ADB, Lao PDR to Boost Farm Output, Incomes in Poor Northern Regions

News Release | 29 November 2010

MANILA, PHILIPPINES - Northern regions of the Lao People's Democratic Republic (PDR) will receive Asian Development Bank (ADB) assistance for agriculture infrastructure upgrades that will boost incomes and opportunities for poor, rural communities.

ADB's Board of Directors approved a grant of $23 million for the Northern Rural Infrastructure Development Sector Project. It will improve irrigation systems and rural access roads together with associated initiatives to enhance agricultural productivity in the provinces of Bokeo, Luang Namtha, Oudomxay and Phongsaly, with a combined population of 760,000 people.

"The project will tackle the problems of low agricultural productivity and limited market access, helping to strengthen food security and livelihoods for rural households where poverty incidence is above the national average," said Bui Minh Giap, Rural Development Economist in ADB's Southeast Asia Department.

Sales of agricultural commodities to neighboring countries, including the People's Republic of China, Thailand and Viet Nam, have boomed in recent years, aided by an increasing network of cross-border corridor routes and all weather national highways. However, upland areas have been slow to benefit because of poor rural access roads that makes getting goods to market time consuming and costly. At the same time, reliance on traditional rain-fed, subsistence farming has held back yields as well as opportunities for adding value to produce.

The project will target the construction and rehabilitation of small- to medium-scale gravity irrigation systems, as well as upgrades of feeder roads connecting rural communities to markets and larger centers. Construction contracts will give preference to local women and men from poor households, with equal pay for equal work. Support will also be given to link producers to markets and processors, to help them secure tenure and access to productive land, and to build up the capacity of local and national agencies overseeing development of the agriculture sector and carrying out project activities.

"These initiatives will increase rural communities' access to and participation in the country's burgeoning market economy, and will help commercialize the low-performing agriculture sector in the northern region," said Mr. Giap.

ADB's grant from its concessional Asian Development Fund makes up over 93% of the total project cost of $24.6 million. The Government of Lao PDR is providing $1.17 million equivalent while beneficiary groups will contribute their labor for an estimated $460,000. The Ministry of Agriculture and Forestry is the executing agency for the project, which is due to be completed in February 2017.