8. The Supply of Inputs to Rice Farmers in Savannakhet

The policy of rice intensification in Laos is dependent on an adequate supply of key inputs such as high-yielding seeds, good-quality fertilizers, reliable irrigation, affordable finance, and appropriate information. The study reported in this chapter focused on two crucial inputs for increased productivity in rice—seeds and fertilizers. The main objectives are to (a) map the seed and fertilizer supply chains; (b) identify the key actors in each chain and their roles; (c) identify major problems affecting the performance of each chain; and (d) provide recommendations for improvements in input supply.

Six villages in Champhone District, Savannakhet Province, were selected, as described in Chap. 7. Two villages (Phalaeng and Piakha) produced rice primarily for commercial purposes, two (Buekthong and Dondaeng) produced rice primarily for family consumption but regularly sold a surplus, and two (Khamsida and Khaokad) produced rice only for self-sufficiency. A preliminary survey was conducted to determine the broad picture of the seed and fertilizer supply chains in the six villages and to identify the key actors in each chain. This provided the basis for selecting interviewees in the second visit in March 2012. The types and numbers of interviewees are listed in Table 8.1. The farmers were selected randomly from the list of farmers in each village, including farmers who were members of a seed production group or involved in the government’s Rice Production Improvement Project (RPIP).

As shown in Chap. 7, most rice farmers (85%) in the Savannakhet Plain used chemical fertilizers for the wet-season (WS) crop and all used chemical fertilizers for the dry-season (DS) crop. The commonly used fertilizers were urea (46-00-00), ammonium phosphate (16-20-00), and compound fertilizers such as 16-08-08 (16%) and 15-15-15 (4%). The most common fertilizer brands used by Savannakhet farmers were Ox Brand from the Thai Central Chemical Public Company Limited, Rabbit Brand from the Chia Tai Company Limited, and Football Brand from an unidentified company in Vietnam. These were the brands with higher quality and price. Most farmers used fertilizers based on their financial capacity; only a few based their usage on technical requirements. Some farmers could not afford to apply fertilizers due to the high and fluctuating price. In many cases, the cost of applying additional fertilizers outweighed the additional return (see Chap. 10). In addition to applying chemical fertilizers, farmers in Savannakhet still applied animal manure to their rice fields before land preparation. The animal manure was sought from within the family and the village. Farmers applied as much as they could find as the number of animals had decreased and manure was increasingly scarce.

Farmers in Champhone District had mostly adopted the seed-fertilizer technology that formed the basis of increased yields and productivity in Asian rice farming (Chaps. 1 and 6). Mechanization of land preparation through the use of hand tractors was also widespread. Many had also intensified their cropping system, using irrigation to cultivate a DS crop as well as the traditional rainfed WS crop. However, the productivity and profitability of rice farming remained low. Constraints to the supply of seeds and fertilizers can explain part of this dilemma.

Farmers used mostly improved varieties for the WS crop and entirely so for the DS crop. These were mostly glutinous varieties, incorporating introductions from the International Rice Research Institute (IRRI) and Thailand with Lao genetic material, to produce higher yields in a range of adverse environments. They had been progressively released since the 1990s and were rapidly adopted and disseminated. Just over a third of Champhone farmers (37%) sourced their seed from the formal public-sector supply chain, including seed production centres, PAFO, DAFO, and a government-implemented rice development project. The private sector played little role, apart from some millers who included seed in their advance of inputs to selected surplus-producing farmers. Most farmers (61%) obtained seed from other farmers, including 18% who bought from a seed production group, set up by the seed production centres to accelerate the multiplication of seeds, and 43% who exchanged the seed with their neighbours, after observing the performance of different varieties in the field, and then selected and retained the seed for their subsequent use. In this way, they gained access to the improved varieties, though probably with some deterioration in seed quality and hence yield (Diaz et al. 1998). Indeed, the main problems identified concerned the lack of proper seed certification, the supply of impure seeds, lack of varieties for specific soil and climatic conditions, and lack of varieties with resistance to the prevalent pests and diseases.

Farmers also used various types of fertilizers in their rice production, including chemical fertilizers from Thailand and Vietnam, organic fertilizers, and animal manure. While the increasingly limited supply of animal manure was sourced from neighbours in the village, the manufactured fertilizers were sourced from a range of mainly private-sector distributors, including import companies, input supply shops, mobile traders, individual villagers acting as agents, and rice millers. In addition, the government seed production centre and the Rice Production Improvement Project supplied fertilizers to farmers participating in their activities. Most of these suppliers provided chemical fertilizers, including urea, ammonium phosphate, and compound nitrogen-phosphorus-potassium (NPK) fertilizers; only a few provided organic fertilizers. The most important suppliers were the import companies and shops, who preferred cash payment at the time of purchase. In contrast, the traders mainly supplied fertilizers in the village on credit, to be repaid soon after harvest, with an implicit interest charge of 50–100% p.a. incorporated in the price. Farmers with limited capital were more likely to use this credit system. The major problems identified in this fertilizer supply chain were the poor quality of especially the Vietnamese product, the lack of financial resources to buy sufficient fertilizers, and the increasing price of fertilizers.

There is clearly scope for policy intervention to improve the supply and use of productive inputs for more intensive rice production. Further investment in the rice breeding and seed production centres may be needed to develop suitable varieties for the range of rice environments encountered by farmers and to improve the quality of the seed supplied. This needs to be accompanied by an official seed certification system to ensure farmers have access to high-quality seeds and information about varieties suited to their local situations. While the increasing price of fertilizers was clearly a constraint, marketing margins were quite low, implying a competitive in-country distribution system. Intervening to control or subsidize the price of fertilizers can be a costly and administratively cumbersome policy and is unlikely to be effective. The government could, however, take action to further simplify the import process, which would help reduce costs that are passed on to farmers, to increase the capacity to monitor and enforce fertilizer quality standards, and provide more site- and variety-specific information to farmers regarding optimal fertilizer use.