Animal Feed Production and Distribution
Animal Feed Production and Distribution
Business Model Description
Invest in the manufacturing and distribution of nutrient-rich, sustainable animal feed by utilizing local agricultural by-products, thereby establishing a robust supply chain connecting last-mile farmers. Illustrative examples of enterprises working in this space are:
C.P. Laos: A subsidiary of the Thai conglomerate Charoen Pokphand Foods, C.P. Laos operates a feed mill with a capacity of 6,000 tonnes per month on an area of 100,000 square meters of land. The company also engages in animal farming businesses, including swine and chicken, on 322,000 square meters of land. (10)
Greenfeed Vietnam Corporation: Established in 2003, Greenfeed is a fully integrated clean food chain FEED-FARM-FOOD company. While the company is based in Vietnam, it has operations in Lao PDR and has been recognized by the President of Lao PDR and the government delegation. (11)
Expected Impact
Expected to increase access to high-quality animal feed, promoting sustainable agriculture and improving rural livelihoods in Lao PDR.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Lao PDR: Vientiane Province
- Lao PDR: Savannakhet Province
- Lao PDR: Champasak Province
- Lao PDR: Oudomxay Province
Sector Classification
Food and Beverage
Development need
Lao PDR still faces high rates of food insecurity and malnutrition, with 11.8% of the population undernourished and 33% of children under 5 suffering from stunting .The sector is hampered by its heavy dependence on imports, including seeds, fertilizers, and pesticides. Food system is vulnerable to climate change, that can lead to crop failures and food shortages. (1)(2)(3)
Policy priority
Lao PDR aims to improve the food and beverage sector through the National Development Plan (2018-2022), which prioritizes technical assistance to 4,000 companies and allocates at least 50% of sector investment for producer access to productive assets. The plan also aims to increase domestic food production and improve food security. (4)
Gender inequalities and marginalization issues
Despite women's 54.4% participation rate in Lao PDR's agriculture sector, they only own 18% of agricultural land, receive 84% of the pay compared to men, and have limited access to credit, with only 5% accessing formal credit. Women in senior management positions are only 10%. Addressing these challenges could improve productivity, inclusivity in the agricultural workforce and overall drive long term and sustainabile growth of the sector.(5)
The agriculture sector in Lao PDR contributes 16% to the GDP. Lao PDR's investment opportunities include agricultural cold storage, microfinancing for high-quality seeds, agro-industrial processing, and animal feed production. The government is seeking agricultural sector growth of 2.5% by 2025 and has conducted a major agricultural census.(4)
Key bottlenecks introduction
Most rural Lao people are subsistence farmers, and only 10% of the country's land area is dedicated to agriculture. Lao PDR has an agricultural development strategy for 2025, seeking a 2.5% agricultural sector growth to improve nutrition production and secure access to domestic, regional, and international markets. (4)
Food and Agriculture
Development need
Despite Laos' agricultural potential, the sector is underutilized due to limited access to quality seeds, fertilizers, and pesticides, leading to low crop diversity and yields.The country's livestock sector has shown significant growth, particularly in pigs, cattle, and goats, which could be further enhanced with improved animal feed production and distribution. (4)(6)
Policy priority
The Lao PDR government's National Development Plan (2018-2022) and the 9th NSEDP are addressing these issues by offering technical assistance to farmers, promoting high-quality seeds and modern farming techniques, and enhancing credit access for agricultural enterprises, all aimed at boosting agricultural productivity and improving food security (7)(8)
Gender inequalities and marginalization issues
Women in Lao PDR, particularly in rural areas, face multiple challenges, including limited access to credit and land ownership. Paritcipation in the value chain of Animal feed production can empower women economically and help bridge the gender gap in the sector.
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Investment opportunities
The subsector offers opportunities in improving feed production and distribution infrastructure, developing cost-effective feed solutions, and enhancing supply chain efficiencies. These align with the government's 2025 agricultural development strategy, aiming to stimulate sector growth.
Key bottlenecks introduction
Challenges include feed and resource shortages, high costs, and limited access to modern production and distribution technologies.
Agricultural Products
Pipeline Opportunity
Animal Feed Production and Distribution
Invest in the manufacturing and distribution of nutrient-rich, sustainable animal feed by utilizing local agricultural by-products, thereby establishing a robust supply chain connecting last-mile farmers. Illustrative examples of enterprises working in this space are:
C.P. Laos: A subsidiary of the Thai conglomerate Charoen Pokphand Foods, C.P. Laos operates a feed mill with a capacity of 6,000 tonnes per month on an area of 100,000 square meters of land. The company also engages in animal farming businesses, including swine and chicken, on 322,000 square meters of land. (10)
Greenfeed Vietnam Corporation: Established in 2003, Greenfeed is a fully integrated clean food chain FEED-FARM-FOOD company. While the company is based in Vietnam, it has operations in Lao PDR and has been recognized by the President of Lao PDR and the government delegation. (11)
Business Case
Market Size and Environment
< USD 50 million
5% - 10%
924,854 tons of Animal Feed produced in 2022 with a market value of $ 16.3 million . [12]
The Lao PDR animal feed market is estimated at around $150 million, according to a 2020 report by the United Nations Food and Agriculture Organization (FAO) (13)
The report also predicts that the market will grow at a CAGR of approximately 6% due to increasing demand from the growing livestock sector and rising awareness about the benefits of quality feed. (14)
Lao PDR produces around 450,000 tonnes of animal feed annually as per the Ministry of Agriculture and Forestry.
Indicative Return
5% - 10%
The meat consumption per capita increased by 25% from 2017 to 2020. Given the current macroeconomic events in the country, a 5 to 10% return is possible.
Investment Timeframe
Medium Term (5–10 years)
Only 60% of the current demand for animal feed production is met. Investment in this IOA would generate faster returns due to existing demand in the market. (12)
The timeframe also considers the cyclical nature of the agricultural industry and the time needed for adoption of new feed products by farmers (14)
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Capital - CapEx Intensive
Market - Highly Regulated
Impact Case
Sustainable Development Need
Limited access to affordable and high-quality animal feed for farmers in rural areas (17)
Unsustainable farming practices lead to soil degradation and water pollution. (18)
Insufficient knowledge and skills among farmers regarding sustainable agriculture practices. (19)
Gender & Marginalisation
Limited participation of women and marginalized groups in decision-making processes. (4)
Limited access to resources, including land and credit, for women and marginalized groups. (4)
Gender-based violence and discrimination against women in the agriculture sector. (4)
Expected Development Outcome
Increased availability of affordable and high-quality animal feed for rural farmers leads to improved animal health and productivity. (4)
Adoption of sustainable farming practices leads to reduced soil degradation and water pollution. (4)
Increased knowledge and skills among farmers regarding sustainable agriculture practices, leading to improved livelihoods and food security. (19)
Gender & Marginalisation
Improvement in livelihood of women through employment opportunities will promote their participation in decision-making roles. (4)
Access to stable income streams through employment opportunities improves access to low-interest credit from local financial institutions. (20)
Reduced gender-based violence and discrimination against women in the agriculture sector. (21)
Primary SDGs addressed
2.3.1 Volume of production per labour unit by classes of farming/pastoral/forestry enterprise size
In Lao PDR, the prevalence of undernourishment was 11.3% in 2020. (22)
Lao PDR aims to reduce the prevalence of undernourishment to less than 5% by 2030. (23)
12.2.2 Domestic material consumption
In Lao PDR, the adoption of sustainable practices in agriculture remains low, with many farmers still relying on traditional farming methods and using chemical fertilizers and pesticides. (4)
Lao PDR aims to increase the adoption of sustainable practices in agriculture, including organic farming and agroforestry, with a target of 70% of farmers using sustainable practices by 2025. (4)
Secondary SDGs addressed
Directly impacted stakeholders
People
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Outcome Risks
Increased demand for animal feed leading to increased deforestation and land use change, contributing to habitat destruction and loss of biodiversity.
Dependency on external markets for raw materials, potentially leading to supply chain disruptions and price volatility.
Increased greenhouse gas emissions from animal agriculture, contributing to climate change.
Gender inequality and/or marginalization risk: Women and marginalized groups may face barriers, including access to training, employment, and financial resources.
Impact Risks
The IOA's business model may not lead to improvements in animal health and productivity, potentially reducing the income and livelihoods of farmers and negatively impacting food security.
Negative environmental impacts of unsustainable agriculture practices such as deforestation and water pollution could lead to reduced biodiversity and ecosystem services.
Adoption of unsustainable farming practices by the IOA or its customers could lead to soil degradation and reduced land productivity.
Expansion of the animal feed production and distribution value chain may lead to land grabbing and displacement of local communities, potentially exacerbating social inequalities.
Gender inequality and/or marginalization risk: Women and marginalized groups may not benefit from the IOA's business model, potentially exacerbating gender and social inequalities.
Impact Classification
What
Increased availability and affordability of high-quality animal feed in Lao PDR, contributing to improved animal health and productivity and increased income for farmers.
Who
Farmers and their families, women and marginalized groups, corporate actors in the animal feed production and distribution value chain.
Risk
Potential negative environmental impacts of unsustainable agriculture practices and potential marginalization of small-scale farmers and local communities due to competition.
Contribution
In Lao PDR, 13.9% of the population faces food insecurity. IOA can enhance livelihood, improving food security. [25]
How Much
Poverty in Lao PDR declined from 33.5% to 23.2% in the last decade. IOA can further reduce poverty by boosting livestock productivity and farmers' income. (26)
Impact Thesis
Expected to increase access to high-quality animal feed, promoting sustainable agriculture and improving rural livelihoods in Lao PDR.
Enabling Environment
Policy Environment
National Agriculture Development Strategy 2021-2025: aims to promote sustainable agriculture practices and increase productivity in the agriculture sector, which is directly relevant to the IOA's business model. (27)
National Livestock Development Strategy 2015-2025: outlines strategies for improving livestock production and health, which is directly relevant to the IOA's business model. (28)
Law on Livestock Production and Veterinary Matters (2018): regulates animal feed production and distribution in Lao PDR, which directly affects the IOA's operations. (29)
National Strategy for Small and Medium Enterprise Promotion 2016-2025: aims to promote and support the growth of small and medium enterprises, including those in the agriculture sector. (30)
Financial Environment
Investment Promotion Law (2016): provides tax incentives and other benefits for businesses investing in Lao PDR, which may be relevant to the IOA's operations.(34)
Decree on Incentives for Investment Promotion (2017): provides specific tax incentives for businesses investing in priority sectors, including agriculture, which may be relevant to the IOA's operations.(35)
Small and Medium Enterprise Promotion Fund: provides financing and technical support for small and medium enterprises, including those in the agriculture sector, which may be relevant to the IOA's operations. (36)
Regulatory Environment
Decree on Livestock Feed Quality Control (2016): establishes standards and regulations for animal feed production and distribution in Lao PDR, which directly affects the IOA's operations. (31)
Decree on Livestock and Aquatic Animal Health and Disease Control (2016): regulates animal health and disease control in Lao PDR, which indirectly affects the IOA's operations. (32)
Decree on the Management of Hazardous Chemicals (2018): regulates the handling and disposal of hazardous chemicals, which may be relevant to the IOA's operations. (33)
Marketplace Participants
Private Sector
Charoen Pokphand Foods, Betagro, Cargill, Mitr Phol Group, New Hope Group, Greenfeed Lao
Government
Ministry of Agriculture and Forestry, Ministry of Industry and Commerce, Ministry of Natural Resources and Environment
Multilaterals
International Fund for Agricultural Development (IFAD), World Bank, Asian Development Bank (ADB)
Non-Profit
World Wildlife Fund (WWF), Oxfam, Care International
Public-Private Partnership
Lao PDR Livestock and Fisheries Sector Development Project, ASEAN Sustainable Agrifood Systems "
Target Locations
Lao PDR: Vientiane Province
Lao PDR: Savannakhet Province
Lao PDR: Champasak Province
Lao PDR: Oudomxay Province
References
- (1) European Union Centre for Socio-Economic Science and Policy Research (CSPR) & National Institute of Economic Research (NIER). (2021). Economic Consequences of Malnutrition in Lao PDR A Damage Assessment Report (DAR). https://nipn.lsb.gov.la/wp-content/uploads/2021/12/UNICEF-Lao-Economic-Consequences-Report-FINAL-WEB.pdf
- (2) World Food Programme. (n.d.). Lao People’s Democratic Republic - UN World Food Programme (WFP). https://www.wfp.org/countries/lao-peoples-democratic-republic
- (3) UNICEF. (2018, October 18). Preventing malnutrition in Laos. https://www.unicef.org/stories/preventing-harmful-effects-malnutrition-lao-pdr
- (4) Asian Development Bank. “Lao People’s Democratic Republic: Agriculture, Natural Resources, and Environment Sector Assessment, Strategy, and Road Map.” Asian Development Bank, 2016, https://www.adb.org/sites/default/files/institutional-document/480141/lao-pdr-agriculture-assessment-strategy-road-map.pdf.
- (5) Food and Agriculture Organization of the United Nations. “Gender in the Lao PDR on the Agriculture Sector.” FAO, 2012, https://www.fao.org/fileadmin/templates/rap/files/meetings/2012/121113_laos.pdf.
- (6) Access to Seeds Index. “Smallholder Farmers Lack Access to Quality Seeds, Study Shows.” Alliance for Science, 2019, https://allianceforscience.org/blog/2019/02/smallholder-farmers-lack-access-quality-seeds-study-shows/
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- (9) World Food Programme, & Food and Agriculture Organization. (2023). Lao PDR - Food security situation, a slow burning crisis. https://reliefweb.int/report/lao-peoples-democratic-republic/lao-pdr-food-security-situation-slow-burning-crisis-wfp-fao-cfsam-echo-daily-flash-10-march-2023
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- (11) Greenfeed Vietnam Corporation. “Home.” Greenfeed Vietnam Corporation, 2022, https://www.greenfeed.com.vn/en/
- (12) Laos govt makes call for increased production of fertiliser and animal feed.” The Star Online, 17 July 2022. https://www.thestar.com.my/aseanplus/aseanplus-news/2022/07/17/laos-govt-makes-call-for-increased-production-of-fertiliser-and-animal-feed
- (13) Food and Agriculture Organization of the United Nations. (2020). FAO Country Profiles: Laos. https://www.fao.org/countryprofiles/index/en/?iso3=LAO
- (14) International Food Policy Research Institute (IFPRI). (2020, March 16). Circular agriculture: A vision for sustainability. IFPRI Blog. https://www.ifpri.org/blog/circular-agriculture-vision-sustainability
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- (16) Food and Agriculture Organization of the United Nations. (2018). Lao People’s Democratic Republic: Agriculture, Natural Resources, and Environment Sector Assessment, Strategy, and Road Map. https://www.adb.org/sites/default/files/institutional-document/480141/lao-pdr-agriculture-assessment-strategy-road-map.pdf
- (17) Food and Agriculture Organization of the United Nations. (2018). Lao People’s Democratic Republic: Agriculture, Natural Resources, and Environment Sector Assessment, Strategy, and Road Map. https://www.adb.org/sites/default/files/institutional-document/480141/lao-pdr-agriculture-assessment-strategy-road-map.pdf
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- (23) Our World in Data. (n.d.). Hunger and undernourishment. https://ourworldindata.org/hunger-and-undernourishment
- (24) World Bank. (2020). Lao PDR Forest Note. https://openknowledge.worldbank.org/bitstream/handle/10986/34094/Lao-PDR-Forest-Note-Toward-Sustainable-Forest-Landscapes-for-Green-Growth-Jobs-and-Resilience.pdf?sequence=4
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- (26) World Bank Group. “Lao PDR Poverty Profile and Poverty Assessment 2020.” World Bank Group, 20 Oct. 2020, www.worldbank.org/en/country/lao/publication/lao-pdr-poverty-profile-and-poverty-assessment-2020.
- (27) “Agriculture Development Strategy to 2025 and Vision to 2030.” Leap UN Environment Programme, https://www.fao.org/faolex/results/details/en/c/LEX-FAOC163566/
- (28) National Assembly. “LAW ON LIVESTOCK PRODUCTION AND VETERINARY MATTERS.” World Trade Organization, 25 July 2008, www.wto.org/english/thewto_e/acc_e/lao_e/WTACCLAO17A1_LEG_1.pdf. " "30) Ministry of Industry and Commerce. “National Strategy for Small and Medium Enterprise Promotion 2016-2025.” Ministry of Industry and Commerce, 2016.
- (29) Ministry of Agriculture and Forestry. “Decree on Livestock Feed Quality Control.” Ministry of Agriculture and Forestry, 2016.
- (30) Ministry of Agriculture and Forestry. “Decree on Livestock and Aquatic Animal Health and Disease Control.” Ministry of Agriculture and Forestry, 2016.
- (31) Ministry of Natural Resources and Environment. “Decree on the Management of Hazardous Chemicals.” Ministry of Natural Resources and Environment, 2018.
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