Context and background
Improved rice production is key to development and food security in the Lao PDR. While paddy rice production has increased in recent years, less attention has been paid to improving productivity both on-farm and in post-harvest handling, including milling. One kilo of paddy rice milled in the Lao PDR used to produce significantly less edible rice than in neighbouring countries. Poor quality meant lower prices and reduced profits for both millers and farmers. Production of better quality paddy rice and improved milling practices can increase the supply of rice in Lao PDR, open new distribution channels and improve the profits and livelihoods of both millers and smallholder farmers.
In 2009, due to high market potential and the possibility to increase the incomes of a large number of small holder farmers, SNV Laos piloted a small programme to promote rice production for industrial processing in conjunction with three small scale rice millers in one of the country’s provinces. This specific variety of non-glutinous rice had good yields and a higher market price at that time compared to regular glutinous rice. Total demand among rice noodle factories and beer factories for non-glutinous rice was estimated at 20,000 metric tonnes (mt) per year from in Laos, which was mainly met by imports from neighbouring countries. If a substitute for this imported product could be provided, more than 6,000 small holder farmers with average land holdings of one hectare per family could benefit. Working in this value chain for about nine months, we were able to connect three rice mills with about 1,000 small holder farming households with average land holding size of one hectare per family. The income of both the small holder farmers and the rice millers increased as a result of the programme. With the provision of good quality inputs (seeds and fertiliser), extension services and cash advances from the millers, the farmers were able to significantly increase rice yields and incomes from rice production. The rice miller group formed during this period was able to jointly access institutional markets such as Beer Lao, the World Food Programme and large rice exporters.
The European Union call for food facility in rapid response to soaring food prices in developing countries programme in 2009 was a good opportunity to up-scale the rice programme. SNV being mainly an advisory organisation sought for a likeminded partner organisation with a similar experience in rice sector as well as project management experience to apply for this funding. SNV decided to partner with Helvetas due to their past experience in working with private rice mills in promoting organic rice, and a good track record in project management. SNV in partnership with Helvetas successfully received funding from this facility. Helvetas is a lead applicant managing the project and SNV provided joint technical assistance with Helvetas in implementing the programme. The Department of Agriculture is the key local implementing partner of the programme. The total budget of the project for 23 months duration (January 2010 to November 2011) was €2.3 million; 90 per cent of which was funded by the EU Food Facility, with Helvetas and SNV providing the remaining 10 per cent. The rice programme has been expanded to six provinces with some new elements, most notably, a value chain co-investment fund for milling facility improvement and public policy dialogues to address constraints in the rice sector.