Income Risk Perception and Management by Rural Farm Households, Taking Part in Sugarcane Contract Farming in Lao PDR

This research aimed to examine income risk perception and management of sugarcane contract farming at farm household level in Lao PDR. The study was conducted using a qualitative approach, employing purposive sampling with a total target group of thirty respondents that included older people from the village and heads of the sugarcane grower group as the key informants. The target group also included twenty five farm households who were planting and harvesting at least one hectare of contract farming sugarcane during a single season in 2014. In-depth interviews, group interviews and observation techniques were employed. Data collection was done during October-December, 2014. Content analysis was employed for the data analysis while descriptive analytic methods were used to present the results. The results indicated the sources of income risk to rural farm households engaging in sugarcane contract farming. These risks included the high cost of clearing land; in particular land containing large trees, the high cost of sugarcane stalk, which was often supplied contaminated with soil and tree branches, the high cost of fertilizer and also labor costs caused by annual inflation. Households were aware of the income risks from sugarcane contract farming and used their own strategies to manage them. These strategies would include reducing the amount of inputs, using their own labor, renting out their land to others and diversification in to other crops and livestock.