Pig Farmers in Laos Face Debt And Bankruptcy Due to Falling Pork Prices

2016-02-03
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Slabs of pork are for sale at Houakhaou market in Vientiane, Feb. 3, 2016.
Slabs of pork are for sale at Houakhaou market in Vientiane, Feb. 3, 2016.
RFA

A Lao government program that provided loans to farmers to raise pigs in the run-up to the Southeast Asian Games held in the country seven years ago has bankrupted several farmers who have become mired in debt as pork prices have fallen, pushing a few to commit suicide, those who were involved in the program said.

The government issued 2.5-year loans with 13-percent interest rates to farmers to increase pork production in the run-up to the multi-sports event that Laos hosted in 2009 to ensure there would be enough meat for visitors and athletes from the 11 participating countries.

About 140 pig farmers and their families who live in the capital Vientiane and in the central provinces of Vientiane and Bolikhamxay participated in the program.

Phouvan Leu-ekkhammanivong, a pig farmer in Nakoung village, Vientiane, told RFA’s Lao Service that the government issued him and others loans to raise the animals before the biennial sports event.

“Farmers would get loans, small pigs and animal feed based on their production capacity,” he said. “That means if one farmer could feed 200 pigs, the agriculture promotion bank provided 200 piglets; if he could feed 100 pigs, the bank would give him 100 piglets.”

During the Games, government authorities controlled pork supplies, so that the meat used to sell quickly in markets when demand grew. But afterwards, excess amounts of pork flooded local food markets, causing prices to plummet.

But with a glut of pork hitting food markets, pork prices dropped, and the farmers could not sell all of their meat to the brokers, who in turn sold it to market vendors. Many ended up with heavy debt because they could not repay the loans they had received from the government.

“Finally, the pork could not be sold,” Phouvan said. “I still owe the bank 250 million kip [U.S. $30,700].”

Some pig farmers are even 300 million-800-million kip in debt (U.S. $36,900-$98,300), he said.

Others who had participated in the government program have gone bankrupt in recent years, with three committing suicide as a result

Another pig farmer, who declined to give her name, told RFA that she used her land as a guarantee for the bank loan she received.

“I sold my house to pay back the bank with 13 percent interest on a loan that is two-and-a-half years old,” she said. “Three people from our group died after they went bankrupt.”

“At first, they [the government] said if we could not produce enough pork to meet the demands of Vientiane, we must take responsibility” before and after the Laos hosted the Southeast Asian Games, the pig farmer said. “In practice we could do it, but the domestic commerce department cannot control the market price for us.”

Phouvan also said the domestic commerce department failed to control the cost of animal feed, and he faulted the agricultural banks for not following with the farmers who had received the high-interest loans.

Trapped in pig farming

Because the Lao government does not provide farmers with access to consultants who could help them change their production from pigs to other animals, many must keep raising pigs, hoping that pork prices will eventually rise.

In the years following the Southeast Asian Games, farmers have expected to be able to sell their pork at 16,000 kip (U.S. $1.96) a kilogram (2.2 pounds) to meat brokers, making a 2,000-kip (U.S. $0.25) profit over their production costs. But in reality they have received only 12,000 kip (U.S. $1.47) per kilo, the other pig farmer said.

Furthermore, Lao pig farmers said they cannot compete with Thailand’s Charoen Pokphand Group, a conglomerate whose agribusiness and food business sells pork is sold at even lower prices in Lao markets, she said.

The Lao government cannot control prices because pork smuggled in from neighboring Thailand, Vietnam and China has flooded Lao market, causing additional problems for local pig farmers who try to sell their meat in local markets.

Lao farmers are further strapped because they have the added cost of having to buy piglets and animal feed from Thailand, the pig farmers said.

Lao government officials say they are working to address the issue.

“Now relevant officials are busy with meeting to identify approaches to help farmers,” Sithong Phiphakhavong, deputy director general of the country’s Department of Livestock and Fisheries, told RFA Tuesday. “When the conclusions of the meeting come out, we will give an interview.”

Sonexay Siphandone, minister to the Government Office, held a meeting with relevant sectors last December to discuss possible resolutions to the pig farmers’ debt problems that could include reducing or canceling interest payments and lengthening debt-repayment plans.

Reported by RFA’s Laos Service. Translated by Ounkeo Souksavanh. Written in English by Roseanne Gerin.

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