I hope the farmers will get a fair return of investment soon, otherwise instead of improving their lives they will be indebted and suffer more than gain.
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Sugar crop leaves villagers with bitter taste

Vientiane Times, 8 Sep 2009

Many farmers in Nonsan village of Outhoumphone district, Savannakhet
province, have decided to abandon rice cultivation for sugarcane,
hoping to earn more after a Thai sugar processing factory agreed to
provide them with financial and technical support to grow the crop.

But one year after shifting to sugarcane cultivation many have found
they have nothing left after selling their crops to the company, while
others are still in debt.

Nonsan village, some 30 km from the provincial capital of Savannakhet,
has become a forest of sugarcane plantations.

One sugarcane grower in the village, Mr Phouvong Phayphone, told
Vientiane Times that he sold more than 1,600 tonnes of sugarcane to
the factory last year, generating more than 250 million kip.

However, he said he gained nothing as the company took all of the
money as loan repayments. He added he was still in debt to the
company.

Mr Phouvong, who is village chief, explained that like other
villagers, the Thai company provided him with financial and technical
support to grow the crop, at a cost of nearly 300 million kip and now
he was 40 million kip in debt to the company.

The company does not give the farmers a direct loan but rather pays
for services and products such as ploughing and fertilisers. The
villagers just have to sign a contract to acknowledge that they have
borrowed the money from the company, he said.

Mitr Lao Sugarcane factory staff admitted the company was providing
loans to farmers through financial and technical support to ensure
that the sugarcane they produce meets the requirements of the company.

They also admitted that some villagers were now in debt to the
company. However, they said many farmers had paid off their debt and
earned some profit from their first year sugarcane crops.

"Some villagers have not paid much money for land clearance and
ploughing so they have made good profits from their investment," said
one of the company's staff.

The staff member said that villagers would earn more profit in the
coming years as their production costs fall.

However, sugarcane plantations are most productive in the first year,
after which yields fall away.

Savannakhet provincial authorities have received numerous complaints
from the villagers regarding the conduct of the company. Authorities
have stated there is a need for further investigation into whether the
company has overcharged farmers for the cost of land clearance
services and fertilisers.

The authorities have stated all complaints will be investigated to
ensure the villagers are fairly treated.

Another sugarcane grower, Mr Konglae Xayalath, said the villagers were
facing financial difficulties after the company reneged on an earlier
verbal promise that it would allow the farmers to repay half of their
debt to the company in the first year.

He said the villagers would consider stopping growing sugarcane if the
company did not keep its promise.

However, the company has not drawn up any formal written contracts
with the farmers regarding that promise.

The Mitr Lao Sugar Company's staff has said it is in the process of
drafting a new contract, which will provide more benefits to the
farmers.