Price volatility across scales and farmer maneuvering in Lao cassava markets

ABSTRACT

Lao PDR is undergoing a rapid agrarian transformation, underpinned by a growing commercial production of commodity crops such as cassava by smallholder farmers. The global nature of commodity crop markets increases the exposure of potentially vulnerable smallholder farmers to global price dynamics. We apply a cross-scalar and mixed-methods approach to investigate the role of institutional structures and the global-regional-domestic context in local price formation mechanisms at the farm gate. We focus our analysis on policy shocks created by the Chinese government’s temporary purchase and storage policy (TSPS) for maize, and the experience and price risk mitigation strategies of smallholder cassava farmers in Lao PDR during this period. We find that the price level and volatility experienced by farmers are shaped by local-level market structures as much as global price dynamics and regional trade integration, demonstrating the importance of institutions across scales in price formation and transmission.

KEYWORDS:

• Price volatility
• price transmission
• price risk mitigation
• cassava
• Lao PDR

Acknowledgments

This study was supported by CIAT and NAFRI staff as part of an ACIAR funded project ASEM/2014/053 ‘Developing cassava production and marketing systems to enhance smallholder livelihoods in Cambodia and Lao PDR’. The authors also thank Soytavanh Mienmany for translation and facilitation, and the focus group participants in Paklai and Kenthao districts.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

The work was supported by the Australian Centre for International Agricultural Research [ASEM/2014/053].