The agriculture and forestry ministry has said that it requires US$1.8bn to ensure that the sector meets its target under the new five-year plan of average annual growth of 3.5%. The ministry expects at least 60% of total funding for the sector to come from foreign aid, with 20% coming from private investment and the rest from the state budget and farmers. The government has pledged to reduce taxes for investors in agriculture and forestry in order to encourage participation from the private sector.

Plans are progressing for new national irrigation networks to boost agricultural production. Laos will rely on its main supporters, notably China, to fund this development, with the first project set to begin in the southern province of Saravan. An agreement for a project survey was signed in mid-April between the Lao Department of Irrigation and China's Guangdong Water Conservancy and Hydroelectric Board. The US$90m project will build irrigation systems with funding from a loan provided by the Export-Import Bank of China. Traditional paddy fields are to be consolidated and linked to roads, warehouses and a rice-processing complex. The irrigation department says that the project will help farmers to increase production, but the authorities will first have to convince them of the virtue of altering traditional field ownership and management systems.

The high price of animal feed, combined with rising interest rates on agricultural loans, is causing livestock production to fall. As demand has remained high, the illegal import of pigs is increasing, in some cases with the blessing of local authorities. Although pork shortages, caused by poor supply chains for both pigs and feed, are not new in urban markets, the problem has been aggravated by an outbreak of blue-ear pig disease in 2010. The government asked banks to postpone loan payments and provide new loans to farmers affected by the outbreak, but this has not occurred. The government is also seeking funding to stimulate production of animal feed and fish fry. Laos imports about 150,000 tonnes of animal feed a year, plus most of its fish fry and young egg-laying chickens, from Thailand. Hungary is already providing assistance, through a US$48m interest-free loan to expand fish and livestock farms and to construct fish, pig and poultry feed production facilities. Laos aims to produce sufficient fish and animal feed to supply 70% of the market by 2015.

A local cassava processor, Lao Indochina Group (LIG), expects to list on the Lao Securities Exchange by early 2012. The company signed an agreement with Laos's sole brokerage, Lanexang Securities Company, in May to help with preparations for listing. The chairman of LIG, Sengmaly Sengvatthana, said that many improvements are required to bring LIG to the standard of a public company, so the process is likely to be delayed. LIG hopes to use the capital raised by listing to open another tapioca plant in Bolikhamxay province. Its plant at present, in Vientiane province, produces 320 tonnes of cassava powder a day, of which about 90% is exported to China.

Government policy has managed to keep rice prices in check. Traders who bought rice at high prices in November and December 2010 have seen prices fall in the first three months of 2011, following a government ban on rice exports. The ban came in response to rice shortages in southern and central provinces. The price of rice peaked in 2010 at K7,000-9,000 per kg for polished rice. This year, however, it has been selling at K5,500-6,000 per kg, and traders believe that prices will remain stable in the coming months. Some traders have also surmised that business groups are buying large amounts of dry season rice and stockpiling it for a time when prices rise again.