their crops.

“Even though access to finance has been improved, producers are burdened by high interest rates on loans,” he said.

Economists say agriculture is a risky business because producers not only have to contend with pests and diseases but also flooding and drought.

In 2018 and 2019, the agriculture sector was harmfully affected by the flooding in southern provinces and a drought in the north of the country.

Thousands of hectares of crops died during floods and prolonged dry spells. In addition, the high cost of irrigation has forced some farmers to abandon their dry-season rice crop because they can’t make a profit from it. Farmers have been encouraged to grow other crops that result in higher economic returns.

One of the main challenges is that many farmers still depend on subsistence agriculture based on traditional methods, but yields are insufficient to meet market demand. Another problem is related to low-quality farm productivity and fragmentation of the value chain.