Lao People's Democratic Republic: Smallholder Development Project (Additional Financing)

Sovereign Project | 31351-014 Status: Closed


The agriculture and forestry sectors remain Lao PDR's primary source of livelihood and play a key role in reducing national poverty. The Smallholder Development Project (current project) has therefore been promoting sustainable commercial smallholder agriculture and associated agribusiness through strengthening extension services, enhancing access to information and markets, capacity building, and increasing investments in agribusiness. The proposed additional financing, which will consolidate and expand well-performing investments initiated under the current project, covers 8 districts in four provinces.

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Project Name Smallholder Development Project (Additional Financing)
Project Number 31351-014
Country Lao People's Democratic Republic
Project Status Closed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2809-LAO: Smallholder Development Project (Additional Financing)
Asian Development Fund US$ 5.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change
Sector / Subsector

Agriculture, natural resources and rural development - Agricultural production

Gender Equity and Mainstreaming Effective gender mainstreaming
Description The agriculture and forestry sectors remain Lao PDR's primary source of livelihood and play a key role in reducing national poverty. The Smallholder Development Project (current project) has therefore been promoting sustainable commercial smallholder agriculture and associated agribusiness through strengthening extension services, enhancing access to information and markets, capacity building, and increasing investments in agribusiness. The proposed additional financing, which will consolidate and expand well-performing investments initiated under the current project, covers 8 districts in four provinces.
Project Rationale and Linkage to Country/Regional Strategy The Asian Development Bank (ADB) approved the Smallholder Development Project for $12 million equivalent from its Special Funds resources in November 2002. The completion date was stated as 28 February 2011 and the closing date as 31 August 2011. The purpose of the current project was to establish sustainable smallholder agribusiness. The current project focused on (i) effective agricultural extension and training mechanisms, (ii) improved physical infrastructure and marketing of agricultural goods, and (iii) effective primary market networks. The current project has (i) established 162 farmer production and marketing groups (FPMGs) and organized training on agricultural production techniques and post-harvest practices; (ii) developed agricultural extension services to assist farmers groups, processors, and traders with the establishment of contract farming; (iii) upgraded 89.5 kilometers of access roads and built 70.8 kilometers of new feeder roads; (iv) delivered an agriculture and marketing information system; (v) constructed six markets; and (vi) provided post-harvest technology and associated equipment. These investments created a favorable environment for the development of commercial agribusiness and contributed to the improvement of farmers incomes. As a result, the outcomes of the project have been achieved. An average beneficiary smallholder household income in Khammouan province, poorest among the project provinces, increased from $280 in 2002 to $675 in 2010. The same trend has been observed in the other project provinces.
Impact Improved agricultural productivity in four provinces
Project Outcome
Description of Outcome Improved sustainability of smallholder commercial agriculture in the provinces of Champassak, Khammouan, Savannakhet, and Vientiane
Progress Toward Outcome Farmer Production and Marketing Groups are able to supply their products to markets. The 30 R3 rice seed production groups are able to supply quality rice seeds of 700 tons in the wet season and 853 tons in the dry season. The average yield of wet and dry season rice in project areas has increased to 3.7 tons/ha and 3.9 tons/ha against the targets of 3 tons/ha and 3.2 tons/ha, respectively.
Implementation Progress
Description of Project Outputs

1. Strengthened FPMGs in 24 districts by 2014

2. Replicated post-harvest technology and practices in the new project areas

3. Strengthened extension services of ATEC

4. Improved FPMGs' knowledge on agribusiness practices

5. Strengthened human resource capacity for project implementation

Status of Implementation Progress (Outputs, Activities, and Issues)

As of September 2015, about 277 villages (or 556 villages' times) have been provided extension services and training on crop production, FPMGs' revolving fund and veterinary service.

Cumulatively, 264 FPMGs were established. 102 FPMGs were established in new target districts, while 162 were established under L1949. However, as of September 2014, 221 were operational:

- Model FPMG: 45

- Strengthened FPMGs: 106

- Learning FPMGs: 70

60 FPMGs have established revolving funds. Total amount of fund collected was about 1,246 million kip

360 out of 1,374 (30%) FPMGs committee members are females.

A total of 10 seed dryers, 8 threshers, 8 graders, 21 mosture testers 10 thermoneters, 14 small mowing machines, 8 milling machines, 8 transplanting machines, 19 seed spraying machines were delivered to FPMGs.

66 seed spraying machines were also provided to FPMGs in 22 project districts. 3 coffee roasters, one medium rice milling machine and 5 corn grinder machines; 3 sets of rice color sorter & one rice mill were provided to FPMGs.

Based on data collected from DPOs & PPOs on the farm-gate prices on major crops under support from the project such as rice seed, commercial rice and feed corn, which the prices of rice seed increases by 50%, ranging from 5400-5000 Kip per kilogram against the baseline of 2500-3000 kip, 14% increment for commercial rice, ranging from 2000 to 2500 kip per kilogram against the baseline of 1800 to 2200 kip and 29 % increment for feed corn, ranging from 2000-2200 kip per kilogram against the baseline of 1300-1700 kip. It is to note that an average of 31 increment has been achieved.

66 out of 325 (20.3%) of participants of various training conducted were female. The project has set a quota of at least 20% of the participants of further training should be women.

(1). Two models are evident: the production and marketing model being used by Lao China Agriculture Center and rice mill marketing platform in Khammouane province.

(2). An integrated rice production chain model in Khammuane province was selected as extension service model supported by the project.

Construction was completed. First batch of farmers is attending one month training on vegetable produciton at the center

An average of 87% of the ATEC staff has skills and knowledge in workplanning and management.

- Exceeded the target of 549 villages under L1949.

(i) 302 villages in Khammouane province received extension service by ATEC of Xebangfai

(ii) 16 villages in Savannakhet province benefit from extension service by ATEC of Thasano

(iii) 43 villages in Champasak province received training on organic vegetable production techniques from ATEC of Paksong. Second training on organic vegetable production techniques was conducted in 9-22/11/2014 for 20 farmer group member in 14 villages.

As of December 2014, total 65 contracts farming (CF) equivalent to USD 12 million were signed among the farmer groups including 21 Contract farming in Khammouane, 7 CF in Savannakhet, 34 CF in Champasak and 3 CF in Vientiane province

As of June 2015, 19 trade fairs and 24 agribusiness forums were organized in Vientiane, Khammouane, Savannakhet, Champasak provinces, involving 5144 participants and 1706 females.

As of December 2014, total 664 participants (166 or 25% were female) attended business for a and agribusiness conference as following details:

(1). PPO and PICO of Savannakhet carried out agribusiness forums on rice production in 16 October 2012. 10 out of 51 participants participated in the forum are women (19%).

(2). DPO of Xebangfai district Khammouane province carried out meeting with rice miller groups which 6 out of 23 participants are women (26%).

(3). Four agribusiness conferences were carried out by PICO in Khammouane province from 2012-2013, attended by 143 participants including 57 women (40%).

(4). 37 project staff, farmers and traders attended Rice forum at district level in Khong district in February 13, 2014, given opportunity for farmers, private sectors and project staff to discuss on how to assist noodle processing group access to the markets or traders through contract farming arrangements. 6 out of 37 participants attended in the conference are women.

(5). 91 Project staff, farmers and traders attended Provincial rice forum in Champasak province from 17-18 February 2014, which aims to link producers to traders through production chain approaches and contract farming arrangement. 9 out of 91 participants attended in the conference are women.

(6). Seven rice matching meetings were conducted in 7 districts in Champasak province in May 2014 which aims to bring farmers and traders or processors to discuss and reach contract farming arrangements. The meetings were attended by 99 participants including 14 women (14%).

(7). Six rice matching meeting were also replicated and applied in six districts in Savannakhet province from April to May 2014 which brought together 124 participants (27 females or 22%).

(8) Business matching meetings between rice miller groups and private traders were carried out in Khammouane, Savannkhet and Champasak from 17-24 August 2014 which aims to exchange experience on rice trading, contract farming arrangement. 37 out of 99 (37%) participants attended in the meeting are woman.

Project activities were implemented as scheduled with minor delays in procurement.

Quarterly progress reports and one midterm report were submitted to ADB on time

Geographical Location
Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects The Project is categorized as environmental category B. None of the proposed activities directly impinge upon the environment. The Project will have limited environment and social impacts which are site-specific, few if any of them are irreversible, and in most cases effective mitigation measures can be designed. Promotion of organic farming and associated marketing activities will have beneficial environmental impacts and the scattered, small-scale village post harvest operation will have no negative environment impact due to their small-scale. Awareness raising activities will increase community consciousness of the need to follow sustainable practices. No new construction facilities and/or physical infrastructure is planned.
Involuntary Resettlement All infrastructure under the component has been fully completed. The additional funding will not go towards any further land acquisition or compensation, thus rating a Category C for IR.
Indigenous Peoples Analysis during fact-finding confirmed constraints and capacity to benefit from the Project are not defined by ethnicity, but rather by the socio-economic strata in which households may fall. This being the case, there remains no need for formal ethnic minority or indigenous action plans under ADB's IP policy. The Project is Categorized C for IP.
Stakeholder Communication, Participation, and Consultation
During Project Design Consultation have been conducted with key stakeholders and agencies in the Government of Lao PDR at national, provincial and district levels including Ministry of Agriculture and Forestry, Ministries of Planning and Investment, and Ministry of Finance. Consultations have also been held with the participating provinces with the private sector involved with commercial agriculture to determine their constraints, assistance need, and capacity. A number of meetings have been conducted with village-based organizations focusing on agriculture production techniques and agribusiness. This requires appropriate levels of consultation for subproject proposal preparation have been developed.
During Project Implementation
Business Opportunities
Consulting Services Recruitment of consultants will be undertaken in accordance with the ADB's Guidelines on the Use of Consultants (2010, as amended from time to time). The proposed Project will finance 36 person-month national project management specialist, 96 person-moth national farmer support specialist, and 18 person-month national financial and administrative specialists through of the ongoing contract with Lao Consulting Group. In addition, one international specialists (1 person-month post-harvest evaluation specialist and 2 person-month monitoring and evaluation expert), a national gender development specialist (3 person-month), a national Environmental Safeguarding Specialist (3 person-month), International PCR Economist (1 person-month), and 6 national district based project implementers (216 person-months) will be recruited using individual consulting selection method.
Procurement All procurement of goods and works will be undertaken in accordance with ADB's Procurement Guidelines (2010, as amended from time to time). They will be procured through the national competitive bidding (NCB), shopping, and direct contracting methods. Some specific goods such as rice dryers, rice seeds graders, etc may be procured through direct contracting. National competitive bidding procedure will be used for civil works contracts estimated to cost more than $ 100,000, shopping will be used for contracts for procurement of works and equipment worth less than $100,000. The NAFES's procurement capacity assessment was prepared. The result of the assessment shows that NAFES in general has good tracked record and experience in managing of procuring of goods and works of small contracts using national competitive bidding and shopping methods. However, recruitment of consultants is still need to be improved through providing capacity building. The volume of the procurement activity under the proposed Project to be significant for the five individuals in the finance division. Therefore the proposed Project will hire a senior finance and administration officer with solid experience and knowledge in procurement and recruitment procedure to assist and support the ONPD in procuring of goods, works and consulting services.
Responsible ADB Officer Phoxay Xayyavong
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Lao Resident Mission
Executing Agencies
Ministry of Agriculture & Forestry-Irrigation Dep
DIDMP, Irrigation Department, Ministry
of Agriculture and Forestry
P.O.Box 5192, Chao Anou Road
Concept Clearance 03 May 2011
Fact Finding 09 May 2011 to 19 May 2011
MRM 01 Jul 2011
Approval 22 Nov 2011
Last Review Mission -
Last PDS Update 14 Oct 2015

Loan 2809-LAO

Approval Signing Date Effectivity Date Closing
Original Revised Actual
22 Nov 2011 24 Jan 2012 10 Feb 2012 30 Jun 2015 - 26 Oct 2015
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 5.50 Cumulative Contract Awards
ADB 5.00 22 Nov 2011 4.69 0.00 99%
Counterpart 0.50 Cumulative Disbursements
Cofinancing 0.00 22 Nov 2011 4.75 0.00 100%

Safeguard Documents

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Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

Evaluation Documents

See also: Independent Evaluation

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Related Publications

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