The Cooperative Federation for German Cooperatives (DGRV) has agreed to provide funding support for a cooperative development project in Laos to improve agriculture.

A memorandum of understanding to this effect was signed in Vientiane yesterday between Agriculture Extension and Cooperative Department Director General, Mr Thongphath Vongmany, and the Country Director of the German Cooperative and Raiffeisen Confederation, Mr Holger Grages.

The objective of the project is the promotion of the agriculture extension sector, improving smallholders' farming systems and empowering farmers as well as production groups and entrepreneurial associations to become voluntarily involved in agribusiness.

The two year project will run from 2013-2014. It will be implemented first in the capital, as well as Vientiane and Champassak provinces and will then be expanded to other provinces.

Mr Thongphath said he hopes that through this project, Lao cooperative groups will develop their skills and improve their crop cultivation techniques.

The objective of the DGRV in Laos is to contribute to the improvement of the economic situation of farmers and micro, small and medium enterprises by strengthening their initiative and self-help capabilities, said Mr Grages.

DGRV will also contribute to the development of a legal framework with regard to the cooperative system, he said.

In the agricultural sector, DGRV is supporting the setting up of farmers' cooperatives and the provision of their respective institutional capacity building efforts.

In the financial sector, the establishment and strengthening of member based organisations such as village banks and savings and credit unions is being supported, Mr Grages said.

Laos' membership in the World Trade Organisation means more competition and new challenges for Lao society, and cooperatives can contribute to strengthening farmers' capacities and marketing power, he added.

“Development takes time and we should give some time also to the development of cooperatives in Laos. We have to study what the success factors of well functioning farmer's groups are as well as the causes for failures,” Mr Grages observed.

“The main principles of cooperatives are the three S's - self-help, self-responsibility and self-administration. That means cooperatives work on a voluntary basis and are member driven. Our role is to support the farmers' groups by providing the necessary capacities and services,” he added.

A ceremony to launch the project was attended by Deputy Office Head of the Ministry of Agriculture and Forestry, Mr Bounay Nounouannavong, and other officials from both parties.

(updated February 22, 2013)