Environmental Impacts of Trade Liberalization in the Organic Agriculture Sector of the Lao PDR

Lao PDR has only recently penetrated the organic agricultural products market. Export performance is still underdeveloped. Not enough goods are produced to meet the demand. Non-tariff barriers such as certification remain a major hurdle. This paper explores the potential environmental impact of this sector and finds an inherently environmentally-friendly industry with the potential to grow and prosper in the future.

Key findings:

• Trade liberalization makes evident the potential benefits of increasing value in certain sectors and expanding green niche markets. For the agriculture sector, trade liberalization provides an incentive to grow organic to supply the growing demand for organic produce abroad.

• Many Lao producers already grow organic produce by default. However, only a handful have penetrated the organic agricultural products market. On the whole, there is a low awareness of the potential economic and environmental benefits of this form of agriculture.

• Organic agricultural practices are usually environmentally-friendly, following natural processes and using natural raw materials without the use of chemical fertilizers or pesticides. In this way, they can provide many environmental benefits, enhancing soil fertility and managing ecological interactions within an agro-ecosystem. However, if the industry was to grow significantly, the potential for negative environmental impacts such as deforestation to increase arable land (including shifting cultivation and protected area encroachment) or carbon emissions resulting from increased transportation, should be recognized and managed.

Key recommendations:

• The Government of Lao PDR, through relevant agencies like the Ministry of Agriculture and Forestry, should consider ways of supporting Lao producers to compete in international markets by having a formal organic certification process.

• The government should consider developing policy and programs to support the supply chain for increasing the quantity of organic products sold in domestic and international markets, with premium prices for organic and Fair Trade products sought in these markets. To meet the export demand, Lao producers should consider forming "farmers' groups" to lobby for support of the sector.

• A key next step for the Government of Lao and the development of the organic agricultural sector is to draft laws and regulations to implement policies for organic agriculture, food safety and food quality assurance. Potential negative environmental impacts of developing this sector such as deforestation, protected area encroachment and other land-use changes, should be recognized and addressed in these policies.