Action Needed in Laos to Address Food Inflation, Combat Malnutrition

High food prices in Laos are contributing to child malnutrition, according to two policy notes released by the World Bank today. The notes, Food Inflation in the Lao PDR: Trends, Drivers, and Impacts, and Factors Behind Child Malnutrition in the Lao PDR, offer policy recommendations to address the effects of food inflation, plus targeted measures to help people most affected by high food prices, especially vulnerable families and their children.

The World Bank presented the policy notes with experts from the Ministry of Agriculture and Forestry, Ministry of Industry and Commerce, Ministry of Planning and Investment and UNICEF. The work shows that food inflation in Laos has surged into double digits since mid-2022, above global and regional trends, with rice prices especially volatile. Prices have risen faster in the north, where there is a deficit in staple foods and a higher reliance on food imports.

"Many poor and vulnerable families are suffering because of food price increases", said Alex Kremer, World Bank Country Manager for the Lao PDR. "Economic reforms, such as better tax collection and management of public spending, are needed to stabilize the exchange rate and control inflation."

Child malnutrition remains high, with around a third of Lao children classified as stunted (too short for their age), and no progress has been made in reducing this rate since 2017. Malnutrition not only limits human potential but also undermines economic growth. Eating meat, dairy products, and eggs reduces the likelihood of stunting, but poorer households often lack these foods. Crucial factors that can reduce stunting include four antenatal care visits, use of skilled birth attendants, prevention of teenage pregnancy, and improvements to village sanitation.

Dr. Sathabandit Insixiengmay, Vice Minister of Planning and Investment, said "this work provides detail that can help all stakeholders address the impact of high food prices and reduce child malnutrition. Improving the efficiency of our food market would make it easier to keep prices stable".

Depreciation of the kip, which means higher prices for imported food and agricultural inputs, is the main reason for food inflation. From 2017 to 2023, every 1% depreciation in the kip/dollar parallel exchange rate added 1.1% to the food inflation rate. Purchased food accounts for up a third of household consumption, and although Laos produces sufficient rice, many households must buy most of their food, making them vulnerable to price changes.

The reports argue that increasing state revenues would allow the government to help the poorest through targeted income support measures, like the existing Helping Hand Program. Business reforms could make food trade easier inside Laos, enabling traders to move food where it is most needed to keep prices stable. Improved agricultural market information among farmers and traders, and the upgrade and maintenance of roads would also help.

Farmers and food producers could capitalize on periods of high prices and invest in their production methods or businesses so they become more efficient. To facilitate such investment, policies are needed to support access to credit, markets, and farm inputs, to provide technical training and assistance, and to invest in irrigation, storage facilities, and roads.

The Lao government, with support from the World Bank, uses a multisectoral convergence approach to address nutrition and food security challenges. This enhances social assistance, livelihood options, childcare practices, and access to health services, while also improving clean water, sanitation, and hygiene.