Laos Rice

Underlying business model

The project activities mainly focused on improving the capacity of millers as an entry point in establishing and strengthening fair trading linkages with the small holder farmers and improving post-harvest handling and processing. In addition, the project also facilitated the creation of an enabling policy environment through regular public-private dialogues. The following is a summary of the business model.

Socially committed and capable millers were selected as engines of the project through a rigorous selection process. Criteria used to aid the selection of millers were, among others, a substantial capacity to support smallholders, and a reputation as trusted and honest players.

The selection of socially committed millers and the creation of competition between them were crucial to the project’s successful implementation. Millers had to compete with each other in order to be selected by the programme, which stimulated millers to ‘put their best foot forward’, thereby improving the quality of the programme. One miller was underperforming according to the programme criteria, and was given an initial warning about his performance. When his performance failed to improve, he was suspended from the programme. This miller was then replaced by two other rice millers. These new millers were selected to participate in the programme through an abbreviated selection process, while local government and project staff invested their time to train them and get them on track.

The project helped the selected millers to develop an Inclusive Business Plan, which described the necessary steps to increase productivity, and supported farmers in producing highquality paddy rice. Prior to the project intervention, the farmers did not have proper access to quality seed and needed to negotiate prices for their harvest individually with different traders due to the absence of farmer groups. In addition, extension services were poor; these should have been provided by government extension officers, but they were underpaid and did not have the means, including such basic shortages as petrol for their motorbikes, to visit the farmers. This is why the millers implemented the formation of farmer groups together with SNV. Millers received training and advice on forming and strengthening farmer groups, input provision, and business management skills. They also improved extension services by collaborating with the government extension officers, and paying officers a better day rate than the government did. This enabled them to expand their traditional trading role to incorporate the provision of seed, fertiliser and extension services based on production agreements with their farmer groups. It has resulted in a steady supply of highquality paddy rice, along with higher revenues for farmers and millers.

A co-investment fund helped millers to upgrade their equipment and improve rice production and post-harvest handling, which contributed to increased recovery of milled rice. Regular consultation between millers and farmers and flexible needs-based interventions enabled trust and fair trading relations. A small, but significant, intervention was millers helping to purchase communal weighing scales and facilitate their certification by government authorities to foster transparency and avoid cheating by either traders or farmers. Each miller now has the capacity to support 1,000 smallholder farming households and to stimulate self-organisation. Farmer groups are better able to make informed decisions, share learning, and negotiate.

The project works closely with provincial agriculture and forestry offices, the departments of industry and commerce, and the private sector in improving policy and regulatory conditions in the rice sector. Government agencies have increasingly realised the value of alignment with the private sector in policy consultation. In Bolikhamxay Province, for example, the government exempted fertilisers from import taxes as an additional incentive for millers to work with smallholder farmers. The provincial authority has supported millers by officially approving miller groups in line with government policy. The Ministry of Agriculture and Forestry is receiving support from the World Bank and FAO to develop a national rice strategy utilising the successful experiences derived from EMRIP.