Thailand, Laos sign MOU on contract farming

Thailand and Laos yesterday signed a memorandum of understanding (MOU) on cooperation in the promotion of contract farming scheme to support production of farm products in the neighboring country.

Foreign Minister Surapong Tovichakchaikul inked the document with Laos's Minister of Industry and Commerce Nam Viyaketh in Vientiane on the sideline of 5th summit of the Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS).

Prime Minister Yingluck Shinawatra and her Lao counterpart Thongsing Thammavong witnessed the signing ceremony.

The MOU is a part of cooperation on agriculture under the ACMECS scheme to accelerate and facilitate contract farming to guarantee food sufficiency in the region. Under the MOU, Thailand will import Lao farm products with tariff exemption under the Asean Trade in Goods Agreement.

List of products would be determined and announced later by concern authorities in Thailand. Contract farming is an agricultural scheme which buyer and farmers agree upon conditions on production and marketing. The contract farming is a Thai flagship project to promote supply of farm products in neighboring countries into the Thai economy. Thai private sector involved and invested under the contract farming in Laos for more than a decade.

To concern of the two countries, sometime Thai market could not absorb some particular farm items due to domestic over production, causing troubles for Lao producers.

The MOU would establish a working committee to regularly consult at least once a year on matters relating to annual operation plan and the review of the list of farm products under the scheme.

The MOU was not a dispute settlement mechanism but any disputes could be settled through consultations within the working committee,

According to the article 14. The ACMECS Business Council may participate in the coordination for the settlement of disputes.

The MOU would play a crucial role in facilitating agricultural activities in Laos. Both countries would lender assistance to companies in forming partnership with local partners.

Authorities of both sides would facilitate border crossing of staff members of agricultural companies to carry out contract farming activities. Import of seeds, seedlings, fertilizers, equipment and machinery for the purpose of contract farming would be granted privilege tax incentives.

The MOU remains valid for initially five years after the signing but can be renewed as agreed by both sides. It could be terminated by giving the other side six months prior notice.-The Nation (March 13, 2013)