World Rainforest Movement

Rural livelihoods made vulnerable as rubber investments take over land in Laos

Investments by foreign companies in commercial tree plantations in Laos PDR increased sharply increased during 2004-2006. Large scale plantations are promoted through state land concessions. Currently, an area of 167,000 ha has been transferred to foreign companies under large scale land concessions in the central and south regions of Laos. Of these, 48% or 80,000 ha are dedicated to rubber, and 28% of 46,600 ha are allocated to growing eucalyptus. However, the total area for growing rubber throughout the country has increased to 182,900 ha. (Ministry of Industry and Commerce and Land Management Authority of Champasak province)

The expansion of the rubber industry in Laos, is directly related to the growth of the Chinese car industry. China has now become the biggest rubber consuming country in the world. Companies from China have expanded their rubber crop area in Laos, mostly in the northern region where the two countries share a border, mostly through contract farming. Commonly, the Chinese trader or company will provide capital, seedlings and will buy the produce from the farmers, while the land and the labour are supplied by the farmers; however many variations in arrangements exist. Vietnamese and Thai companies have also invested extensively in rubber, predominantly in the central and southern regions. These companies have acquired land through a land concession model. Currently, there are five Vietnamese companies in the south of Laos, four of which are companies from the major Vietnamese Rubber Group (Viet-Lao, Dau Tieng, Quang Minh, Quasa Geruco) and another provincial state company called the DakLak Rubber Group. In total, the area where they have been authorized to grow rubber in Laos is 42,050 hectares.

Land loss and poor compensation

The land concessions for rubber plantation of three Vietnamese companies resulted in some people living in the project area losing almost all their farming land. Only the paddy fields, of which there were relatively few, were salvaged along with the village housing area. Most of the areas which have been included in these land concessions are swidden fields, crop fields.

Some villagers expressed their confusion and frustration at their loss of land. One explained “In the beginning, villagers didn’t understand what a land concession was. The village authorities and the upper authorities came to explain the benefits that the villagers would gain. For example, they explained that the villagers would gain work with the companies and get a monthly wage. The entire land of our village is in the land concession area. There was no point in saying if we were satisfied or not satisfied, because the concession is in accordance with the national government’s policy.” Another said “Some people had only 1-2 ha of land, which they had to give to the companies. After that they didn’t have any land left, this meant that the villagers had no rice to eat. Having to depend on the company, they will not survive.”

In general, compensation was made to the people who lost their land, but there were several exceptions and the rates were
exceedingly low. Reports on compensation were not made as required in the Compensation Decree. Some companies paid
compensation for the foregone harvest only, others assessed the land and crops together, others still paid for the land only. Much depended on the ability to negotiate of each villager, which varied greatly from person to person. On average, families interviewed received compensation for their losses of around 1.5 million Kip (US $150) per family.

In some villages, swidden fields were compensated at an average of 500,000-1,000,000 kip per ha (50-100 US$), while in other
villages no compensation was given. Groundnuts which are often grown in the swidden fallows were not compensated. For the crops such as teak, the compensation depends on type and age of the tree at 500-5,000 kip / per tree (0.05-0.50 US$). Losses derived from produce which the villagers had not planted themselves, were not assessed. For example, broom grass (ya kha), which the villagers harvest for sale, or sources of food or grazing areas in the pa khoke (deciduous dipterocarp forests). Families who have broom grass gardens, used to be able to gain an income from selling ya kha alone of around 1.6 million kip per family per year.

Living under greater vulnerability

The livelihoods of the villagers who lost land to the company changed. From being a community that used to make their living from swidden farming, cropping, raising cattle and buffaloes, and finding food in the pa khoke forests, villagers now rely on hired work as labourers with the company to earn money to buy rice to eat. They have had to sell almost all of the cattle and buffalo that they used to keep for farming and for meat.

From a sample of 189 interviewees in 6 villages, it was found that the people who grew enough rice to eat for 11-12 months in a year fell from 4 in 5 in 2003 to 1 in 5 in 2007. There was a stark increase in the number of months without home grown rice, and the overall number of households lacking rice to eat in 2007.

For those who lost their land, if the rubber company does not hire local people to work, then there are few alternative employers to whom they could turn for help. They become dependent only on one source of income, which makes most more vulnerable than their original way of life with diversified livelihoods. Mostly villagers are hired on a daily basis rather than on a permanent basis. The companies pay differing wages, but generally pay an average daily wage of 20,000-25,000 kip (US$ 2-2.5) per day. The average number of working days a year for non-permanent labourers amongst those interviewed worked out as less than a quarter of the working year.

Labour requirements are high in the first year but there is little work available thereafter until the rubber is harvested. The permanent workers’ salaries were irregular with a tendency to decrease after the first year. Permanent workers often do not know how much they earn until they receive their monthly pay.

In some villages, the company sacked all its permanent labourers, saying that they are not effective. The company has hired labourers from elsewhere, through middle men [labour brokers], when they were not happy with local labour. As one provincial official of the Land Management Authority commented “the villagers cannot picture what their future holds, as their land has been given up for concession. What will their children and grandchildren do? The older people who don’t have the strength to work, what will they do? If the price of rubber falls, isn’t there going to be an impact?”.

Concluding remarks

Laos has a forestry strategy which promotes the expansion of commercial tree plantations to the year 2020 but has not yet made an overall strategy concerning land resources as a whole. The promotion of commercial tree plantations appears to be given more importance than the preservation of rice growing areas and other livelihood resources for use by the people.

In the review of major investments for large-scale monoculture plantations, a great many issues must be considered. In the light of poor financial resources and other capacity problems within several layers of government, decisions have been made without sufficient analysis, and without protection of the interests of the nation and the majority of the people of Lao PDR. As a result, the country is facing very rapid loss of primary resources into foreign hands.

Despite efforts to clarify and determine the land rights of the people, confusion reigns even among those who were allocated land certificates under the Land and Forest Allocation Programme. Villagers were under great pressure to hand over their certificates to allow in the plantations. As in many countries around this region, the swidden fields, pa khoke areas or other forest area where the villagers collect their food and other products of the forest, raise their livestock, etc, are considered under the law as land of the state. The value and benefit of these lands to the local people are well-studied but are rarely taken into account in planning and decision making. The losses of these lands and forests to the people are devastating.

Based on a research report by Pinkaew Luangaramsi, Rebeca Leonard, Pornpana Kuaycharoen (2008), “Socio-economic and
Ecological implications of large scale industrial plantations in the Lao PDR, Case Study on Rubber Plantation”, Chiang Mai University, English edition forthcoming. Based on research work cooperation between the Centre for Information and Research on Land and Natural Resources, Laos National Land Management Authority, Office of the Prime Minister; Foundation for Ecological Recovery and Faculty of Social Sciences, Chiang Mai University, Chiang Mai, Thailand