“Pro-Poor Policy Analysis on Cattle Productivity and Links to Industry in Lao PDR”. © FAO: http://www.fao.org

1. The 1st Regional Policy Dissemination and Consultation workshop
September 2015, Bangkok
“Pro-Poor Policy Analysis on Cattle Productivity and
Links to Industry in Lao PDR”
1
FAO&IFAD Project: “ GCP/RAS/276/IFA & TCP/RAS/3405
“Pro-Poor Policy Approaches to Address Risk and Vulnerability at the Country Level”
Presented by: Dr. Aloun Phonvisay
(National Agriculture and Forestry Research Institute)

2. Content
1. Introduction
2. Objective
3. Research methods
4. Research findings
5. Risk and vulnerability of smallholder cattle
farmers
6. Policy Recommendations

3. 1. Introduction
• The research project: ‘Pro-Poor Policy Analysis on
Cattle Productivity and Links to Industry in Lao
PDR’;
• A part of the Project of “Pro-Poor Policy
Approaches to Address Risk and Vulnerability at
the Country Level (GCP/RAS/276/IFA &
TCP/RAS/3405)”;
• Started since November 2014

4. 2. Objective
• To provide an overview of
cattle policy options:
– contributing to mitigate the
vulnerability of smallholder
cattle farmers;
– enhancing cattle
productivity, thereby
improving the Lao cattle
industry

5. 3. Research methods
• Desk reviews;
• Field data collection;
• Consultation
workshop.

6. 3. Research methods (cont.)
• Conceptual framework for analyzing risks and
vulnerability
Analytical themes
Identification of risks
and vulnerability
Recommendation for
pro-poor cattle
policies
(Risk reduction,
mitigation and
coping programs)
 Livelihoods
 Cattle production
systems and their
economics
 Cattle marketing and
trade
 Institutions governing
cattle development

7. 3. Research methods (cont.)
• Analyses of stakeholders in the cattle industry

8. 3. Research methods (cont.)
• Field studies: Six study provinces

9. 4. Research findings
• Importance of cattle and buffalo to Lao economy
– 1.4 billion USD of the total stock of large ruminants
Luang Prabang Huaphanh Xieng Khouang Vientiane Savannakhet Champasack Laos
Large ruminants 65 62 83 113 334 141 1,387
Other livestock animals 40 22 16 26 48 45 467
-
200
400
600
800
1,000
1,200
1,400
1,600
millionUSD
Figure 1 Valuation of livestock production in US dollars in selected provinces and Laos

10. 4. Research findings (Cont.)
• Trends of cattle production in the six studied province from 1975 to 2013
0
50
100
150
200
250
300
350
400
450
1976 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013
Thousandhead
Luang Prabang
Huaphanh
Xieng Khouang
Vientiane
Savannakhet
Champasack
Source: MAF (2006), DLF (2013)

11. 4. Research findings (Cont.)
• Cattle smallholder farmers
– 98% of the total cattle from smallholder farmers (DLF 2013)
– Approximate 297,000 farm households (38% of the total farm
households) had cattle
– This signifies the importance of smallholder farmers in the Lao
cattle industry
Cattle herd size (% of cattle holdings)
1-2 head 3-4 head 5-9 head 10-19 head
20&
over
head
Average cattle per
cattle holding
Whole country 32% 26% 28% 11% 3% 5.3
No. farm households (‘000) 95.04 77.22 83.16 32.67 8.91
Table 1 Cattle herd sizes or percentage of cattle holdings in the whole country
Source: ACO (2012)

12. 4. Research findings (Cont.)
• Role of cattle raising in smallholders’ livelihoods
Independent Variables Total household Poor household
Constant 4.959*** (0.000) 4.974*** (0.000)
Geography -0.070 (4.406) -0.103 (0.287)
Household size 0.039* (0.072) 0.042* (0.082)
Age of household head 0.628* (0.088) 0.661* (0.070)
Level education 0.018 (0.234) 0.024 (0.156)
Total land holding 0.002 (0.795) 0.000 (0.997)
Experiences -0.007 (0.200) -0.005 (0.406)
Total cattle holding 0.788*** (0.013) 0.609** (0.054)
Disease infection -0.133 (0.130) -
Number of Observation 211 118
R
2
18% 24.00%
F-Statistic 7.95 7.24
Estimated P-values are in parentheses. *, ** and ***Significance at 10%, 5% and 1%, respectively,
data estimation is based on the field survey of small household farmers in 6 provinces.

13. 4. Research findings (Cont.)
• Land availability
– 654,300 ha of grazing lands and 1.14 million ha of forest
areas (MAF 2014)
• Of 654,300 ha of grazing lands:
– 7,300 ha of grazing land in lowlands (1.12% of the total
grazing lands)
– 490,000 ha of grazing land in uplands (75% of the total
grazing lands)
– 9,900 ha of grazing land in highlands (1.5% of the total
grazing lands)
– 147,300 ha of scattered grazing land in lowlands (each plot
was no more than 300 ha) (22.5% of the total grazing
lands)

14. 4. Research findings (Cont.)
• Feed availability
Strategic
crops
Harvested
area (ha)
Production
(tons)
By-crop products (tons) Remark
Lowland rice
(rainfed&irrig
ated)
775,465 3,174,120
- rice bran: 530,078, broken rice:
62,213, rice straw: 3,101,860
Can feed 1.69 million cattle
Cassava 45,185 1,254,188 - leaves: 74,261
Tubers and leaves can be used for 25-
55% of concentrate feed ingredient
Maize 188,825 994,750 - stover: 1,740,813, cob: 870,406
Can be fed with cobs and stover with
available carbohydrate
Sweet corn 23,205 219,335 - stover: 383,836, cob: 191,918
Sugarcane 14,270 865,130
- tree top: 423,361, molasses:
128,849
Can be fed with molasses (10-20% of
feed ration); use as feed block and
molasses urea
Total 1,046,950 6,507,523 11,201,746 Can feed 5.1 million cattle
Table 2 Summary of strategic crops which can produce a large amount of by-crop products
Source: calculated from MAF (2014)

15. 4. Research findings (Cont.)
• Smallholder cattle production systems and productivity
– Free grazing systems which may present at least 60% of total cattle
herd in Lao PDR (1 million head or 172,800 households)
– Closed extensive grazing systems containing two sub-types which are:
• (a) individual or group-fenced fallow systems, and
• (b) institutionalized communal grazing systems.
• 30% of total cattle herd (513,000 head or 90,000 households)
– Cattle fattening and farm systems are intensive production systems
may be up to 10% of the total cattle herd (170,000 cattle or almost
30,000 households)

16. – value chain of live cattle and beef trade remains short and minimal
– live cattle export to Vietnam and China
Most cattle smallholder farmers still benefit less from
preferential trade utilization due to:
1) a low quality of cattle product, not meet the standard of importing
countries
2) an eligible export products such as live bovine animal not included in
the list of tariff concession
3) an awareness of Free Trade Agreements of cattle traders relatively low
4) insufficient promotion of preferential tariff preferential utilization to
exporters.
• Progress of cattle trade development
4. Research findings (Cont.)

17. 4. Risk and vulnerability of smallholder cattle farmers
• Summary of major risks faced by cattle smallholder farmers, and policy recommendation
Types of risk faced by cattle smallholder
farmers
Major impacts on smallholders’ livelihoods and cattle
production systems
Policy recommendations
1. Risk from macro policy of market
reform
- increase in agricultural land conflicts between
smallholder cattle farmers and crop producers;
- loss of cattle as important livelihood assets of poor
smallholder farmers.
Policy for cattle land zoning
2. Risk of cattle feed and water shortage
during dry season
- reduction of cattle productivity especially in calves
and pregnant cows;
- Vulnerable to cattle disease infection and outbreaks.
Policy for risk-coping
3. Risk of cattle disease outbreaks
- significant economic loss to smallholders and their
communities.
Policy for animal health services and
veterinary supplies4. Risk of decline in cattle productivity
due to climate change phenomena
- highly vulnerable to unpredictable disease outbreaks
such as HS disease.
5. Risk of market exclusion from beef
high-value chains
- loss of opportunity to capture high beef price from
the high-value beef markets, thereby increasing
income.
Cattle marketing and trade policy
6. Risk of being cattle specialization and
marginalization from cattle development
projects and financial institutions
- vulnerability of smallholders’ livelihoods if their
specialized cattle production fails due to animal disease
outbreaks or natural disaster events;
- loss of opportunity to access to loan with the low-
interest rate; thereby missing opportunity to improve
their cattle production.
Cattle-related financial policy
Cattle research policy

18. Policy recommendations
First stage (1-2 years) Second stage (2-5 years)
(i) Policy for cattle land zoning
(ii) Policy for risk-coping
(i) Policy for animal health services and veterinary
supplies
(ii) Cattle-related financial policy
(iii) Cattle marketing and trade policy
Table 3 Recommended policies for smallholder cattle development
• Development of cattle policy requires considering not only national economic
gains, but also rural development and poverty reduction
• Aim for development of the Lao cattle industry in which cattle smallholder
farmers play important roles in the supply chains.

19. (1) Policy for cattle land zoning
• Land zoning - the basics of cattle production:
– Zonation must be on physical characteristics of
smallholder cattle production systems which are
adopted in different agro-ecological zones i.e.
lowlands and uplands;
– Defining grazing land areas are necessary for land
zoning. This policy should be firstly prioritized for
implementation.
• Zoning allows cattle development programs
working specifically and effectively through
better management, monitoring and evaluation.

20. (2) Policy for risk-coping
• Risks of losing productivity of cattle occur mostly in the
middle and late of dry season due to lack of feed
which leads to deterioration of cattle body weight and
health, thereby reducing cattle productivity and prices
– Provide emergency feed to strategic zoning areas with no
or low costs to registered smallholder farmers;
– De-stock unproductive bulls and cows before feed
shortage toward establishing a dry-season market at the
district level that connects the de-stock owners with
market-oriented smallholders who adopt cattle fattening.

21. (3) Policy for animal health services and veterinary
supplies
• Promote small commercial animal health service providers
in strategic lowland and upland zones;
• Create a business association of animal health services and
veterinary supplies to guarantee the quality of products
and services and to have close collaboration with the
relevant government departments;
• Strengthen the capacity of DLF/PAFO/DAFO in monitoring
and evaluating private enterprises that provide veterinary
services with low standard
• Maintain operation of DAFO and Veterinary Village Workers
for veterinary services in remote uplands and lowlands
where private enterprises could not operate profitably

22. (4) Cattle-related financial policy
• Provide loan with the lowest interest to smallholder farmers who adopt free grazing systems
under conditions that they have to adopt semi-intensive cow-calf production or fattening
systems, and are trained by PAFO/DAFO staff regarding appropriate techniques and
technology;
• Provide loan with low interest rate of 5% (e.g. without paying the interest rate until 4 years)
to strategic smallholder farmer groups that adopt communal grazing systems so that they
could improve cattle productivity through feed and herd management;
• Provide loan with a medium interest rate of 6-8% (e.g. without paying the interest rate until
2-3 years) to market-oriented smallholder farmers and groups, and small and medium
enterprises that adopt cattle fattening systems;
• Provide loan with a medium interest rate of 10% (without paying the interest rate until 2-3
years with provision for extension if appropriate) to small and medium cattle feed producers,
hygienic slaughter houses, and veterinary service providers;
• Strict monitoring and evaluation of effective loans must be made by both government banks
and cattle technical sector.

23. (5) Cattle marketing and trade policy
• Standardize a tax collection fee of cattle sale in nationwide
• Create one stop service to collect fee and tax of cattle movement in order to
facilitate and simplify of cattle movement, and to reduce transaction costs
• Formulate strategic cattle smallholder groups including gender involvement
(e.g. women microcredit schemes for meat processing and other related
agribusiness) to participate in the high-value beef chain through contract
farming with private sectors and under supervision and support from the
government
• Formulate cattle trader group or association to increase negotiating empower
of cattle traders, exchange cattle trade information, and to ensure the benefit
of cattle trade

24. (5) Cattle marketing and trade policy (cont.)
• Make a great effort to negotiate with China and Vietnam to include the live bovine
animal into the list of Free Trade Agreement (FTA)
• Review and adapt some cattle trade regulations (restriction of cattle import and
arrangement export quotas, SPS measurement) and harmonize the regulatory
framework for cattle trade in compliance with ASEAN trade regulations
• Make a clear and concrete investment policies in livestock sectors, such as the list
of livestock sectors should be opened for foreign investors, a land zones available
for accession, including simplify and transparency investment approval in order to
attract foreign investors in these sectors
• Establish AEC implementation unit, which is participated by MAF, MIC, private
sectors and farmers to update, distribute information and estimate the possible
impact of AEC implementation on smallholder cattle raising and traders

25. Conclusion
• Policy recommendations focus on smallholder cattle
farmers, particularly the poor
• Implication for rural development and poverty
alleviation
• Long term commitment from the Government to
national economic gain
• Support and align with the Livestock Policy developed
by the Department of Livestock and Fisheries
• Optimal participation of smallholder farmers in the
cattle value chain is critical for sustainable
development of the Lao cattle industry