Organic Agriculture and Biofuels in Cambodia and the Lao People's Democratic Republic (Lao PDR)

This policy brief has the following findings for both countries:

• Assistance should be provided to build certification capacity in both OA and biofuels.
• In addition to a third-party certification system, alternative certification systems based on existing social capital should be developed and utilized, particularly for the domestic market.
• Even as more farmers go organic, concerns about undersupply of organic fertilizer appear to be unwarranted.
• Assessment of biofuels' local environmental impacts also requires careful analysis.
• Intergovernmental organizations should support these countries in identifying carbon credits of biofuels and OA and in promoting the technologies and processes that generate measurable and worthwhile benefits.

In the case of Cambodia, the following results are noted:

• OA through the System of Rice Intensification (SRI) should be promoted. Converting cultivated land by 20% of wet season rice farmers to SRI increases the farmers' incomes by 40% to 70%. About 21,300 households could escape poverty. Export sales could reach US$180 million.
• Two biofuel crops may be attractive options: jatropha and cassava.

  - Under the jatropha program, 10,000 hectares are to be cultivated in 2008, increasing to 40,000 hectares by 2010. Fifty-six percent of the land is to be given to smallholders and the remaining 44% to commercial growers and biodiesel processors.
  The smallholder program would benefit farmers more than the concessionaire program. The former could take between 6,500 and 7,900 households out of poverty, vis-à-vis 1,400 to 1,500 for the latter. The smallholder program would produce 27% less biodiesel and would be financially unviable if the amount produced fell in the lower end of the yield range unless some subsidy was provided. Issues to be addressed are: (i) identification and processing of the carbon credits, (ii) reduction of the risks of failure (in case the price of oil falls) through a price guarantee program, and (iii) a capacity building support program.

  - In the case of cassava, private sector interest is already present. A program should be developed to increase yields from the current 17.8 tons/hectare to a possible 22.8 tons/hectare by 2012.

  - Similarly, the program would have a smallholder part and a concessionaire part. The former would target 20,000 households initially, going up to 30,000 by 2011. It would take about 7,000 households out of poverty and could increase farmers' net incomes to US$14.5 million by 2011. Again, the concessionaire component would have higher yields, creating about 2,000 jobs, but has fewer social benefits. Cassava roots could be used partly for ethanol production for export, which could earn US$65 million by 2011. However, the project needs to be evaluated in terms of the cost of the support program and analyzed with respect to the possible carbon credits.

• Given limited funds, OA rice using the SRI method should be given the highest priority as it generates the greatest increases for the smallest inputs, followed by the jatropha project and finally the cassava project.

In the case of the Lao PDR, the following results are noted:

As data for the Lao PDR are less comprehensive, the analysis that follows is less rigorous and the recommendations more generic.

• The study focusing only on rice crops in the Lao PDR yielded the following findings:

  - With experts' advice, Good Agriculture Practice and OA can be combined in a program following the regional demarcations laid out by the government.

  - If yields could be maintained and if marketing and communication could be improved, farmers' income could increase by 15%.

  - With a program covering around 100,000 households, of which half are upland and the other half lowland, an increase in incomes of about US$5.6 million is feasible, taking about 33,000 households out of poverty. The program would cost about US$52 million.

• Regarding biofuels, similarly to the case of Cambodia, cassava and jatropha crops are attractive options but further investigation and development are needed before they can be implemented, as current targets are unrealistic.

  - The program's economic benefits should be similar to those in Cambodia (i.e., a smallholder program benefits more poor farmers than a concession program).

  - The program's viability will depend on the price of biodiesel. At US¢40/liter, only the concession program would be viable. As in the case of Cambodia, some subsidy or support for smallholders may be needed.

  - For the cassava program, yields should be increased from 6.8 tons/hectare (one of the lowest levels in Asia) to around 17.8 tons/hectare to be on par with Cambodia. To avoid conflicts and even hardships within local communities, the government needs to improve the framework for concessions of land to private investors.

• As with Cambodia, the Good Agriculture Practice rice development program should be prioritized, with certified OA programs being developed where market niches can be identified.

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