Cross-border Contract Farming Arrangement: Variations and Implications in the Lao People's Democratic Republic

Abstract

This paper presents the variations and implications of contract farming arrangements in three case studies - cabbage, maize, and sugarcane - in the Lao People's Democratic Republic (Lao PDR). The variations in contract farming resulted in varying implications in terms of agreement types, degree of flexibility, extent of material support, and strength of relationships between the contracting farmer and the firm. Overall, contract farming has resulted in beneficial material and non-material outcomes for the Lao PDR farmers as observed in the three case studies. The extent of the benefits varies according to the contract farming arrangement. The results of the case studies strongly suggest that there is no single contract farming model that can work best in all situations, and that contract farming models are crafted to address certain production and marketing limitations that prevent efficient functioning of industries and markets. However, considering the higher levels of access to services of contract farming farmers and the high levels of overall satisfaction with contract farming, it would appear that engaging in contract farming is a valuable way to enter into commercial, cross-border agriculture. The policies promoting cross-border trade and small-scale contract farming appear to be generating positive results and should be maintained and enhanced.