Impact of the coronavirus pandemic on financial returns of smallholder coffee plantations in Lao PDR

Abstract

Laos is among the top twenty coffee producing country in the world—producing about 39,000 tonnes per year—and most of its production is currently exported to over 26 countries, contributing about 1.1% of the total export value or US$64.3 million in 2019 to Laos’ national economy. COVID-19 restrictions on trade and movement of people have largely impacted on coffee markets and production. As a strategic crop in Laos, it is supported by a range of policies and programs to generate greater benefits to both independent smallholder farmers and those involved in cooperatives, including support for agroforestry production models involving coffee and tree crops. However, studies of the profitability of different coffee agroforestry models are limited. This study compares financial returns from four most popular coffee agroforestry models in two coffee production provinces of Laos, before and during COVID-19 pandemic. The data were gathered from 20 farmers, five coffee traders and an integrated coffee processing company. These data were then triangulated with, and supplemented by, interviews with coffee exporters (n = 3) and key informants (n = 4). Financial indicators suggest that all four agroforestry models were profitable before COVID, but profits for cooperative growers were higher than for smallholders due to higher crop productivity and lower costs. Despite higher prices due to COVID restrictions, other factors reduced profitability of all four models and one smallholder model became unprofitable. The reasons for such differences and related policy implications are discussed.