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Increasing smallholder incomes throughout supply chain in Laos
Ironbark Lao, a subsidiary of Australia-based Ironbark Citrus, has joined the Business Call to Action (BCtA) with a commitment to engage 250 smallholder farming families in its value chain by 2021. Through its Vilabouly Citrus Project, the company pledges to increase household incomes six-fold and create entrepreneurship opportunities for local communities throughout the citrus supply chain.
In rural Vilabouly, Laos, many families are struggling to grow enough food for their own subsistence. Despite favorable soil and climate, and a high demand for agricultural products in external markets, the region’s poor roads and farmers’ lack of knowledge about crop productivity isolate rural communities from livelihood opportunities. Farmers in the region mainly grow rice: because of prohibitive costs and low market prices, they have not been able to diversify their crops in order to bring in needed cash for a more balanced diet.
Family-owned Ironbark Citrus is helping farming communities in this region to improve their lives by providing them with citrus trees from its nursery, training in sustainable agriculture, extension services and, most importantly, a fair market price for their produce. Farmers can also access micro-loans through Ironbark’s revolving loan fund (since Laos’ banking system does not offer suitable loan products for small farmers to expand into tree crops like citrus). With a growing market for citrus fruits among the burgeoning middle class in Southeast Asia (where expensive imported fruits are traditionally offered as gifts and, increasingly, for everyday consumption), the crops offer rural farmers a sustainable source of income and are tough enough to transport over Vilabouly’s rough roads without incurring damage.
Ironbark’s inclusive model grew out of its founders’ experience producing citrus for export from their own family farm in Australia. Noting the rapid growth of the Thai and Vietnamese economies, the company’s leadership saw a major opportunity to develop high-value crops in Laos to supply these markets. At the same time, they saw that this expansion would provide a means for Lao farmers to shift from subsistence to sustainable incomes through supplying these economies. In 2014, the social enterprise Ironbark Lao was born.
In recognition of women’s critical – and often unrecognized – role in family farming, Ironbark has made women a special focus of its inclusive model, encouraging their participation in contracting and agricultural training. This encouragement has led women farmers to become noticeably more confident and deepened their engagement in dialogue – with both the company and other farmers. To ensure sustainability, Ironbark enters into long-term contracts with farming families, providing a competitive price that boosts farmers’ confidence in their participation. In addition to providing citrus trees, the company transfers knowledge and best practices in sustainable agriculture such as integrated pest management, targeted fertilizer application and efficient watering practices.
As a result of their participation in its value chain, Ironbark’s management anticipates that family incomes will increase six-fold and that most will be able to repay loans from the company’s revolving fund within six years. Ironbark also benefits since the citrus growing seasons in Laos and Australia are complementary: the company can now satisfy its customers’ demand for citrus year-round and expand its market share. In the future, there are plans for Ironbark Lao to be managed independently of its parent company by local staff, leaving the profits in Laos and expanding the inclusive business into other areas of the country.