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The Lao Coffee Economy:
A New Growth Path on the Horizon?
By Mana Southichack, Ph.D.
30 October 2009
(Full report revised 20 November 2009)

Boosted by government supports and inflows of resources from
domestic and foreign private investments, the Lao coffee industry is
on a path of growing farm output and Laos-grown brands, with
increasing share of the Arabica varieties. This growth trend is driven
by land expansion, growing yield, the need for value creation, and
demand from the specialty coffee market.

Coffee is one of Laos’ top-five export earners and agricultural largest export commodity. The Lao
coffee farm community is comprised of more than 20,000 smallholders operating 1-3 hectares, a
much smaller number of plantations with 4-10 hectares and several emerging large, domestic-
and foreign-invested plantations cultivating more than 100 hectares. The farm industry links
extensively with other related businesses and jobs throughout the coffee industry supply chain,
making it a vital part of the country’s economy. Any major change that occurs in the Lao coffee
industry will affect many lives and the economy far beyond the coffee farm community. Boosted by
government supports and inflows of resources from domestic and foreign private investments, the
Lao coffee industry is on a path of growing farm output and Laos-grown brands, with increasing
share of the Arabica varieties. This growth trend is driven by land expansion, growing yield, the
need for value creation, and demand from the specialty coffee market. What are the development
patterns of the Lao coffee industry in the past several decades? How did the global price crash in
the early 2000s and entries of foreign-invested firms affect the industry and lives of village
farmers and how have these changes shaped the future growth path of the industry? What are
the major problems, challenges, and concerns that exist in the industry today? As the industry
continues to mature, will small farmers have a fair share of the additional benefits to be created?
Will the drive to attain higher productivity be achieved at the expense of the environment and the
health and wellbeing of farm workers? What can policy makers, development agencies, and
socially-and-environmentally responsible private coffee business owners/executives do to lead the
development of the Lao coffee industry towards growth with an economic-social-environmental
balance? These questions are addressed in this paper.
The Lao Coffee Economy:
A New Growth Path on the Horizon?

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