Agriculture, natural resources and rural development / Agricultural policy, institutional and capacity development - Agricultural production - Agro-industry, marketing, and trade - Irrigation - Rural market infrastructure

The Human Development Index report ranks the Lao PDR as 138th out of 188 countries. Macroeconomic and political stability enabled it to achieve moderate economic growth at 6.5% per annum during 1986-2016. However, the country also grappled with a persistent current account deficit, falling foreign currency reserves, and growing public debt. Although the contribution of agriculture to the national gross domestic product is declining (from 32.7% in 2010 to 19.8% in 2016), the economy still remains agrarian: about 65% of the working population is employed in the sector. Low sector growth led to low levels of rural household incomes. The poverty rate of those engaged in agriculture is nearly three times higher than for those working in other sectors.

The government aims to increase the agricultural growth rate to 3.4% per annum by 2020. The policy framework for the agriculture sector is set out in (i) the ADS to 2025; (ii) the 8th Five-Year National Socio-Economic Development Plan (2016-2020); (iii) the Development Strategy of the Crop Sector 2025 and Vision 2030; and (iv) the National Strategy on Climate Change of Lao PDR. The ADS aims to (i) ensure food security; (ii) produce competitive commodities with a comparative advantage; (iii) develop a clean, safe and sustainable agriculture; and (iv) shift gradually to the modernization into a resilient and productive agricultural economy.

Agricultural competitiveness improved.

Productive and resource-efficient agribusiness value chains developed in project areas.

Critical agribusiness value chain infrastructure improved and made climate resilient

Climate-smart agriculture and agribusiness promoted

Enabling environment for climate-friendly agribusiness enhanced.

Following are findings of the Inception Mission:

(i) Thirty-six irrigation subprojects are being considered for rehabilitation. All long-listed subprojects were pre-screened and divided into three groups of priority, with the highest priority schemes to be included in the 2020 work program. To date, 5 irrigation subprojects were prioritized.

(ii) Thirty-three farm road subprojects (71 km) of which 6 road subprojects will be prioritized for support in 2020. Most research centers are not ready to receive and operate equipment and staff capacity building is required in most cases prior to procuring equipment. A detailed note on infrastructure needs and status of agricultural development centers, crop research centers at provincial colleges and associated costs of refurbishing as well as training program will be prepared.

(iii) Most research centers and laboratories are not ready to receive and operate equipment and that staff capacity building is required in most cases prior to procuring equipment. A detailed note on infrastructure needs and status of the centers and laboratories at provincial colleges and associated costs of refurbishing as well as training program will be prepared.

(iv) Thirty-four rice mills, 2 biofertilizer factories and 1 vegetable packhouse have been visited and most do not maintain financial and accounting records and that some of the rice mills identified during project processing phase are not operating anymore. Draft operational guidelines for MGS have been updated and will be submitted to ADB.

(v) PPIUs have identified 114 ponds for rehabilitation with an irrigable area of 1,760 hectares.

(vi) The TOR for IRRI will be reviewed to ensure that comprehensive support is provided to (a) deploy climate resilient rice and vegetable varieties, and (b) develop a commercialization program for NAFRI with recommendations on the legal framework to develop intellectual property rights and partial cost recovery.

(vii) A comprehensive master plan for capacity building will be developed by October 2020. To prepare the master plan, collaboration with other capacity building initiatives in project areas organized by development partners (e.g., FAO, World Bank/SNV, USAID) will be done.

(viii) The Inception Mission stressed that APG support should be linked with training on CSA and GAP. Additional efforts will be made to convince APGs on the need for adopting CSA and GAP in a changing climate.

(ix) DOA, DTEAP and MOIC (with support from PIC) will formulate a climate-smart gender-responsive agribusiness policy by 31 October 2022. Two studies will be commissioned: one on identifying priority agricultural products with processing potential, and another on comparative advantage of Lao PDR agribusinesses relative to those in Thailand and Vietnam.

(x) The project will (a) assist in overcoming gaps between Lao standards and international standards on GAP, GMP, organic products, HACCP, and (b) identify and train at least 30 agribusinesses towards achieving GMP and HACCP certification.

The Inception Mission requested PIC and FME to provide capacity building assistance to the financial sector to evaluate climate risks and recognize lending opportunities for banks and financial institutions for climate friendly investments by training at least 50 staff (30% women) from financial institutions in CSA lending and green finance.

During project design, consultations were conducted with MAF, provincial, district, and village officials to determine project priorities, objectives, and confirm priorities and needs. Focus group discussions were also held with private crop collectors, mill operators, and other agribusiness actors and families living in the subproject target areas.