Economic Constraints to the Intensification of Rainfed Lowland Rice in Laos

AbstractDespite the widespread adoption of mechanised land preparation, improved varieties, and low levels of inorganic fertilisers, rainfed lowland rice production in Laos remains an economically marginal activity, with limited incentives for farmers to intensify production beyond household needs. This is a challenge for the government, which promotes rice intensification by setting high official yield targets. We analyse farmers’ decisions regarding the intensification of rainfed lowland rice systems in two lowland provinces—Savannakhet and Champasak. We demonstrate that farmers have selectively adopted a range of new technologies and continue to respond to changing incentives. However, this has largely involved the adoption of Low-Input, more labour-efficient, and more stable production systems rather than commercially oriented, High-Input, high-yield systems. We use activity budgeting and sensitivity analysis to explore the economic performance of several input scenarios, ranging from farmers’ practice to input levels required to achieve government policy targets. The budget models show that, given their resource endowments and the high degree of production and market risk they encounter, households in the rainfed lowlands have been rational in adopting a Low-Input system rather than intensifying rice production to achieve government yield and production targets. We argue that the strategy of diversifying livelihoods while maintaining a largely subsistence-oriented rice production system is likely to persist, given current economic trends.