Bananas are expected to be the nation’s highest revenue earner among agricultural exports this year, retaining the top spot achieved last year despite a decrease in exports by value.
This year, Laos expects to earn about US$184 million from banana exports, down US$13.8 million compared to last year, the Ministry of Industry and Commerce reported.
In the first nine months of this year, Laos earned US$158.5 million from banana exports, while last year overseas banana sales stood at US$197.8 million for the same period. The bulk of the crop was sold to China and some to Thailand
Other major agricultural export earners are expected to include cassava, with sales reaching US$158 million. Raw coffee exports are forecast at US$113 million, rubber at US$77.5 million, and maize at US$60.2 million.
In 2015, rubber was the top earner but this year it is forecast to drop to fourth place due to falling prices, while some farmers have switched to other commercial crops.
The export value of bananas is expected to slide further next year after the government banned additional plantations.
Commercial production of bananas is a good strategy and has the potential to generate much-needed income in rural areas, but it can have negative impacts on farmers’ health and soil quality, according to 2016 studies by the National Agriculture and Forestry Research Institute (NAFRI).
Overall, the commercialisation policy on banana production has benefited rural people.
The most notable outcome of this policy has been the influx of Chinese investors to assist Lao banana growers in the northern provinces of Bokeo, Luang Namtha, and Oudomxay.
Over the past four years, the value of banana exports increased tenfold from US$3.8 million in 2011-12 to over US$46 million in 2014-15.
Typically, there are three parties involved in the production process, namely the Chinese investor, the landowner, and labourers.
In Luang Namtha province, for example, the net economic return to the investor is 20 million kip per hectare per year, the return from the lease of land is 15 million kip, and the return for a labourer is about 780,000 kip.
Research findings indicate that the net economic return is much higher for the investor than the Lao people who contribute their land and labour.
In addition, the income gap among stakeholders from banana production becomes larger if social and environmental costs are included in the cost-benefit analysis.
NAFRI’s research findings indicate that there has been intensive use of herbicides and pesticides in banana production which has negative impacts on the quality of life of farmers and people living around banana plantations, as well as on soil fertility.
If the cost of soil recovery is added to the cost-benefit analysis, the land owner will have a lower net economic return for land lease. Similarly, if the cost of health treatment is added to the cost-benefit analysis, a labourer will have a lower net economic return.
While the commercial production of bananas can be an important source of income in rural areas, Lao people have not yet fully benefited and in some cases production has had an adverse impact on the quality of life of people and the environment.