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An Alternative to Large Scale Rubber Plantations: The Case of Smallholder Livelihoods in Ban Somsanouk, Central Laos

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Edo Andriesse

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The trend of shifting end markets in global value chains is also clearly visible in the reconfiuration of rubber value chains originating in Southeast Asia. Within the Greater Mekong Subregion Laos and Cambodia are actively seeking to become major suppliers for the Chinese market. The rubber boom in Laos has been associated with two related negative phenomena: 1) vulnerable livelihoods as a result of contract farming and 2) destruction of the natural environment due to large scale plantations. Henceforth, there is a need to focus more on smallholders and emerging value chains in areas where selling latex is relatively new. This paper analyses emerging rubber smallholder activity in central Laos and investigates to what extent rural communities can benefi from the rubber boom and improve their livelihoods. This is done through a case study of Somsanouk village, located between Vientiane and the tourist spot Vang Vieng. Researchers and non-governmental organisations have focused on southern and northern parts of the country, yet the substantial increase of small and large scale plantations in central Laos warrants a comparative perspective and deeper insights into geographical differentiation of rubber value chains. A survey was conducted in July 2013 among 19 Lao Soung, mostly ethnic Hmong, 20 Lao Loum and 1 other (Tai Deng) smallholders and discussions were held with the village chief (Lao Loum) and deputy village chief (Lao Soung). The survey was carried out with the assistance of an interpreter and the Lao Loum village chief. The latter voluntarily offered to help and did not ask for any compensation for his efforts. He was also interested in the rubber situation in his village. This chief was also able to translate answers from the ethnic Hmong community to the interpreter. The survey revealed that Ban Somsanouk is increasingly being inserted into international rubber value chains, focusing on China. The lead fims are three domestic and one Chinese investment fims that stimulate farmers to embark upon the cultivation of rubber trees and that support them in their cultivation. In return, they expect 35% of the revenues. The most remarkable result of this upstream value chain is the village-wide selling process to the highest bidder. Smallholders are not bound to sell dried latex to their investors. This is markedly different from the more common 2+3 arrangement. Although Ban Somsanouk is much closer to Thailand than to China, this study shows that central Laos is more inflenced by and connected to China in terms of rubber cultivation. The rubber smallholders of Ban Somsanouk generally have a positive attitude towards their new undertaking. Many consider the cultivation of rubber to be instrumental in expanding household income and securing a future for their children. Overall, this paper offers a cautiously positive view of changing rural livelihoods in a new rubber growing area, but it remains imperative that foreign direct investment in the rubber industry and other agribusinesses in Laos and Cambodia such as sugarcane should be carefully monitored by central governments, local and foreign NGOs. The paper ends with policy implications related to producer-buyer relationships, intercropping, micro-fiance and Asian rubber chain governance.

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Natural rubber, smallholders, pluriactivity, Laos, Asian value chains, livelihood trajectory, transnational actors