Laos has decided to set a minimum price for rice purchased from farmers to cushion them from a volatile market, the government announced Tuesday.
An official with the Agriculture and Forestry Department in Champassak province, the rice bowl of Laos, said farmers have been reeling from erratic demand and prices compounded by the poor quality of the commodity produced.
The official said farmers face heavy risks because they have no control over the market.
Buyers and farmers are also mostly not bound by contracts that would compel buyers to purchase rice at previously agreed prices and farmers to deliver predetermined quantities at quality standards.
"There is lots of rice, but it's low-quality rice. Farmers do not have contracts with buyers," the official told RFA's Lao service. "The buyers come only when they need to buy rice."
Rice is the main crop in Laos, accounting for about 80 percent of agricultural land use.
According to the state-run Vientiane Times, the government is proposing that during the wet and dry seasons of 2012-2013, the minimum price of the widely grown glutinous rice—sticky rice that is bought from farmers by the authorities and the public—be set at 2,500 kip (U.S. $0.31) per kilogram.
Prices could go up to 3,000 kip (U.S. $0.37) per kilogram if they are purchased by rice associations, mills, or other business establishments, the report said.
Producers buying directly from farmers could seek prices lower than the set 2,500 kip level on mutual agreement based on the quality of rice, it said.
Domestic Trade Division Head of the Vientiane Industry and Commerce Department, Nouman Phothisane, said the move to set a minimum price is aimed at ensuring the "security" of families of farmers relying on incomes from rice planting.
"The long-term aim of the new scheme is to increase the value of rice in Laos [with an aim] towards commercialized farming of rice in the future," the report said.
Last year, the government banned farmers from exporting rice amid a spike in prices.
After a surplus crop this year, Champassak authorities announced they would permit rice business owners and farmers in the province to export the crop.
The surplus rice had caused prices in the province to plunge and many provincial farmers were left struggling to sell enough rice to support their families.
To contain the problem, the authorities announced that provinces and districts neighboring Champassak should buy their rice from the province.
Reported by RFA's Lao service. Translated by Max Avary. Written in English by Parameswaran Ponnudurai.