Presentation at the Sub-Sector Working Group for Farmers and Agribusiness, Department of Technical Extension and Agro-Processing, 25 March 2019 (see www.LaoCoffee.org)

1. Keoset Community Coffee
Xieng Khouang

2. What is LURAS?
 The Lao Upland Rural Advisory Service (LURAS) is a partnership
between MAF and SDC, which started in Dec 2014.
 Implemented by Helvetas and DTEAP, with activities in Xieng
Khouang, Houaphan, Oudomxay, Xaisomboun and Sayaboury.
 Working with farmers to strengthen production, processing and
marketing of coffee, tea and KKN rice. The project also works on
reducing the risks of pesticide use, especially in maize areas.
 Also Secretariat of the Sub-Sector Working Group for Farmers
and Agribusiness, cooperating with DoPLA on a policy studies.

3. The Market for Northern Coffee
 Coffee from Xieng Khouang is attracting higher prices than the South
 Cherries: 4,000 kip
 Parchment: 27,300 kip
 Green beans: 35,000 to 45,000 kip
 Two related reasons:
 Expansion of cafes in VTE and LPB is creating strong local demand
 Transportation and transaction costs of sourcing beans from elsewhere are high
 Cafes in the capital have been struggling to get green beans!
 But the on-going expansion of the production area is the North of Laos
means this situation cannot last.
 Prices for farmers are likely to drop once the local demand is met and
the ‘surplus’ has to be exported.
 Can Laos compete with areas such as Yunnan, Shan State and the Lanna
area of Thailand where coffee production is also expanding?

4. Background of Coffee in Khoun District
 LURAS is building on earlier coffee initiatives
in Khoun District of XK.
 Arabica coffee was first planted with support
of IFAD in 2001 but then abandoned due to
lack of market.
 In 2010, the SADU project introduced wet
processing and started making connections
with private sector.
 Following the completion of SADU, farmers
stopped processing but continued to sell
cherries to local buyers.
 In 2016, LURAS started applying a systems
approach to achieve greater sustainability.
 Currently 714 HH in 40 villages have 393 ha
of coffee. Expected yield 46 t cherries.
SADU Report, 2012

5. A Systems Approach
 Integrated activities are carried out that take account of the
relationships between multiple factors and actors.
Collaboration with
private sector:
promotion of CSR
commitments
Strengthening local
Govt: support to PAFO
(coordination) and
DAFO (facilitators)
Expanding capacity:
establishment of
nurseries and
processing centres
Vision and Strategy
development:
consultant study and
stakeholder meetings
Strengthening Farmer
Organisations, incl.
farmer-to-farmer
training
A systems
approach to
development
of Keoset
coffee

6. Vision for the future
 The LURAS team believes that the future profitability and
sustainability of Keoset Community Coffee depends on
empowered farmers delivering a specialty product.
 “Specialty can only occur when all of those involved in the
coffee value chain work in harmony and maintain a keen focus
on standards and excellence from start to finish.” (Source, SCA)
 In practice this means...
 A focus on quality not just quantity. Quality must be consistently high.
 Farmers moving up the value chain, eg. selling green not red
 Getting premiums through certification (eg. organic) and/or
maintaining unique identity (eg. single origin)
 Establishing long-term partnerships among the value chain actors

7. Partners 1: Farmers
 Investing in the ability of farmers is the key to
success for the sector. Small producers need both
facilities and skills.
 LURAS has demonstrated that the provision of
processing facilities can act as a basis for collective
action that in turn will enhance the bargaining
power of farmer groups.
 LURAS has also demonstrated that farmer-to-
farmer learning is an effective means for
improving skills. Exchanges between Keoset
farmers and coffee producers from the Bolaven
have strengthened techniques and confidence.
 Ownership is important. Not only of productive
assets, but also the product identity. LURAS is not
simply promoting Lao coffee but Keoset Coffee.

8. Partners 2: Companies
 Farmers need buyers, but they are also vulnerable to exploitation,
especially when they have no choice about who they can sell to.
 LURAS is promoting partnerships that reduces risks for farmers, and
secures supply for locally-based companies. A win-win situation.
 And we work with companies that don’t just buy beans, but also roast
and retail in Laos, thereby creating jobs and related economic activity.
 Competition is important. The project has introduced new companies
to prevent the creation of local monopsonies, and thereby ensure that
farmers have options.

9. Partners 3: Technical Assistance
 Many projects have introduced coffee in the
North, often as an alternative for opium, but
failed to make a sustained impact because of
unrealistic and inadequate TA.
 In some cases, the assistance was too narrow in
scope, eg. supporting planting but not processing or
marketing.
 In other cases the duration of assistance was too
short to enable farmer groups to reach the required
capability
 Some projects have also been unrealistic, failing to
adequately analyse profitability of interventions
 LURAS recognizes that the introduction of
coffee needs at least 5 years of TA, and that
different experts may be needed to address a
wide range of issues: technical, organisational,
marketing, policy, communication.

10. Partners 4: Local Government
 Like other forms of agribusiness in Laos, coffee is
vulnerable to rent-seeking behaviour by local
government.
 Collection of taxes and payments for quotas,
permits etc. can undermine the profitability for
farmers and companies alike, and stifle the
growth of the sector.
 These problems appear to be less with coffee in
the North of Laos
 LURAS experience shows that local government
can play a constructive role as coordinators and
facilitators.
 Effective coordination requires data collection
and stakeholder consultations, with transparency
as a key ingredient.

11. Partners 5: Youth
 The development of the coffee sector is a long term initiative.
 Coffee is also a labour-intensive sector
 We cannot succeed if all the youth migrate out of the coffee villages.
 For this reason LURAS has a Youth Engagement Strategy (YES)
 YES aims to strengthen the connection between agro-processing, rural
employment and youth empowerment.
 We need to work with the next generation of coffee farmers!

12. Conclusions
 Some key ideas to remember:
 A vision of speciality coffee production in Laos
 Profitability through consistent quality and premiums
 Community ownership of productive assets and product identity
 Encouraging partnerships and competition in the engagement
with private sector
 Be realistic and open when making plans and analysing data.
 A long-term perspective, including engagement with youth

13. For more information:
www.LaoCoffee.org