PRCC Café Lao II

SWG ANR in Vientiane Capital, Laos on 14/11/2011

ByMr. Vichit SIBOUNHEUANG

National Project Director of PRCC II

Lao coffee

Main Objective

PRCCII is the second phase of a French-funded project called “PCADR-PAB’’ (2005-2009), started in 2010 for a period of 4 years (2010-1014). It aims at strengthening commercial and organizational capacities of all actors of the Lao coffee supply chain, in particular by: Setting up the Lao Coffee National Council, the representative body of coffee sector (Lao Coffee Board). Enabling AGPC to become an autonomous and professionally efficient organization (AFD funding).

Review of Development actions for Lao coffee by MAF under Aid Funds (1)

Significant outputs:

LUADP (1990-1995) funded by France (AFD): Introduction of a new variety, the Arabica Catimor; Introduction of new techniques (nursery & grafting); Improvement of the old plantations of Robusta.

PDRPB (1997-2002) funded by France (AFD): Introduction of new varieties of Arabica to more

farmers; Improvement of the old plantations of Robusta.

Review of Development actions for Lao coffee by MAF under Aid Funds (2)

FAO (2003-2004): to support the Coffee Experiment Center at Km 35 Improvement of the quality of Lao coffee; Introduction of new techniques for Roasting; Introduction of new equipments for coffee growing and

processing.

Others Projects implemented to support the development of the Lao Coffee Sector like Oxfam, JCFC, GTZ, etc.

Review of Development actions for Lao coffee by MAF under Aid Funds (3)

PCADR – PAB (2005-2009): Improvement of post-harvest / processing techniques: Wet processing, drying,

stocking and sorting… Implementation of Capacity Building activities on Management & Marketing to

support Coffee Smallholders Organization (SCO) in the region. Creation of the second Level of CSO in 2007 with AGPC’s birth (First Legal

Producers Organization in Laos). Support AGPC to obtain Organic and Fair Trade certifications in order to enable

its coffee to reach « Niche » World Markets. Significant Outputs of the Coffee Working Group like for the Lao Coffee Board

(CNCL) proposal to Government.

Impacts of Projects Implementation (1)

Strong development of the coffee sector Progressive liberalization of the Lao coffee sector; Development of infrastructures; Recognition of Lao Coffee by World Markets; Increase of the investments in the Coffee sector.

Increase of the surfaces of production Increase of plantation’s surfaces, especially for Arabica

Catimor (15 % of the total coffee surfaces in each year); Improvement of old coffee plantations: Unique Robusta in

Laos growned in high altitude (plus 1000 M); Increase of large scale coffee plantations.

Impacts of Projects Implementation (2)

Increase of farmers incomes Creation of 53 coffee producers’ groups (2,700 families)

gathered in a smallholders’ association (AGPC); Increase of the production of high quality coffee through the

implementation of collective wet processing facilities (40 centers) & a coffee processing factory;

Recognition of Lao coffee image worldwide which enables farmers to reach international “niche markets” with Fair Trade & Organic certified coffee.

Organization of the Lao coffee Value chain Creation of CNCL, the 1st Lao coffee board, by the Prime

minister of Laos PDR (Decree n°58) on June 25th 2010

Value chain study

PRCC Café Lao II objectives : 2010-14 (1)

To strengthen the organization of the Lao coffee value chain through CNCL by: elaborating a common value chain strategy; promoting Lao coffee origin worldwide; enabling Lao Coffee to expand on Niche Markets through

labels / certifications : Organic, Fair-trade, IG Market Networks;

seeking sustainable source of funding; enhancing GoL capacities to support the development of

the coffee value chain through the CNCL experience; supporting the adhesion of Laos at ICO (International

Coffee Organization).

PRCC Café Lao II objectives : 2010-14

(2)

To support the development of the smallholders’ organization (AGPC) by: Strengthening AGPC organizational, financial and

marketing capacities; Enabling the increase of its production capacities of

premium quality coffees that can find outlets on international niche markets;

Enabling AGPC to become a financially autonomous and professional organization;

Encouraging more villages to become AGPC’s members.

PRCC Café Lao II ’s implementation (1)

The First Project activites for CNCL (1): Organization of the 1st CNCL Meeting on December 17th

2010 in order to:• Define the future work plan of CNCL by establishing coordination

mechanisms, responsibilities separation between each sector.• Discuss CNCL role & functions in order to distribute

responsibilities between each concerned sector.• Discuss the opportunity to strengthen capacities & gather together

producers’ groups, roasters and exporters.• Ensure that each sector within the CNCL’s secretariat will assign

its own assistance and inform the secretariat office to ease the coordination between all parts.

• Assign the secretariat office to study the process to become a member of ICO.

• Discuss CNCL’s budget for activities implementation (financially autonomous in the future).

PRCC Café Lao II’s implementation (2)

The First Project activities for CNCL (2):

Definition of the strategic action plan during the Project Steering Committee on May 06th 2011 in order to:

• Elaborate a common value chain strategy for the development of Lao coffee;

• Discuss CNCL role & functions in order to share responsibilities between all concerned sectors at provincial level (3 provinces involved);

• Establish a working team which will support the implementation of CNCL strategic action plan.

PRCC Café Lao II’s implementation (3)

The First Project activities for CNCL (3):

Organization of one conference on “Coffee Marketing through the Fair Trade Network” on September 27th 2011 with all stakeholders of the coffee industry in order to:

• Provide useful information on Organic & Fair Trade certifications for coffee;

• Provide general information on “niche” Markets requirements;

• Enable producers and producers’ groups to increase the value-added of their products;

• Offer the opportunity to stakeholders involved to share experiences.

PRCC Café Lao II’s implementation (4)

The First Project activities for CNCL (3):

CNCL current activities:

• Identifying the strategic activities that need to be implemented as a priority;

• Elaborating the common value chain strategy for Lao coffee development;

• Implementing the identified strategic actions in order to move forward for a common promotion and development of the Lao coffee;

• Finalizing & implementing the Strategy in order to create an incentive dynamic for the development of the Lao coffee industry.

AGPC activities in 2010-11 (1)

Implementation of capacity building activities to support AGPC by:

• Training producers’ groups in organization, management and accountancy;

• Strengthening AGPC management team capacities in marketing;

• Organizing training activities on coffee sensorial analysis (tasting);

• Strengthening capacities of producers’ groups leaders to improve the management of the FT & Organic Premiums;

• Improving the management of the coffee factory;• Organizing study tours for AGPC Board of Directors to

enable them to share experience on Management and Leadership.

AGPC activities in 2010-11 (2)

To strenghten productions capacities by:• Building a coffee laboratory with AGPC’s own funds

(use of the FTO Premium);• Improving equipment and buying new machineries to

increase the capacity of the coffee factory; • Providing technical assistance to farmers to enable

them to improve productivity and quality of coffee plantations.

AGPC Arabica Coffee exported and Sold in Domestic Market

AGPC Robusta Coffee exported and Sold in Domestic Market

Where AGPC Coffee exported

AGPC business turnover since 2007

AGPC plan for the next harvest year in 2011-2012

Production: Arabica:

Next season (2011-12), AGPC plans to produce about 505 tons of green Arabica coffee (460 tons will be exported, slightly over 24 containers).

Robusta:

For the next campaign, AGPC plans to produce about 169 tons of Robusta coffee (153 tons will be exported - about 8 containers).

To become financially autonomous, AGPC planned to process 1000 tons of coffee / year (about 50 containers) within 3 years.

AGPC plan for the next harvest year in 2011-2012

Domestic market Exported green coffee represents today the main

component of AGPC trade. However, the sales of roasted coffee on the domestic market can create more value-added for AGPC and its members.

In the coming years, AGPC will extend its market for "European" type (in 2010: 450 Kg) but without neglecting the Lao traditional market for its less high quality coffee (in 2010: 3 000 Kg).

To ease the process, AGPC designed new packaging and created its owns trademark.

AGPC plan for the next harvest year in 2011-2012

International market Europe through FT and Organic networks: France and

Sweden. Asia – Pacific: Japan, Korea, New Zealand, Australia &

Singapore. America: USA & Canada through FT network. Increase of the demands : recognition of AGPC’s quality

coffee worldwide. New Organic certifications that will enable AGPC coffee to

reach new markets (Japan & USA certifications).

Illustration AGPC Members

Geography

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Thank you very much for drinking Lao Coffee

PRCC Café lao II