Local Vulnerability, Project Risk, and Intractable Debt: The Politics of Smallholder Eucalyptus Promotion in Salavane Province, Southern Laos - Smallholder Tree Growing for Rural Development and Environmental Services - page 266

Core vulnerabilities in Naa Pang Yai village are closely related to differential
access to productive land, and the requirement to sell their rice crop in advance of
the harvest, at near-crippling rates of interest, for access to land, draught buffalos,
or to purchase agricultural fertilizers. 7 Health care represents a second area of
vulnerability: a child's encounter with malaria could mean expensive stays in the
district hospital, incurring costs in the range of $50 USD for a four-day stay.
The ADB Industrial Tree Plantation Project arrived in the village through visits
by Provincial Agriculture and Forestry Office and Lao Agricultural Promotion Bank
staff. The first year, only three Naa Pang Yai villagers agreed to enroll into the
project. Others were reticent to enter into such a significant debt relationship. The
loans on offer by the project to participating farmers were without precedent.
Participating farmers received loans of more than 3.5 million kip per hectare in 1999
and 2000 (approximately US$350 at current exchange rates), including direct cash
inputs of approximately 1.3 million kip per hectare (US$130) to compensate for the
required wage labour and other inputs. For farmers proposing to plant three hectares
of eucalyptus, this could involve loans of greater than 10 million kip (US$1,000).
By the second year, 2001, the promotional campaign by the provincial officials
from the APB and NAFES had improved. Naa Pang Yai villagers reported that
officials promised significantly increased incomes for participating farmers. A Naa
Pang Yai villager recalled the promotional tactics of the project staff: “if you now
have a bicycle, after planting eucalyptus you can have a motorbike!” Enrolment
rates into the ITPP project in the district soon picked up. An additional 29 families
from Naa Pang Yai made the decision to take out APB loans and plant eucalyptus
in 2001, as did many other farmers from nearby villages. For a peasant whose wage
labour rate from sawing wood in 2005 was US$1.50 day −1 , or from working in a
nearby brick factory was $0.80 day −1 , the APB loans involved significant sums of
cash income.
In 2000 and 2001 therefore, the village was flush with cash. With no previous
experience with formal credit, and with a project that was heavily promoted if not
pushed upon them by local officials seeking to meet the central targets, some farm-
ers in the village made 'off-project' spending decisions. Metal roofing for leaky
houses, household implements, and bicycles for transportation were common pur-
chases - all functional additions to their livelihoods. In interviews, farmers reported
using these cash inputs to address other core vulnerabilities, including health costs
for children with malaria; paying down personal debts; or purchase of draught live-
stock, or even additional land.
Fertilizer and fencing material inputs were provided by the ITPP in kind. Almost
all interviewed farmers in Naa Pang Yai reported applying their ITPP fertilizer
inputs upon both their rice fields and the new eucalypt plantations. It is worth noting
7 Villagers report that renting a buffalo from a non-relative or close acquaintance could cost up to
60 taeng of rice from the harvest. This is equivalent to approximately 600 kg of rice, up to 1/3rd
of the eventual yield from 1 ha for some farmers. Interest rates on advance fertilizer purchases are
reported as between 25 to 40 percent.