• 1. OVERVIEW
• 2. CROP PRODUCTION AND FOOD SUPPLY IN 1998/99
  • 2.1 Lowland (Monsoon) Rice Production
  • 2.2 Upland Rice Production
  • 2.3 The 1999 Off-Season (Irrigated)Crop
  • 2.4 Production of Other Foods
  • 2.5 Food Stocks
• 3. DEMAND FOR RICE IN 1999
  • 3.1 Food Use
  • 3.2 Other Uses
  • 3.3 Rice Supply/Demand Balance in 1999
  • 3.4 Targeted Food Assistance Requirements

1. OVERVIEW

Following reports of an unfavourable food outlook and at the request of the Government, an FAO/WFP Crop and Food Supply Assessment Mission visited Lao PDR from 19th January to 8th February 1999 to review the outcome of the main 1998 paddy crop, forecast the 1999 irrigated crop, and estimate import requirements including food aid for the 1998/99 marketing year. Consultations were held with the relevant Government ministries, and donor, NGO and UN representations in Vientianne. The focus of the fieldwork was on selected drought-affected areas, Khammoune, Saravan and Savannakhet Provinces, where the team met with Provincial and District officials, NGOs, farmers, village heads, and merchants, and observed the conditions of the off-season paddy crop, which was being transplanted.

The 1998/99 rice production is forecast at about 1.77 million tonnes, 22 percent above the average for the previous five years and moderately higher than last year’s, despite localised dry spells and a sharp reduction in plantings of the upland rice crop. The increase in production is mainly attributed to unusually low levels of flood damage, and a major expansion in the area under (irrigated) off-season paddy.

In view of the good domestic crop, commercial imports are expected to be minimal, estimated at 3 000 tonnes. Barring late damage to the off-season crop, average food prices are unlikely to come under major upward pressure and provide an incentive for imports. The public sector is not planning to purchase abroad. In the event of a poor off-season crop, the volume of commercial imports would be constrained by a large fiscal deficit, a weak exchange rate, and relatively high world prices for rice.

Estimates of crop production suggest that there will be no major overall national shortfalls that would call for emergency food assistance. However, insufficient access to food remains a continuing problem and targeted development food aid (particularly food-for-work) may be appropriate for chronically food-insecure households.

2. CROP PRODUCTION AND FOOD SUPPLY IN 1998/99

Chart 1 shows trends in harvested area and rice production for the period 1990/91-1997/98 and forecasts for 1998/99. Harvested area has virtually stagnated at around 600 000 hectares, while production has fluctuated between 1.2-1.8 million tonnes over the period.

* forecast

For the 1998/99 production year, dry spells from June to July 1998 affected the transplanting of late rice, but many farmers were able to replant. Flooding, the chief risk to production in the principal growing areas, has been less extensive than usual. The combined upland and lowland monsoon crop was slightly lower than the (bumper) 1997 output, but above the five-year average. A large 1999 off-season crop will, on current projections, bring total 1998/99 rice production (for consumption during 1999) to 1.8 million tonnes, which is one percent above the 1997/98 output and 22 percent higher than the average for the previous five years.

Table 1: Preliminary Estimates of Total Paddy Production in 1998/99 by Province

Source: Ministry of Agriculture and Forestry, FAO estimates for 1998/99 off-season
1/ Harvested area in thousand hectares
2/ Production (paddy rice) in thousand tonnes
3/ Includes crops for consumption in 1999, i.e. the upland and lowland monsoon crops harvested in late 1998 and a forecast of the 1999 off-season crop, due to be harvested in mid-1999. The historic data series also follows this definition, rather than the calendar year production estimates used in the MoAF series.

2.1 Lowland (Monsoon) Rice Production

The lowland monsoon crop is mostly cultivated in the Mekong River valley. It is predominantly rain-fed, with limited irrigation. Dry spells in June through August hampered the transplanting of late paddy, and led to reductions in the yield of the early transplanted (long cycle) varieties. Widespread replanting helped to mitigate the overall impact of the dry spells. The season ended normally and late season rainfall was close to normal levels. Grain development of the late-planted long-cycle varieties was impaired by moisture stress at the end of the season. The most severely affected areas were in the southern and central areas of the Mekong valley, namely Khammoune (2 districts), Houphan (2 districts), Savannakhet (5 districts), and Sekong (1 district) and Attapue (4 districts). Chart 2 shows the rainfall situation in Savannakhet, a main rice producing area, in 1998.

Yields were highly variable, even within districts, reflecting local level variations in rainfall in the June-August period. Farmers with access to short-cycle seed varieties were generally better equipped to reap higher yields. Reported pest damage was minimal, and much lower than in 1997. Endemic rice crop pests include rodents, birds and stem-borer.

Flooding is the main risk to lowland monsoon cultivation, and, nationally, the principal cause of variable yields and (harvested) area. The main reason for above-average production this year is the absence of flooding, rather than any fundamental shifts in the production technology. The alluvial soils in the lowlands are low in organic matter and tend to be acidic. Inorganic and organic fertiliser application is low, and liming virtually unheard of. Average per hectare application rates are around 10 kg, mostly ammonium phosphate and urea, the bulk of which is imported. Two domestic plants produce small quantities of processed organic fertiliser. There was an increase in imported fertilizers for the 1998/99 cropping seasons, mainly through a donor-financed grant. While potential yield responses to fertiliser are strong, a recent report suggests weak actual yield returns, as application methods are haphazard, reflecting the lack of effective extension. The overall yield impact of the increase in fertiliser application in 1998 is likely to have been minimal.

The poorly developed domestic rice input and output markets, discussed below, together with the limited extension services, have perpetuated a low technology farming system, despite Government efforts to increase the use of improved seeds, fertiliser and irrigation. The availability of rural credit is extremely limited, although produce in the main surplus provinces is often purchased on forward contracts, enabling farmers to purchase inputs. The low commercialisation of rice production is shown by the predominance of glutinous rice seed varieties in production. Glutinous varieties are the preferred food staple, especially in rural areas, but are generally lower yielding, more prone to lodging, and less profitable than non-glutinous varieties. Official data sources indicate strong upward trends in lowland yields since the late 1970s.

Table 2: Estimates of Lowland (Monsoon) Paddy Production in 1998 by Province

Source: Ministry of Agriculture and Forestry
Totals are derived from unrounded data
1/ Harvested area in thousand hectares
2/ Production (paddy rice) in thousand tonnes

2.2 Upland Rice Production

The upland rice crop is produced during the monsoon season, either in pure or in mixed stands. The predominant production technology is very low-input, and land preparation is through slash-and-burn. In 1998 the total area is reported to have declined by 13 percent from the 1997 area, and 25 percent from the five-year average. A sharp downward trend in area is attributed to a policy of restricting destruction of forestry resources.

Upland rice yields are low and generally more variable than those of the lowland crop. The official data suggest a modest upward trend in average yields since the mid-1970s. This is disputed. According to one report, increasing population pressures and restrictions on slash and burn practices resulted in decreasing fallow periods in some areas from an average of 38 years in the 1950s to 5 years in 1992. There has been a corresponding increase in the length of cultivation periods. Yields on second and third plantings are universally lower than on the newly cleared areas, as upland soil fertility is low. The main causes of yield variability are weather and pest related. In 1998, average national yields were estimated at 1 percent higher than the five-year average. In the main producing areas of the north, yields were 3 percent above average, whereas in eastern areas of the Southern Regions, particularly in Saravan and Attapue Provinces, they were well below average. The crop was affected by intermittent dry spells, especially at the emergence and flowering stages. In Houphan province, yields were also affected by extensive pest infestations.

Table 3: Estimates of Upland (Monsoon) Paddy Production in 1998 by Province

Source: Ministry of Agriculture and Forestry
1/ Harvested area in thousand hectares
2/ Production (paddy rice) in thousand tonnes

2.3 The 1999 Off-Season (Irrigated)Crop

A major expansion in off-season cultivation (almost exclusively paddy) is targeted for 1999. The target transplanted area of 75 500 hectares, compares to a planned 50 000 hectares in 1998. Substantial imports of pumps and administrative pressure from local authorities are driving the expansion. The high off-season price for rice provides an economic incentive for producers with access to markets, clustered around the main arterial road, route 13. At the time of the mission, land preparation and transplanting were underway. Off-season cultivation is mainly centred in the Mekong River valley, where the mission was able to observe progress and interview farmers.

The official target, used by the Government to arrive at its total paddy production estimate for 1998/99, seems to be over-ambitious. Lack of experience in pump irrigation, shortages of diesel, tight supplies of improved seeds and farm liquidity constraints will all limit land preparation. Rental prices for hand tractors have shot up. While it was not possible for the mission to make an independent estimate of area, it has been assumed that the actual harvested area will fall short of the target by the same percentage as in previous years (some 2 percent for off-season cultivation, nationally).

The target yield for the 1999 off-season crop, at 4.1 tonnes of paddy per hectare, is improbable. There is considerable circumstantial evidence that farm incentives are weak, except in areas near to the main roads. Pest control was observed to be deficient. Fertiliser application rates and use of improved seed varieties are too low for these yield targets to be plausible. There is a high probability that several of the secondary river sources will run dry before the rice reaches flowering. Extensive infestations of stem borer were observed on the newly transplanted crop. The mission’s forecast is therefore based on the 5-year average off-season yields of 3.77 tonnes per hectare.

Table 4: Forecasts of Off-Season (Irrigated) Paddy Production in 1999 by Region

Source: Ministry of Agriculture and Forestry
1/ Harvested area in thousand hectares
2/ Production (paddy rice) in thousand tonnes
3/ FAO Forecast

2.4 Production of Other Foods

Cassava and sweet potato are mainly cultivated on upland plots, often in mixed stands. In eastern areas the crop was hit by the early cessation of the rains and, while the situation varies, production in the coming months is likely to be below average. Local varieties are very low yielding, even under favourable growing conditions. The forests provide a variety of food, notably taro, bamboo shoots as well as wild animals, although the stock of the latter has been depleted. There are no data on consumption or availability of forest products. It is possible that these supplies might be depleted, as competition will be sharper this year in some of the drought-affected hill areas. Maize, the second largest crop in terms of planted area, is produced on the hillsides under low-input technologies. It is primarily used for animal feed, and the probable drop in production will have little impact on food markets in 1999.

Livestock was in a reasonably good condition, although there were localised reports of (unidentified) pig, cattle, and poultry diseases, which had seriously affected livestock. In lowland areas, the large expansion of the off-season area may have limited the grazing area. The official data suggest that there has been a sharp increase in livestock numbers in the past five years. This probably reflects growth in urban and export demand.

In terms of value of production and contribution to the national diet, rice remains uniquely important in the rural economy. As the influence of other food commodities on rice demand is negligible, they have not been included in the national balance provided below.

2.5 Food Stocks

Official stocks held at national, provincial and district levels or in Government shops are limited and complete data do not exist. As the bulk of the harvest is available shortly before the end of the year, significant on-farm or trade inter-annual carryovers are likely to be minimal. None of the villagers interviewed by the team reported carryovers. In the absence of complete and reliable data, it is assumed, in line with previous missions, that there will be zero net draw down

3. DEMAND FOR RICE IN 1999

3.1 Food Use

Population growth is probably the main factor affecting changes in annual demand for rice. The official extrapolation of 1999 mid year population is based on the assumption of a constant, inter-census natural growth rate of 2.5 per cent per annum, giving a mid-1999 population estimate of 5.1 million people. No major influxes of returnees can be expected in the coming year. Official estimates suggest that the flow of repatriations (returnees) has slowed to a trickle. It is probable that temporary out-migration (mainly to Thailand) has also declined, as a result of the economic slowdown in that country, but no data are available to support these hypotheses.

At the aggregate level, per caput demand for rice is unlikely to undergo significant shifts this year. On current projections, per caput GDP growth will be close to zero in 1999. It is difficult to anticipate the level of retail rice prices, as market price data reflect high inflation rates, making analysis of nominal price series meaningless. Estimating real rice prices is complicated by the heavy influence of the nominal rice price on the Consumer Price Index (CPI) calculations, a recent change in the CPI base and the small sample of locations in which retail price data are collected. In view of the largely subsistence nature of demand for rice it is, in any case, unlikely to be highly price-elastic. The official rice consumption norm (180 kilograms of milled rice per caput/year) is a plausible basis for estimating food use in 1999 and is adopted in deriving the country’s cereal balance sheet.

3.2 Other Uses

Seed use and post harvest losses are the two significant deductions from production. The (extensive) use of rice for brewing is reflected in the food use estimates. In preparing a balance for 1999, the mission followed the norms used by the Ministry of Agriculture and Forestry. A constant post-harvest loss rate of 10 percent (of production) is applied. This is probably under-estimated as much of the crop is stored on-farm and highly prone to rodent and other pest infestations. Further, the method implicitly assumes zero losses from imported commodities. In the absence of conclusive survey evidence, there were no solid grounds on which to revise the MoAF figure.

The seed use estimates used by the MoAF are calculated by multiplying target (for the next season) upland and lowland areas by a seeding rate of 60 and 80 kg per hectare respectively. The seeding rates are in turn based on MoAF recommendations, not on survey data. Again there was no alternative data source so these rates were used. Total seed use was based on projected rather than target plantings, using a 10-year linear trend.

3.3 Rice Supply/Demand Balance in 1999

Table 5 presents the supply/demand balance for rice in 1999. The table shows that the country will have a small rice deficit of about 3 000 tonnes, which is expected to be met by commercial imports.

Table 5: Rice Balance Sheet 1999 (‘000 tonnes)

3.4 Targeted Food Assistance Requirements

The aggregate figures and estimates of crop production suggest that there will be no major overall national shortfalls that would call for emergency food assistance. However, households facing problems of food insecurity are widespread. The majority of the rural population produce mainly for their own consumption with many households unable to produce adequate quantities of rice. Access to adequate food is further constrained by i) limited off farm employment opportunities; ii) continuous but often localized disasters over a number of years that have diminished households’ asset base; and iii) a sharp contrast in income distribution. Weak Government social support facilities, limited budget and effects of the economic crisis in the ASEAN states have further accentuated the problem for many food insecure households and limit the government’s ability to respond. Under these conditions, targeted development food aid programmes would normally be appropriate. Previous experience would indicate that targeted food aid (particularly food-for-work) has proven to be an effective and well-appreciated instrument for addressing poverty and food insecurity problems in Lao PDR.

However, reliable information is lacking to determine magnitudes, adequately identify where the most vulnerable live and which targeting mechanisms would be most effective. Appropriate mechanisms for absorbing targeted food aid are presently not adequate to meet needs. Donors are encouraged to support local and international efforts to better identify the most vulnerable groups, the nature of household food insecurity, and to develop the most appropriate mechanisms for targeting food aid interventions.

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