Post on 31-Jan-2022
Resettlement Plan
Prepared by Department of Livestock and Fisheries through the Ministry of Agriculture and Forestry of Lao PDR, the Asian Development Bank (ADB) and International Fund for Agriculture Development (IFAD).
Project Number: 47300-002 August 2018 LAO: Northern Smallholder Livestock Commercialization Project
This resettlement plan is a document of the borrower. The views expressed herein do not necessarily represent those of ADB's Board of Directors, Management, or staff, and may be preliminary in nature. Your attention is directed to the “terms of use” section of this website. In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.
Lao People’s Democratic Republic
Peace Independence Democracy Unity Prosperity
Ministry of Agriculture and Forestry
Northern Smallholder Livestock Commercialization Project
ADB Loan No. 3198–LAO (SF) and IFAD Loan No. 2000001743
Slaughterhouse Feasibility Study
Phonsavan City, Xieng Khouang Province
Loan Implementation Consultant Report
Vientiane, August 2018
1
Table of Contents
SLAUGHTERHOUSE FEASIBILITY STUDY Page
Sub-Project Summary 3
1. Description and Design 3
2. Context and Rationale 4
3. Cost and Finance Plan 4
4. Implementation Plan and Arrangements 5
5. Intermediate Results, Benefits and Risks 6
Part 1: Technical Evaluation 7
A. Proposed Sub-Project 7
1. Introduction 7
2. Overview of the Proposed Project 10
3. Rationale for the Proposed Project 14
B. Market Analysis 18
1. Determinants of slaughterhouse operation 18
2. Demand Analysis 21
3. Supply Analysis 29
4. Supply-Demand Balance 33
5. Trade 33
6. Competitive Analysis 35
C. Social, Gender and Environmental Safeguards 39
1. Land acquisition and Due Diligence 39
2. Gender Action Plan 40
3. Environmental Impact 44
D. Public Sector and Management Aspects 53
1. Land Title and Ownership 53
2. Management 53
3. Public-Private Partnership (PPP) 53
4. Support by PAFO/DAF0 and PONRE/DONRE 54
5. Regulatory 54
E. Economic and Financial Analysis 58
1. Economic Costs and Benefits 58
2. Financial Analysis 60
Part 2: Concept Design 63
A. Site and Structural Survey 63
1. Introduction 63
2. Scope of Work 63
3. Project Location 63
4. Site Layout 65
5. Site History 69
6. Detailed Building Structure 69
7. Structural Assessment 69
8. Other Facilities Surveyed 69
9. Conclusion 70
B. Building and Process Design 71
1. Basic Design Parameters 71
2. Proposed Site Layout 74
3. Equipment 78
4. Costs and Bill of Quantity 79
2
LIST OF ABBREVIATIONS
ADB - Asian Development Bank
CC - Climate Change
CSA - Climate smart agriculture
DONRE - Department of Natural Resources and Environment
DAEC - Department of Agriculture Extension and Cooperatives
DAFO - District Agriculture and Forestry Office
EA - Executing Agency
FAO - Food and Agriculture Organization
GAP - Gender Action Plan
IA - Implementing Agency
LIC - Loan Implementation Consultants
MAFF - Ministry of Agriculture and Forestry
MOIC - Ministry of Industry and Commerce
NPMO - National Project Management Office
O&M - Operation and maintenance
OIE - Office International des Epizooties – World Animal Health
Organisation
PAFO - Provincial Agriculture and Forestry Office
PPTA - Project Preparation Technical Assistance
PPP - Public-Private Partnership
NOTES
i. In this report “$” refers to US dollars and $1 = Lao Kip 8,200
ii. The Government is the Government of Lao PDR (GoL).
iii. The Fiscal Year (FY) of the government ends 31 December.
iv Ton is intended to be metric ton (tonne) = 1,000 kg.
Acknowledgement We wish to express our thanks to all those who gave their time and assistance to accomplishing this study. These particularly include officials in PAFO, DAFO and other departments of the Provincial Government of Xieng Khouang, livestock farmers, traders and market sellers, the owners of the Phonsavan slaughterhouses and the residents of villages near the proposed site. NSLCP Loan Implementation Consultants Vientiane 13th August 2018
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Slaughterhouse Feasibility Study, Phonsavan City, Xieng Khouang Province, Lao PDR
Sub-Project Summary
1. Description and Design
1.1. The Northern Smallholder Livestock Commercialization Program (NSLCP) will
support a sub-project to plan, design and build a slaughterhouse for cattle, buffalo and pigs
near Phonsavan City, Xiengkhouang Province, Lao PDR. The slaughterhouse will provide
hygienic and safe (including provision for the welfare of live animals) conditions for the
slaughter of animals to provide meat for wet markets and other outlets in Phonsavan City
and the surrounding area.
1.2. This feasibility study (FS) is prepared with the support of the Loan Implementation
Consultants (LIC) since no study was undertaken during the initial NSLCP design phase
(PPTA). It is based on visits to the site and consultation with relevant stakeholders and
government agencies. In addition, literature on animal welfare (including OIE guidelines)
and other reports have been reviewed. Furthermore, comprehensive study has been made
of the market conditions in which the sub-project will operate, these studies include retail
market surveys and discussions with livestock farmers. Also considered is the competitive
environment with the live animal transit trade through Laos to neighboring countries.
1.3. The proposed site has been examined and a draft IEE prepared. The sub-project
proposes to refurbish and use as a basis an existing structure at the site to save cost. A
structural survey has been undertaken. Additionally, an engineering concept design has
been prepared that include draft site layouts, building and process layouts and a provisional
equipment schedule. Although not required at a feasibility stage, a provisional Bill of
Quantity (BOQ) and detailed design, supply origin, and procurement have been prepared
and form the basis of the cost calculations shown in this report.
1.4. A Land Acquisition and Compensation Due Diligence Report (LACDDR) was
prepared in July 2018 based on Land Acquisition and Compensation (LAC) fieldwork
carried out in July 2018. In this context, information has been provided through 17
coordination, public village and individual meetings, which were attended by 165 (55 female
and 110 male) villagers. The topics of these meetings included an introduction to the
current Project phase, description of the slaughterhouse subproject, entitlement and
eligibility, grievance procedures, as well as requirements for land acquisition. In addition,
environmental impacts and their planned management were presented. The provision of
information will continue during both the detailed design phase and the construction phase
including further public meetings during mobilization of contractor, and others. The sub-
project has been categorized as Level C.
1.5. The overall approach and design is based on the understanding that what is required
is a simple cradle/booth slaughter system which will provided a model which could be
cheaply replicated anywhere in Laos. The proposed sub-project is not defined as an
abattoir and it does not provide for sophisticated meat processing and cold storage.
Nevertheless, at the request of the Government, the design of the facility does incorporate
some additional features beyond the basic needs required. These significantly impact
costs.
4
2. Context and Rationale
2.1. Phonsavan City is a medium-sized town of about 40,000 persons.1 The surrounding
farmland produces cattle and some buffalo; pigs are imported from farms around Vientiane
and from Thailand. This herd provides meat for the City sold in wet markets, of which there
are two main ones.
2.2. A proportion of the meat supply is provided informally from backyard slaughter pads,
which the main volume originates at a slaughterhouse located near the centre of the City,
within a built-up urban area that includes houses. The slaughterhouse is privately owned
and has served the City for over 20 years, apparently without complaint.
2.3. However, various inspections and reports have noted that the conditions at the “old”
slaughterhouse fall well below international standards. The location is environmentally
unacceptable (effluent is discharged into a stream), the urban area is affected by trucks
bringing live animals to the location, there is no lairage and the live animals are kept close
to where they are slaughtered.
2.4. Slaughtering is done one animal at a time using a hammer or axe to stun the beast.
The buildings in which this is done are old and dirty. The working conditions for human
workers are unacceptable. There is no inspection of the live animals nor of the carcasses
or meat taken. While the “hot” fresh meat is taken directly to nearby markets for immediate
sale and consumption on the same day as slaughter (there is no demand for stored, frozen
meat), the possibility of contamination is high, and much of the meat would be deemed
unsafe for human consumption.
2.5. GoL has issued a Prime Minister’s Decree for slaughterhouse standards, and it is
clear from inspection that the existing slaughterhouse in Phonsavan neither meets these
standards, nor is it possible to upgrade it to meet them; the new slaughterhouse is designed
with these standards in mind.2 The sub-project therefore arises from a prior decision by the
Provincial Government to close the existing slaughterhouse. In this case, if a new facility is
not provided, then slaughtering will be done only in very basic “backyard” conditions.
2.6. There is both a legal and prima facie case on public health grounds to provide a new
slaughterhouse that operates to higher standards. No data is available on the specific
impact on the human population of consuming unsafe meat, but there are data that suggest
that digestive tract diseases are common in the local population. An economic argument
could be based on lost labor days and reduced productivity due to sickness that could be
traced to the old slaughterhouse. However, this is beyond the scope of the FS.
2.7. In this case, the rationale for the sub-project is based only on the ex-ante decision to
close the existing slaughterhouse because of its poor condition. In the absence of a
slaughterhouse for a town of Phonsavan’s size, there is a clear need on public health and
environmental grounds to provide a new location and new slaughterhouse to serve the
community.
1 Including visitors 2 Government Decree (Draft) “On killing animal management and meat hygienic inspection” (Eng.
translation). According to Law on Government No 4 dated 8th November 2016 and the Law on
Livestock and Veterinary dated 11th November 2016. The Draft Decree is due to become law shortly.
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3. Cost and Financing Plan
3.1. The capital expenditure cost, subject to estimation error, is 16 billion Lak (USD 1.9
million).3 This estimate includes all the cost elements some of which have already been
incurred under the NSLCP. The reason for this approach is to make a correct assessment
of the economic and financial viability of the project.
3.2. The entire capital cost of the sub-project is born by the ADB loan for NSLCP. The
original budget was USD680,000 for two slaughterhouses; clearly a mis-estimate. A
revised design and procurement plan has raised this figure to nearly USD 2 million
(excluding contingencies).
3.3. Operating costs from revenue and working capital will be born by the operator. No
subsidy for the facility is proposed or has been discussed. The slaughterhouse is expected
at least to cover its costs including providing a fair return to the operator.
3.4. Financial analysis suggests that at most assumptions about the slaughtering fee (the
main projected source of revenue) the FIRR is less than 12%. Even so an increase in the
slaughtering fee is required. As a stand-alone business the new facility is not attractive from
a commercial perspective; however, as part of a trading operation where live animals are
bought, killed and better quality meat sold for a higher price, the new slaughterhouse could
be viable. In this approach, the facility is seen primarily as a process cost centre, supporting
a business that turns live animals into meat.
4. Implementation Plan and Arrangements
4.1. The implementation schedule for the subproject is dependent upon the time needed
for sub-project approval by the Government and ADB, as well as the length of time it takes
to set up implementation structures and operational accounts. The construction should take
no longer than 6 months. The subproject should be able to start in the first quarter of 2019
providing project implementation commences in the second and third quarters of 2018.
4.2. The executing agency for the sub-project will be the Ministry of Agriculture and
Forestry (MAF) via NSLCP NPMO and PAFO Xiengkhouang. NSLCP NPMO will be
responsible for sub-project coordination and management, including financial management
of accounts, procurement of goods and works, recruitment of consultants, and monitoring
and reporting.
4.3. To ensure inter-agency cooperation at the national and provincial levels, the NSLCP
Technical Steering Committee will establish a dedicated sub-committee for this purpose.
4.4. At the time of this study no arrangements have been made with an operator. It is likely
that the management and operation of the facility will be under some form of Public-Private
Partnership (PPP) arrangements, but these have not been established.
3 Cost estimates at the feasibility and concept design stage are conventionally assumed to have a
30% error factor.
6
Figure 1: Possible Implementation Schedule
5. Intermediate Results, Benefits and Risks
5.1. The proposed sub-project will result in an improvement in animal welfare prior to
slaughter and compliance with OIE guidelines in that regard; it will improve safety in the
work place and result in more equitable employment of women who will be provided
gender-specific washrooms and changing facilities; overall hygiene will be improved and
the quality of the meat produced will be raised ensuring food safety.
5.2. A new facility will be outside the urban area but nevertheless reasonably conveniently
located with respect to the markets. Food safety will be improved by hygienic slaughtering
and proper inspection of the meat. It is expected that the general health of the population
obtaining meat from the facility will improve and the incidence of digestive tract disease
reduced, there may be a consequent improvement in labour productivity.
5.3. Depending on cost recovery and the slaughter fees charged, the new facility may add
to the cost of meat production compared to the existing slaughterhouse. In this case, the
new facility will only be used if the regulations governing animal slaughter are strictly
enforced.
5.4. A second risk is that of the new slaughterhouse passes increased costs back to the
farmer, smallholders will be induced to switch animal sales to the live export trade and
markets in neighboring countries. If the new slaughterhouse is unable to obtain supplies of
live animals then this would reduce the supply of safe, good quality meat to the market and
perhaps encourage the growth of the informal backyard slaughter industry – the opposite
of what is intended by this sub-project.
5.5. No arrangements have been made to manage or operate the facility. There is a risk
that no one may be interested, although it is understood that some groups have expressed
interest in doing so. Equally, a private operator may fail and cease operation especially if
operating the business is not remunerative.
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Part 1: Technical Evaluation
A. Proposed Sub-Project
1. Introduction
1.1. This Feasibility Study arises from a requirement under the NSLCP’s infrastructure
development program to establish improved slaughtering facilities in main cities,
specifically Luangphrabang and Phonsavan. The former has been postponed due to issues
affecting site selection, so this Study is focused solely on Phonsavan City.
1.2. The project design documents (RRP) deal only briefly with the need for slaughterhouse development. This is a task that was left to the LIC consultants:
“The project will conduct feasibility studies with support from the loan
implementation consultants.4 The indicative financial sustainability analysis
is limited in purpose and scope to assessing if and what stakeholder
resources will be available to fund ongoing costs of the facilities to allow
reasonable expectation of these investments”.5
1.3. The RRP attempted to rationalize the investment in slaughterhouses (the project also
includes Luangphrabang). From the perspective of an economic rationale, it said:
“The enforcement of food safety, health, and environmental regulations for
slaughter slab operations is lacking. Most of the traders carry out the
slaughter of livestock at these slabs. Thus, failure of governance has led to
a market failure to supply, at full recovery of cost from the price paid by the
consumer, butcher’s meat that has been processed according to food safety
and public health standards. Uncertainty has been created for private sector
investment in slaughterhouses, where the perceived risk is of competition
from a cheaper alternative that is able to avoid regulatory enforcement. The
proposed intervention will address the market failure and restore confidence
among private investors in the market for slaughterhouse and butchery
products meeting the proper standards.”6
4 Note that this idea did not transfer into the Terms of Reference for the LIC contract and is not
reflected in the TOR for the Agribusiness or Slaughterhouse specialists. The LIC has taken a lead
in developing the slaughterhouse as a tangible contribution to NSLCP over and above contracted
work. 5 Northern Smallholder Livestock Commercialization Project (RRP LAO 47300), F. Financial
Sustainability Analysis, para 16 6 Op.cit. E. Construction of New Slaughterhouses, para. 15, Economic Justification
8
1.4. The first part of this statement is certainly true, as will be seen from our assessment
of the current situation in Phonsavan. Animal welfare (prior to slaughter), food and worker
safety and other standards are entirely lacking. “Market failure” is an effort to dress the
situation up in economists’ terms; in fact, there is no revealed preference for “safe” meat
as defined by Western standards, so to assert that the market has failed is wrong. Equally
questionable is the statement that the private sector is “uncertain” about investment in this
part of the value chain; in general, there is certainty that such investment is currently not
worthwhile.
1.5. The existing slaughterhouse in Phonsavan has been operated by the private sector
for the last 20 years. The regulations are not enforced at this facility. The failure is of
governance (enforcement of existing regulations), not the market, and that is unlikely to be
corrected by constructing a new facility. The local government authorities in Phonsavan
have consistently ignored existing standards and, despite many reports from international
experts which have drawn this to everyone’s attention, have ignored recommended
interventions that might have improved matters. This situation has changed for the better,
however, with the decision to close the existing slaughterhouse.
1.6. The LIC International Slaughterhouse Specialist has drawn attention to the fact that
the greatest challenge is development of human resources. However, true as it certainly
is, that leaves the question of what agency (private or public) will operate the facility. If it is
the government, why should it be assumed that rules and regulations will be enforced that
the government itself currently ignores? If it is the private sector, then the financial structure
of the operation becomes critical. Who provides the working capital? How are revenues
generated? What level of technology is to be used? None of these elements have so far
been addressed by the authorities. An effort has been made to examine as much of the
data as is available, but without the active involvement of both private and public sectors,
the specifics of the operation remain unknown.
1.7. Regarding financial sustainability, the RRP made this statement:
“Assuming a slaughter fee comparable to the traders’ current slaughter cost,
the proposed slaughterhouse should recover operating costs from service
fees, including a provision for meeting food safety and sanitary standards
for processing butcher’s meat from livestock, depreciation, and periodic
maintenance. Based on the operating cost assumptions, the financial
projections show a working ratio of 0.85; the operation and maintenance
(O&M) cost recovery index is 1.18. When due in 2031, the first periodic
maintenance carries a cost to cash balance ratio of 0.13; the cash balance
is 20% of total assets. These results support a reasonable expectation of
operating cost recovery. The demand for safe food products will lead to an
opportunity to raise fees and create a profitable environment”.7
7 Op.cit. para. 17. Representative slaughterhouses
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1.8. Several points need to be made about this text:
(i) The assumption that a new slaughterhouse would charge a fee comparable to
current slaughtering costs is questionable. As the text says, a new facility would
have to recover its investment costs and pay for additional direct costs (safety
etc.), so the service charge will inevitably be higher.
(ii) It is unclear what is meant by these ratios or how they are calculated (no data
tables are available).
(iii) Similarly, it is unclear how the results for “cash balance” is arrived at, nor indeed
what this means.
(iv) The statement about operating cost recovery is unclear; does it mean recovery
of direct operating costs, i.e., the cost of processing an animal, or does it include
overhead (general, salary and administrative costs – GS&A)? Since these costs
are unknown, how can this assertion be true?
(v) The final sentence is questionable: there is no strongly expressed demand for
safe food in a Western sense (as will be seen in the section on demand). This
may or may not arise in the future, but in any event with controlled
consumer/retail prices for meat it is unclear how raising fees leads to a
“profitable environment”.
1.9. The rationale of ADB’s RRP, such as it is, can therefore be disregarded. There was
no proposal for the management and operation of the facility, no design for the
slaughterhouses, so no capital expenditure estimated. There was no analysis of operating
costs (that can be found), so the service fee that would need to be charged was unknown
to the project planners. The budget line estimates in the NSLCP documents (i.e. USD
680,000) apparently had no basis in fact, and indeed do not reflect the real costs of
construction; and, of course, no estimates were made for working capital or establishment
and start-up costs.
1.10. This Feasibility Study therefore starts from a blank page. It examines the
requirement for a new slaughterhouse in Phonsavan, given that the old one must close. It
segues into the analysis that is required to show the economic impact and the financial
parameters under with the new facility will operate. Even so, without clear proposals about
the management of the facility no final judgement can be made about overall feasibility.
Any investment may be viable under one set of rules, but not so under another. That said,
for the sake of moving this forward, it is assumed that ownership, at least at the start, will
be by the public sector and that any subsequent arrangement will be on a public-private
partnership (PPP) basis.
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2. Overview of the Proposed Sub-Project
a. Background
2.1. The project to establish new slaughterhouses is predicated, at least in part, on the
notion that Laos should have modern facilities to demonstrate best practices. This
perspective is based on the experience of the development of the so-called “Hungarian
Abattoir” constructed with development funds and taken over by Lao Fresh Meats.
Construction of the Done Dou abattoir in Vientiane with New Zealand finance over 30 years
ago may have also informed the ideas of the project designers. This latter facility fits
squarely into the category in which the existing Phonsavan slaughterhouse resides, i.e.,
although it is far better equipped and, in its heyday may have been state-of-the-art, it
currently operates well-below the standards its designers and the donor envisaged. Done
Dou is most certainly not a demonstration of how things might be done and is thus a
cautionary example that ideas that another new facility with the same objective might go
the same way. The LFM abattoir, by contrast, is an example of what can be done with the
engagement of private sector management capable of and committed to doing the job
properly.
5.2. When it was first constructed, the LFM abattoir was run by the government.
Predictably it fell into disuse and disrepair because there was no qualified management
and no links with the market.
5.3. However, about four years ago it was taken over by a joint venture between a local
restauranteur and XP Farm, a larger and well-funded enterprise.8 They established Lao
Fresh Meats. The enterprise is vertically integrated, XP Farm provides live animals grown
on its own farms and properly cared for, they are slaughtered in modern and hygienic
conditions and LFM sells the meat in Vientiane in its own retail shop.
Figure 2: “Hungarian” abattoir operated by Lao Fresh Meats
Source: LIC, June 2017
8 Information received in June suggests that XP farm has sold its share in this enterprise, but this remains unverified.
11
5.4. At present, the factory handles about 25 pigs per week and 5 cattle. It has cold
room storage for 40 carcasses, so is operating well under capacity. The reason for this is
said to be “poor sales”. According to the JV partners, the cattle are simply not suited for
western-style dressed meat; the muscle is too small and too tough. One of the partners
said, “the Lao market? I wouldn’t bother”. The business does have an apparently
worthwhile export business based on beef jerky sent to Vietnam.
5.5. LFM have made an impressive effort to invest in modern meat processing for local
sales and even export. However, as suggested by the JV partner (and confirmed by other
sources) the local breed of cattle is too small to provide more than raw material for a
specialty product. Pigs may provide a better business, but even in a large city like Vientiane,
retail sales of high value hams and prosciutto are low volume; this is not how most Lao
consume their meat.
5.6. Furthermore, if the entire cost structure of the business is considered, it is very
unlikely that had LFM constructed the facility themselves that they would earn a return on
capital. The following table provides estimates made by LFM of the real capital investment
required for an abattoir of their standard:
Figure 3: Representative capital costs for a fully equipped modern abattoir
Source: Lao Fresh Meats
5.7. Note that in their calculation, the single largest element in the capex is the building
itself. This is because LFM aim at achieving HACCP status and this requires specialized
building standards. The abattoir is the only one in Laos that would meet the proposed
Decree standards.
5.8. If an investment of this amount were to be made, two things would be needed: (a)
a reliable supply of top-grade animals (not small Yellow Asia breed), (b) market demand
that absorbs large volumes of high-quality, high-priced meat. Currently LFM enjoys neither
of these things. In this case, their operation of the Hungarian Abattoir might well
demonstrate best technical practice, and this is what may have impressed the planners for
NSLCP, but it is unlikely that they understood the business aspects of the enterprise.
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b. Description of the Proposed Project
5.9. Given the issues that arise when the operation of a fully-equipped abattoir is
considered, a project has been formulated for Phonsavan that tackles immediate and
pressing problems of animal welfare, food and worker safety and impact on the
environment, given the ex-ante decision to close the existing slaughterhouse.9
5.10. The project proposes to build a new slaughterhouse, not an abattoir, at a location 7
Km outside Phonsavan City to replace the existing one which is inappropriately located
near the city centre, and which represents an environmental hazard as well as being unable
to meet modern food standards; as stated before, the decision to close the existing
slaughterhouse is not taken because of the proposed new facility, but rather the new facility
is required because the old slaughterhouse will close.
5.11. As designed, the new facility will be located on a 35,000 m2 industrial site (a former
timber mill) on Route NR7 between Phoukoud District and Phonsavan City. It will save
building costs by using part of the existing structure of the timber mill. The slaughterhouse
will provide simple, low cost but modern equipment (e.g., stunners, winches) and potable
water. It will provide adequate and safe lairage with feed and water for animals awaiting
slaughter, and it will have good access to the main wet markets in the city.
Figure 4: The proposed site at the “Old Taiwanese Timber Mill”
Source: LCG Site Survey
5.12. As first observed, the old timber mill looks unusable for any purpose, let alone food
processing. However, a detailed survey of the structure has revealed that the main building,
hidden by poorly built outbuildings, is very strong, indeed over-built, and generally fit for
purpose providing necessary work on upgrading is undertaken.
9 Note: the existing slaughterhouse is NOT being closed to make way for a new one; the decision is entirely separate and based on public health grounds.
13
5.13. The project will convert the main building into the slaughterhouse, with work
including removal of old broken and wooden structures, re-building and tiling walls,
replacement of the concrete floor and construction of modern, environmentally compliant
drainage and waste disposal systems. Furthermore, other necessary building (offices,
toilets etc.) will be built together with the lairage and animal handling systems. Utilities
(water and electricity from main systems) will be connected and fences and other security
aspects strengthened.
5.14. The process of slaughter as proposed here requires simple equipment. The overall
aim is to control the live animal and stun/kill it as humanely as possible and with proper
safeguards for human workers. The carcass must be off the floor and waste properly
disposed of. Waste water (including urine and feces will be treated with maximum concern
for the environment. All items of equipment must be clean, and there must be a source of
potable water together with showers and other toilet facilities.
5.15. In the approach adopted here (a simple design) there are few major items of
equipment. Indeed, the equipment for slaughtering represents only 17% of the construction
costs (less than USD 200,000). The main equipment items are:10
• Stunners
• Pig de-hairer
• Carcass saws
• Water management and high pressure cleaning system
5.16. These items are readily obtained from various suppliers here in Laos or from
Thailand.
c. Objective of the proposed Project
5.17. The proposed project is an innovative and flexible solution to rapidly fill a gap after
the closure of the existing slaughter facility. It is recognized that the design presented here
is not a complete or long-term answer to the use of livestock in the Province; rather it is an
intermediate or “second-best” solution that can be undertaken quickly and effectively. The
new slaughterhouse will use and demonstrate modern equipment. From a capacity
perspective, the facility will replace and slightly expand the capacity of the old
slaughterhouse and will allow further expansion on what is a large site. Fundamentally, the
objective of the project is to implement a rapid, low-cost replacement of the old facility and
supply the city with meat that has been taken from animals that have been humanely
treated, by workers in safe and hygienic conditions.
d. Intermediate results arising from the Project
5.18. The environmental hazard faced by the residents of Phonsavan City will be
removed by the closure of the existing slaughterhouse and its replacement by the new one.
Of course, the old slaughterhouse should be closed immediately, i.e., its closure is not
contingent on the construction of a new one. However, if the existing slaughterhouse was
10 Subject to confirmation in the detailed design and quotes from suppliers.
14
closed without a replacement, it is likely that additional unofficial slaughter pads would
spring up to fill the demand for meat.
3. Rationale for the Proposed Project
a. Purpose
3.1. The purpose of a modern slaughterhouse serving Phonsavan City is to provide
residents and visitors with meat that is safe to eat. While there are other sources of meat,
including meat slaughtered commercially in an existing facility, none of these satisfy
government food safety standards. Consequently there may be a public health risk arising
out of infection with (among others) Salmonella and Escherichia coli (e.coli) bacteria which
cause digestive tract and other diseases. While not life threatening except in unusual
cases, these diseases are unpleasant and reduce labor productivity.
3.2. The link between food safety and health is understood in Laos and has been
identified in the policy for livestock promulgated by the MAF/DLF. An emphasis on food
security implies that the food to be provided should be nutritious and safe.
b. Condition of the Existing Slaughterhouse
3.3. The Phonsavan City slaughterhouse has been operated by Mr. Phayvanh
Phommaxay for five years after inheriting the business; it has been operated for around 20
years by the same family.11 Mr. Phayvanh understands the slaughtering business and is
aware of the problems he faces. Apparently, he has not had the resources to tackle them
(but he has been able to build a new house on the site in the last two years).
3.4. Initial capital was 200,000,000 Lao Kip (USD 25,000) for infrastructure plus
100,000,000 Lao Kip (USD 12,500) of newly registered capital in 2014. His business model
is to provide slaughtering service to livestock traders; the charge is 45,000 LAK per head
of cattle (7,000 LAK per head paid to DAFO for inspection services), and 35,000 LAK per
head of pig (3,000 LAK per head paid to DAFO). Annual production costs are estimated at
420,000,000 LAK (USD 52,500) for electricity, water supply, fuel woods, transport,
telecommunication, staff’s salary, tax and equipment depreciation. Revenue is reported as
950,400,000 LAK (USD 118,800) per year with a net annual profit of 530,400,000 LAK
(USD 66,300).12
3.5. Problems were officially noted by a team from ACIAR.13 The survey by ACIAR
covered five regional slaughterhouses, and it is fair to say that Phonsavan did not stand
out from the other four; there was not one single aspect of the process, from the health of
11 Different information was received by the social safeguards team, and it could be that the story is more complicated. 12 No accounts were audited. These amounts are as reported by the owner in 2017. 13 ‘Slaughterhouse Surveys in Vientiane And Northern Lao PDR March to September2011,
Description of Slaughter Facilities, Practices, Health Status of Cattle, Buffalo and Pigs and
Identification of Risks to Food Safety, Meat Quality, Worker Safety and Animal Production, Health
and Welfare’, Kate Blaszak, Luzia Rast.
15
the live animals entering to the transport of the meat to the wet markets that met even the
lowest standards of reasonable practice.
3.6. The ACIAR report is detailed, thorough and extensive and may be referenced. It
suffices here to quote the conclusion which applies equally to Phonsavan as to the others:
“The surveys showed that slaughter facilities and slaughter practices were
of such poor standard that they led to many hazards and high scoring risks
particularly in food hygiene (quality, public health) and animal health and
welfare, but also worker OHS and environmental contamination had
many high scoring risks. Practices are conducive to high microbial
contamination of meat products and lack of animal health examination,
disease surveillance, meat inspection and condemnation which not only
pose a risk to disease spread amongst livestock but also to humans. Animal
welfare standards are well below international guidelines with systematic
practices that contravene OIE and FAO guidelines involving frequent
infliction of unnecessary pain and suffering during the pre-slaughter and
slaughter process…..”14
3.7. The NSCLP agribusiness and infrastructure specialists visited the slaughterhouse
in 2017. Here is their report:
“All facilities what we visited did not adhere to any systematic, poor hygienic
slaughtering and processing of animals. There was no inspection and weak
management of resources and staff since the site was open, allowing free
access of people, wild and domestic animals during the day and night when
slaughtering occurred.” 15
3.8. Another visit was made by the LIC International Slaughterhouse Specialist in
October 2017. He made the following observations:16
(i) Stunning. Animals are bludgeoned to death with a hammer. Animal welfare is
becoming an issue worldwide.Alternative equipment to humanely kill animals is
now available relatively cheaply and should be included as part of standard
abattoir equipment.
(ii) Slaughter Floor Hygiene. animals are tied up on slaughter floor contaminating
floor with faeces, animal lairage should also have a cement non-slip floor and be
cleaned daily. The slaughter floor has broken areas which pool water and blood
etc, difficult to clean properly.
(iii) Utilities and Ancillaries. Adequate drainage needs to be in place to channel
waste water away. Only materials which are easily cleaned and impervious to
moisture should be used on the inside of a slaughterhouse. Water must be clean
(potable). There must be sufficient equioment to prevent cross contamnation.
14 Op.cit. Section 8, Conclusions and Recommendations, page 30 15 NLSCP LIC Specialist Field Mission Report 18-21 July 2017 16 Mark Lumsden, International Slaughterhouse Specialist, Field Mission Report
16
The whole slaughterhouse must be constructed with animal welfare and human
welfare taken into account.
3.9. The LIC Specialist concluded as follows:
“The largest and probably most difficult part of this project will be in
training all people involved in the meat supply chain in hygienic
techniques and the use of equipment properly. It will require some form
of regulation to be put in place by Government and to be enforced.
People with adequate qualifications will be needed as Meat Inspectors/
Health Inspectors to try to ensure that products sold in markets are fit for
human consumption.”
3.10. Even the standards of the smallest of slaughterhouses only killing one or two
animals per night can be improved with the addition of some basic equipment and training.
3.11. The structure of the slaughterhouse and its location in the city both present
problems. The buildings are old wooden and part-brick structures around a central yard.
The slaughtering floor is beyond repair. There is inadequate water and drainage.There are
no proper lairage facilities; indeed there is nothing good to be said about the actual building
and basic facilities.
3.12. The location of the slaughterhouse is a little more complicated. It is near the centre
of the city and surrounded by what seems to have become a residential areas with some
quite large houses. No doubt the slaughterhouse was located at the outskirts of the city 20
years ago, but the urban area has grown up around it as the city has expanded. It must be
noted that a tream runs immediately behind the slaughterhouse. A water quality survey has
not been undertaken, but it is certain that effluent is discharged into this stream.
3.13. From a present-day environmental perspective, the slaughterhouse could not be in
a worse location, and this aspect alone justifies closure.
Figure 5: The “Old” Slaughterhouse in Phonsavan City
Source: LIC and Google Earth
17
3.14. However, the location of the slaughterhouse is about 2Km by road to the Suan
Phoukham and NamNgam wet markets. This is a short ride for market traders who wish to
get their meat to the customer as rapidly as possible. Moving the site to a location over
7Km away (and requiring transit through the centre of the city) may be a disincentive for
traders to use the new facility.
18
B. Market Analysis
1. Determinants of slaughterhouse operations
1.1. Cattle, buffalo and pigs have a commercial value to humans principally as a source
of food.17 While in many places both cattle and buffalo (large ruminants) are kept for milk
and dairy products, in Laos all three species of animal are mainly used as a source of
protein – meat.
1.2. To transform a live animal to meat it must be killed. In many cases, particularly in
remote areas, this may be done informally, either literally in a farmer’s yard or at a local
slaughtering pad. These are very rudimentary places of slaughter and more than likely are
a simple clearing perhaps near a water source and with a framework (or even a tree) from
which to hang the carcass. In Laos this is probably the most common location where most
meat is produced. It may be neither hygienic, nor environmentally sound and almost all
official agencies would like to see the practice cease. This is unrealistic in the
circumstances.
Figure 6: Informal “backyard” slaughter-pad
Source: OIE, M. Varas
1.3. Nevertheless, there are important reasons why it should be discouraged in urban
areas, not least because the number of animals being slaughtered is larger than in villages.
A simple slaughterhouse is the answer, and this has been adopted in Phonsavan. Most if
not all the animals for consumption by city dwellers effect their transition from life to meat
via such places, which may be considered as a machine for making meat from living raw
material.
17 In most smallholders farming systems animals are also let as a store of wealth and for their use
as beasts of burden. However, these uses are not of concern in this Study.
19
1.4. As is usual in agribusiness, processing machines (including cold stores or
packhouses or grain mills) are considered cost centres rather than stand-alone businesses.
The money (profit) is not made on the actual operation of the machine, but in the difference
between the price the raw material can be purchased at and the yield of the processed
item; the machine adds value and that value is accrued by the trade in raw material and
end-product (plus by-product credits if any).
1.5. It is important to understand the differences between a slaughterhouse and an
abattoir. This difference may have caused confusion since both, in principle, are for
producing meat from live animals. However, by visiting an abattoir (e.g., the Lao Fresh
Meats facility at Nam Xouang – the “Hungarian Abattoir”) it may be supposed that there is
a requirement for such a facility. This Study is based on the contention that there is not;
what is required in Phonsavan is a slaughterhouse to replace the existing one. Even that
replacement requires a justification.
1.6. With an abattoir, animals are usually purchased by the business, slaughtered and
processed at a cost to the business, and the product sold to wholesale customers. Some
abattoirs undertake “service kills’ for outside clients for a fixed fee per head, but (like the
LFM facility) most may be considered as the “machinery part” of an integrated business
that sources its raw materials and markets various products. Because they are businesses
requiring a return on the investment in the machine, abattoirs usually operate at a higher
output than slaughterhouses and have higher input costs such as staff, electricity,
maintenance, water etc. Abattoirs generally have a lot of expensive equipment both to
purchase and maintain, up and down stands, electric splitting saws, hide pullers etc.
1.7. A slaughterhouse is a basic facility built to a sufficient level, so hygiene can be
maintained; equipment is minimal because there is little if any, value added to the raw
materials except by turning a live animal into a dead carcass. Slaughtering is often carried
out by the owners of the animals who may also the butchers who sell to the wet market.
This is how the current slaughterhouse in Phonsavan operates, the owner supplies the
venue, electricity and water, and the rest is up to the butcher.
Figure 7: Simple Slaughterhouse Process
Source: LIC Consultant, International Slaughterhouse Specialist
20
1.8. An abattoir, therefore, is in the business of producing marketable meat-based
products from live animals (as raw material), converted to fabricated (cut into large pieces)
carcasses (intermediate product – some fabricated meat may be sold to specialty meat
processors) and dressed meat cuts (end products). It operates like any other business with
investors, shareholders and a place as a trader within the value chain (e.g., LFM farms the
live animals, slaughters them, fabricates the carcasses, produces sausages, beef jerky and
prosciutto sold at its retail shop in Vientiane); the machinery of slaughter is at the front-end
of this system and is merely a (necessary) part of it. This is not what is proposed or studied
here, since (as far as is known) there are no investors, and there is no integrated business
envisioned.
1.9. A slaughterhouse is often a publicly-owned service facility. Metaphorically, it is like
a photocopier: the owner of the copy machine has no ownership or even knowledge of the
material being copied and maintains no interest in what it is used for after the customer
removes it. Just as with a photocopier, it is often the customer that operates the machine.
Operated by the owner of the animals, all a slaughterhouse requires is a stunning box (or
boxes) to humanely slaughter animals, an overhead winch to elevate animals, cradles on
wheels to move carcasses and keep them off the floor. Several booths each with a hand/
knife wash with both hot and cold water. Stainless steel bench and racks on which to hang
cuts of meat and offal. The simpler the better. The machine should cover its operating costs
and perhaps make a small profit so there is a toll or service charge per page copied (animal
slaughtered), but it is not considered as a full business – it is a serve-provider to folk that
do have both ends of the trade, the ownership of the raw material (live animals) and the
wherewithal to be able to sell meat. It is this kind of service facility that is considered by this
study.
1.10. It is noted that in Laos, slaughterhouses supply freshly killed meat direct to the wet
markets. A challenge to designing a slaughterhouse to cope with wet market sales is that
many animals must be processed in a reasonably short time frame. Animals are generally
slaughtered in the early hours of the morning and the product taken directly to the wet
market for sale. The process is undertaken by butcher teams, often involving 2-3 people to
carry out the slaughter and breaking the carcass down into manageable portions, generally
quarters for bovines and sides for pigs. Supervision and hygienic control systems, which
are already difficult to implement in most Asian abattoirs during the day, function even less
during the night.
1.11. The hygiene problems of livestock slaughtering in the traditional system arise from
the need to rush, as there are only a few hours between production and consumption of
the meat. This requirement causes slaughterers and meat handlers to short-cut on hygienic
procedures for the sake of reaching the meat market in time.
1.12. One advantage of the “backyard” slaughtering system, compared to a purpose-built
slaughterhouse where many animals are slaughtered, is that small numbers are
slaughtered on demand. The dispersal of the slaughtering process mitigates the spread of
disease because so few animals are killed in one place. There can be 20 individual
backyard operators killing 3 head each a night to meet the markets requirement of 60 head.
21
1.13. Any plan for a slaughterhouse must be able to slaughter 60 head in the same time
frame and offer other advantages, or it will not be used. This is often the experience with
publicly-owned facilities that are located for reasons other than market efficiency, and the
responsiveness cannot be achieved in a conventional modern style abattoir without huge
capital expense.
1.14. It will also be apparent that the success or otherwise of both types of slaughtering
machine depend upon the number of animals that can be processed; the throughput. The
facilities will be built with a rated capacity, a certain maximum number of animals of each
type to be slaughtered per shift and this is reflected in the capital invested in building and
machinery. However, this capacity must be used (like any factory) or else there will be
insufficient revenue to cover fixed costs and pay back the investment.
1.15. For an abattoir, not only must there be a sufficient number of animals (i.e., the units
of input), but also a maximum unit yield (output), the amount of meat and other marketable
products derived by the process. A slaughterhouse depends only on the fee charged per
animal slaughtered, so the yield is more a matter for the owner of the animal since he or
she will retain ownership of the meat. Of course, the yield will affect the owner’s decision
to accept the slaughtering fee (if the yield covers the fee) or to seek another, less costly
way of turning the animal into meat.
2. Demand Analysis
2.1. There have been various efforts to assess demand for meat in Laos.18 None provide
definitive data based on consumer surveys. Nevertheless, there is a wealth of anecdotal
information together with data from neighboring countries; Thailand has a large ethnic Lao
population and reasonably reliable data on meat consumption. In general, it can be said
that better-off Lao people eat meat but are more price sensitive than sensitive to quality.
Poorer Lao eat meat when they can get it or when circumstances lead to the slaughter of
one of their family herd (most rural folk keep animals). However, malnutrition, in the sense
of imbalanced diets heavy in carbohydrates, is a pervasive problem especially in the North.
This may change but is more likely to do so as rural people migrate to the cities.
18 For example, Report of the Agribusiness and Value Chain Specialist. Adam Sendall, July 2014.
22
a. Demographics in the North
2.2. The rural population of the Northern Uplands is ~2 million persons.19 The economy
is relatively diverse and although most households keep a few animals, much of their
activity is devoted to other things. One of the benefit of household (“backyard”) livestock
husbandry is that the animals can be left to themselves or minded by an elderly person or
a child. Changing this situation to a “commercial” approach probably involves changing the
entire family routine and has an impact on the overall farming system. It is unlikely that the
system whereby animals are slaughtered on demand in backyards will change.
Figure 8: Laos, Northern Region, Population by Province
Source: Agricultural Census 2011
2.3. Xieng Khouang Province has a population of 251,334 (2017) spread over an
approximate area of 15,000 square kilometers.20 It is one of the 17 provinces of Lao PDR,
located in the north-central area of the country, on the mountainous Tran-ninh plateau.
Xieng Khouang includes eight districts: Paek, Phaxay, Phoukoot, Kham, Nong Hét, Khoun,
Thathom and Mokmai. The province shares borders with Houaphanh, Luang Prabang,
Vientiane and Bolikhamxay provinces, as well as an international border with Vietnam’s
Nghe An Province; the influence of Vietnam culturally and business-wise is pervasive.
2.4. Phonsavan, the provincial capital, is in Paek (or Pek) District. It has a reported
(official) population of 37,507 persons, and another 74,000 visitors interested in tourist
sites. It is a relatively new city (by most standards just a small town) built in the 1970s to
replace an older settlement. The main economic activity is government administration,
mining companies from China and Australia, tourism and the work of NGOs related to UXO
clearance. Phonsavan is home to various ethnic groups, such as the Phuan, whose
ancestors once founded the kingdom of the same name, the Hmong, the Khmu and Tai
Dam. There is also a minority of Chinese and Vietnamese as well as some international
workers.
19 Some sources say as high as 2.6 million persons. The official Lao population of the North in 2011
was 1.8 million persons for the region. Since then there has been both inward and outward migration
which may have balanced itself. It is assumed the total population is now 2 million persons. Of this
number, 60% are assumed to be rural dwellers; the number of persons may be lower (higher in
urban areas) during much of the year. 20 Tourism Laos 2017
23
2.5. Like most Lao urban areas in the North, Phonsavan is relatively isolated. There is
an airport with regular daily flights (sometimes cancelled by bad weather in the mountains),
but road travel is usually a minimum of 8 hours to the next town. The roads have improved,
but Phonsavan is not especially well-placed as a hub or interchange, except for transit to
North Vietnam; Vinh is 12 hours away and Hanoi about 8 hours by road. However, it is very
unlikely that major goods to and from Hanoi and Vinh would transit Phonsavan. The
quickest route to those cities, e.g., from Vientiane, is via Bolikhamsay on NR8 to Vinh, then
up the coast road (or by boat) to Haiphong and Hanoi. Note also that the North-South
Economic Corridor route runs up the west side of the country and by-passes Xieng
Khouang by some distance.
2.6. An assessment of the development and growth potential for Phonsavan is beyond
the scope of this Study. However, while the city is a pleasant place with a livable climate,
there is no obvious reason to expect a large increase in its population. That would probably
require an explicit effort by government to encourage industry to re-locate, and with the
constraints on travel that might be difficult. The following quote provides some perspective:
“The Northern Region has great potential, but industrial sector (sic) has
not yet evidently developed. At present, there are only some
hydropower dams, small-scale mining and some handicraft and a few
family-run food processing enterprises.”21
Figure 9: Proposed Slaughterhouse site at Phonsavan
Source: Google Earth
21 8th Five-Year National Socio-Economic Development Plan (2016–2020), Ministry of Planning and Investment, June 2016
24
2.7. There may be an assumption that, with NSLCP and an emphasis on livestock
production, there will be an increase in agricultural activity. However, even if this is the
case, it is unlikely to draw people in, and certainly not to the urban areas. These may, on
the contrary, increase their population as people reject agriculture as a way of life.
Agriculture development will not prosper based on extensive farming systems, especially
since the available arable land is limited in these mountainous areas. For agriculture to
develop, the emphasis must be on intensification, which means more output for less labor
and land.
b. Overall demand and consumption of meat in Laos
2.8. Asians, including the Lao, usually eat rice, vegetables and a flavoring of animal
protein. Lao consumers mostly want freshly killed, “hot” meat at a low price. All the edible
parts of the animal are consumed including (perhaps preferred) the offal.
2.9. Consumption of meat in Laos is low by world standards. The Thai might eat a little
more, but the Vietnamese eat double that, and the Chinese nearly 60 Kg/head. There is a
relationship between incomes and the amount of food consumed, but within Asia it is not
as strong as expected. Rich Japanese people eat roughly the same amount of meat as the
much poorer Vietnamese. It should not be expected that national income growth in Laos
(even assuming it is distributed equally) will result in dramatic shifts in diet or cuisine.
2.10. Poverty is a serious issue in Laos. ADB says more than 23% of Lao are below the
poverty line, and that nearly 60% of the working population earn less than $1.90/day. This
places LPDR on a par with Myanmar, far behind Cambodia (14% below the line) and
Thailand (10%). In upland areas, the poverty rate is as high as 43 per cent, compared with
about 28 per cent in the lowlands. Meat demand is elastic with respect to incomes, and so
relatively low incomes in the North suggest a lower level of consumption than elsewhere in
Laos.
2.11. At 26 Kg/person and a population of ~7 million persons in Laos, total demand for
meat of all types (excluding fish) comes to 182,000 tons. The NSLCP designers estimated
265,000 tons growing to 300,000 tons by 2020.
Figure 10: Meat Consumption by Livestock Type in Laos
Source: FAOStat 2013
25
2.12. These data suggest that the average demand for beef (from cattle and buffalo) is
about 3 Kgs of meat per person per year. Livestock targets for 2020 are for a total meat,
fish, and egg consumption of 65 kilograms (kg)/person/year, of this 20% is pork
(13kg/person/year); 14% is poultry (9 kg/person/year); and 6% is beef (4 kg/person/year).
By 2025 the consumption of animal products is expected by the policy-makers to increase
to 70 kg/person/year, with a similar breakdown of different meat consumption. This means
a total increase of 2 Kg of pork, poultry and beef from the current estimated amount of 26
Kg/head for those products. Increases in demand for pork and beef these meats are 1 Kg
and 300 grams respectively. In 2025 the human population could be as high as 10 million
persons, however, a lower figure of 8 million is used.22 Assuming a slight increase in per
capita consumption, this could mean a requirement for 32 million Kg of beef and 112 million
Kg of pork.
c. Demand for meat in Xieng Khouang and Phonsavan City
2.13. If it is assumed that Xieng Khouang Province has a population of about 250,000
persons, and the average per capita meat consumption figures are used (3 Kgs beef and
13Kgs pork), this suggests a total demand by the province of 750,000 Kgs of beef and 3.3
million Kgs of pork. Using a standard yield figure of 70% usable meat per live animals,
these numbers represent about 58,000 pigs and 6,000 cattle.23
2.14. The population of Phonsavan may be taken as 40,000 persons. It is assumed that
per-capita consumption is 5 Kgs beef /annum, and 13Kgs pork. In this case the demand
for lives animals is 9,280 pigs and 1,429 cattle. If these are slaughtered proportionately
throughout the year, then the daily slaughter is approximately 25 pigs and 4 cattle.
However, the existing slaughterhouse in Phonsavan reports processing 50 pigs and 10-12
cattle per day. The discrepancy can probably be explained because the distribution of the
animals slaughtered is not proportional throughout the province, nor is the per capita
consumption. Rural people eat less meat, and certainly do not eat as much pork (which is
largely imported by Phonsavan from the south). City-dwellers in Phonsavan (especially
those of Vietnamese origin) eat more pork than the average, and that the per capita meat
consumption overall is higher. While there is no hard data to support this contention, it does
seem the most likely explanation.
22 The Ministry of Planning and Investment estimated in 2015 the population would climb to 10 million
in 2020. This is much higher than other estimates. 23 The calculation is 70% of 4.6 million kgs of live pigs. The average pig size is 80Kgs, so 4.6 myn
divided by 80 = 58,038 live pigs. Similarly, for cattle with the average live cattle for slaughter weighing
175 Kgs. The number of live cattle is 6,12.
26
Figure 11: Meat demand and live animal requirement Phonsavan City
Source: LIC
2.15. For this Study is suffices to conclude that the existing slaughterhouse does
represent the exact demand requirements for the city. There is no cold storage for meat,
and no demand for meat which has been frozen, so the supply-demand balance seems
clearly and accurately represented by the numbers of animals slaughtered.24
d. Demand for high-quality meat arising from visitors
2.16. Much of the discussion of the need for modern slaughterhouses and abattoirs
centres on the assumed demand by tourists for high quality meat; tourists would reasonably
like to know that their food is processed properly and that it is safe to eat. This is perhaps
truer as the composition of the visitors to Laos changes from the “backpacker” adventurers
of the 1990s to a more sophisticated group that combines relatively well-off tourists and
business visitors. The key question is whether this segment of demand is sufficient to
support the extra cost of processing animals in a modern abattoir rather than in more basic
circumstances.
2.17. The hotel and restaurant sector in Laos has expanded dramatically in the last 20
years; the number of tourists visiting Laos rose from 2.5 million arrivals in 2010 to nearly 5
million in 2015; numbers have fallen off recently and may stabilize at ~4 million. Most of
these persons visit Luangphrabang City and Vientiane.25
2.18. The tourist trade is seasonal, with a peak season from October to February (the
cool season coinciding with holiday periods elsewhere). This means that, for the country,
to the extent that demand depends on visitors asking for high quality meat, there will be
significant changes in the required supply between the two main times of the year. This
would affect the throughput for any abattoir.
24 Assuming the slaughterhouse does operate 365 days per year, and that the numbers reported
are true. The ACIAR Report of 2011 states that 8 to 10 large animals are slaughtered in the City
every day on average 25 Population of LPB Province is in total ~500,000 persons.
27
2.19. Almost all the visitor arrivals are Asian, largely from Thailand, Vietnam and China.
The Chinese eat relatively more pork than beef, which the Thai and Vietnamese are fish
and pork eaters – and like food very similar to the Lao; the idea that the growth driver for
high quality steak founders on the fact that in 2017 visitor arrivals from e.g., the USA were
only 86,000.
2.20. Proponents of the new slaughterhouse may suggest that it becomes a commercial
operation (rather than a public service) and move in to the high-value and processed meat
segments. This possibility cannot be excluded in the future. Nevertheless, at present there
is no data to support strong demand for such products in Phonsavan. Neither is there any
particular reason why they would need to be produced locally. High-value meat is more
likely to be imported and brought to the few city customers (hotels or restaurants) directly.
A local, small-scale processor cannot hope to compete, and indeed the LFM abattoir near
Vientiane struggles to compete with imports. Xieng Khouang has less than 20 hotels of all
kinds and few of international level standard; similarly, most restaurants cater for visitors in
search of adventure and local food. In 2016 the province hosted 74,166 visitors in the year.
Assume the average length of stay is 5 days, so 370,830-person days. Assume on 10% of
those days people eat expensive meat, and that the amount of beef meat consumed is the
average consumed by westerners, about 200 grams. This amounts to only ~740Kgs. Easily
flown in from cheap and reliable foreign sources. This is exactly what is done by the mining
companies. No local, modern abattoir could compete even if the best beef cattle were
available because the demand is so small thus not providing the throughput required.
e. Expansion and growth of Phonsavan City
2.21. At one time the “old” slaughterhouse was properly located outside the main urban
area of the city, not far from what was then the airport (now used for other building including
the Suan Phoukham wet market). Even in 2005, imagery shows that while the city had
surrounded the slaughterhouse, it was still isolated. That is not now the case, large houses
have been built immediately adjacent to the site.26
2.22. The same situation may occur with the new planned facility. The land surrounding
the site of the old timber mill is currently open fields, but it is ideal building land – flat and
above any flood areas. The normal way urban sprawl develops in this region is strip
development along the sides of the road; informal booths and small restaurants get
surrounded by shelters and these are rapidly developed into apartments and shops.
2.23. In the case of the proposed site, there is about half a kilometer of agricultural land
along the NR& separating the village of….. from the timber mill, and another half-Km from
there to the first building of Phonsavan itself, and then another 3Km to the city centre. Given
the alacrity with which small business springs up, there seems every reason to believe that
in the future this too will be a heavily populated area. Although no plans for widening the
NR7 are known, if the road is widened, then this will also encourage urban expansion.
26 At the back of the slaughter-house is still the stream that runs through the city.
28
2.24. Is it likely that Phonsavan will expand? Perhaps. Will the authorities place a cordon
sanitaire around the slaughterhouse? Judging from the existing one, the answer is No.
Figure 12: Possible urban development near the proposed site?
2.25. If the city expands, is it likely to double in size and in what period? No plans or
estimate have seen. If it does the rough rule of thumb is that every extra 10,000 persons
will require meat from an additional 357 cattle and 2,321 pigs. In terms of the demand on
the slaughterhouse operations, this is less than one extra cattle/day and another 7 pigs.
This growth can be catered for easily by the proposed simple design for the new facility.
29
3. Supply Analysis
a. Total numbers of animals
(i) Cattle
3.1. The consumption data suggest that a herd of 2.8 million cattle and buffalo is needed
for Laos to be self-sufficient in beef. The herd is currently estimated at 2.6 million. 27
3.2. Cattle are found throughout Laos, and there have been efforts to expand the herd
in the Centre South where feed/forage is easier to find. Locating the herd’s distribution
within Laos is important, since the gross total of animals cannot be used to make
calculations about the need for, and viability of, slaughterhouses in the North.28
Figure 13: Laos, Distribution of Cattle and Buffalo, 2010/11
Source: Agricultural Census 2010-11
Note: Xienkhouang is officially included in Central,
which makes no geographic or analytical sense, so it is changed.
27 3Kgs beef multiplied by 7 million persons is 21 million Kg of beef. The average animal is ~180
Kgs live weight with a meat off-take of 50 Kgs. A slaughter of 420,000 animals is required. If the off-
take is 15%, then the herd requirement is 2.8 million head. However, the Government policy
assumption is that the off-take is much lower, 2.5%, in which case a very large herd – 17 million
head - is required. This is clearly not sustainable and must be a mistake in the estimate of the off-
take number. Even at 10% (a low figure by smallholder standards worldwide) a herd of >4 million
head would pressure land resources well beyond their capacity. 28 In this instance, more accuracy is required than most numbers used in policy papers to date.
30
Figure 14: Laos, Distribution of Cattle and Buffalo, 2011
Source: Agricultural Census 2011
3.3. The eight (by this categorization) Northern provinces account for 32% of the total
number of large animals in Laos in 2011.29 Four of the provinces, Phongsaly, Luangnamtha,
Bokeo and Oudomxay, are marginal producers of large animals, and are discounted from
the “cattle belt” as a source of commercial supply. Xaiyaburi is a transit route, and so may
not be helpful from a perspective of supplying local slaughterhouses. Huaphanh supplies
most of its commercial cattle to Vietnam.
(ii) Pigs
3.4. Xiengkhouang is not known for its pig industry. The official data suggest there are
about 70,000 head of local breeds of pig. Almost all of these would be for local household
consumption, mainly in rural areas. White pigs are brought up from the South (including
from Thailand). This supply is directly aimed at meeting local urban demand for pork meat
(see below).
29 Xaisomboun was a so-called “Special Zone” up until December 2013 when it became a province.
In 2011 it was included as Vientiane Province figures, so is included in the Central Region.
31
Figure 15: Laos, Distribution Pigs, 2011
Source: Agricultural Census 2011
3.5. The Northern provinces account for 62% of the total number of pigs. However, the
important feature of this chart is to note the prevalence of pig farms to the south in Thailand.
The Lao pig industry is dominated by the Thai industry, and whatever happens to the pig
industry in Thailand materially affects that in Laos, i.e., the “driver” of the Laotian pig
industry from the supply side is the activity of its large neighbor, Thailand.
b. Supply of live animals for slaughter
3.6. There arises a question about whether there is a sufficient supply of live animals
from to justify the investment in a slaughterhouse in the main livestock areas of
Luangphrabang and Xiengkhouang. It must be remembered that an abattoir requires a
high throughput of animals to justify the capital investment. A slaughterhouse is a service
facility, so the number is lower.
(i) Cattle
3.7. Overall, the total herd in the Northern Region can be taken as 800-850,000 head.
However, the number of surplus in each province that might be available for commercial
slaughter is not known. For example, most marketable cattle in Huaphanh will go across
the border to Vietnam. All the cattle and buffalo in Luangphrabang are slaughtered
informally.
3.8. Luangphrabang and Xiengkhouang are the hub of commercial supply for domestic
meat consumption in the North. Their combined large animal population was 13% of the
country-herd. The twin-province herd was 283,000 head, or 38% of the total large animal
population of the Northern provinces.
32
3.9. There is no solid evidence that the herd in Luangphrabang and Xiengkhouang has
grown between 2011 and today, but it probably has. A round number of 370,000 head is
assumed which is in line with the assumed 2011-17 increase for the entire herd. It is NOT
an accurate number, but it suffices to estimate a possible off-take from this herd for
slaughter and for live animal sale to other places (including abroad).
3.10. That said, and although the two provinces are contiguous and connected by a good
all-weather main supply route, the trade in live animals between them is unknown. The
distance is 260 Km by road and takes the best part of a day to travel. In this case, arbitrage
trade between the two main centres is possible, but not likely. However, live animals are
exported to China from Xiengkhouang via Luangnamtha, which is a much greater
distance.30
3.11. The herd size for Xiengkhouang is put at 225,000 head of cattle. Based on a herd
offtake of 15%, the province provides 33,750 head. 31 If this entire number were
slaughtered, with slaughtering occurring 365 days a year, then the total daily slaughter for
Xiengkhouang Province is 92 live cattle and buffalo per day.
3.12. Animals are slaughtered informally in the villages for local consumption. But there
is no data on the number. It seems unlikely that given the physical transport difficulties in
e.g., Xiengkhouang, that cattle are brought in to Phonsavan for slaughter and then meat
transported back to remote areas, although this may happen with nearby villages (another
way to account for the discrepancy in the apparent city demand compared to the numbers
slaughtered in Phonsavan).
(ii) Pigs
3.13. The Thai company, Charoen Phokpand (CP) is the market leader in this area. In
addition to dominating the Thai market, CP has established a production company in LPDR,
CP Laos Ltd. Development of a provincial pig industry for slaughter would not be viable
since (a) the demand is limited to urban consumers and is quite small, (b) the pigs can be
produced in the South and transported at lower cost than they could be produced in
Xiengkhouang since scale economies apply in the large pig farms around Vientiane and in
Thailand, and the cost of feed in and around Phonsavan would be higher than the bulk
production elsewhere. Since the requirement is under 60,000 pigs per year, it would be
surprising if local producers could compete. Equally, the volume is small enough to be
easily supplied by the large commercial farms.
30 We also know that pigs are imported from Thailand for slaughter in Phonsavan and
Luangphrabang, so we cannot be firm about these arrangements without much more investigation. 31 There is ample research evidence to suggest that the total offtake from a dispersed smallholder
herd is between 10 and 15%.
33
4. Supply-Demand Balance
4.1. The analysis undertaken above suggests that the demand in Phonsavan and the
surrounding area for both beef and pork is easily catered for by local live cattle supplied
from a relatively large provincial herd, and that pork supply can be adjusted to whatever
level of demand the market signals; indeed, this is probably the case for both types of meat.
4.2. It can be concluded that there are no market distortions (apart from the controlled
price) and that the supply and demand for meat in Xiengkhouang represents a reasonably
free market: farmers can sell their animals to traders/collectors when they wish to do so,
and the traders may bring them to slaughter exactly as day-to-day market demand dictates.
4.3. Is there latent or suppressed demand for high-quality meat? This seems quite
unlikely. When such meat is required, there is nothing to prevent it being transported in the
small volumes needed from larger producers in the South. Should there be concern about
pork supplies? Certainly not; once again traders with contacts in the large pig farm
(including CP) can adjust the supply to whatever is needed.
4.4. Looking at the North as a whole, from a base of 740,000 head in 2011, the total
number of live animals (cattle and buffalo) in the region might be as high as 850,000 head.
Annual offtake at 15% would be 127,500 head, providing about 18 million Kgs of meat. If
the human population is ~2 million persons, then this is about 9 Kgs of meat per head.
Consumption data suggests this is high by South-east Asian standards. To supply the more
likely regional demand, local slaughter is probably about 70-80,000 head. This leaves
around 50,000 animals for export, a figure that is consistent with other information, for
example live animal movements to China and Vietnam (see below section on Trade).
4.5. Xiengkhouang is at the heart of the cattle Northern industry, and so development
must be focused on what happens to the surplus animals. The question is, if local demand
for meat is less than local supply (it is), then should the surplus animals be raised for live
export, or can they be slaughtered locally for export as meat products? Experience from
Lao Fresh Meats abattoir based on the usage of the local cattle breeds suggests not. Even
when the animals are slaughtered hygienically, there is insufficient good quality meat to
justify a meat processing element in the facility. In the case of pork, what would be the point
of bringing live animals all the way to Phonsavan to slaughter and make sausages when
this would be more easily accomplished in the South closer to the input supply and the
markets?
5. Trade
5.1. The export of cattle meat is difficult to quality conscious foreign markets due to the
prevalence of endemic disease such as foot and mouth (FMD). The well-documented
absence of any semblance of food safety and enforcement of regulations in this sphere
makes it inconceivable that Laos can become a significant exporter of animal products
within 10 years. Of course, there are exceptions, e.g., beef jerky from LFM to Vietnam and
the planned Japanese investment in high quality beef production near Phonsavan, but
these are the exceptions that prove the rule.
34
5.2. Laos imports high-quality beef from Thailand and other origins, especially Australia
and New Zealand (about 20,000 tons annually). Imports of high quality beef (and other
meat) is required by the hotel and restaurant trade and by the mines and other construction
sites. It is said that every morning flight arriving in Luangphrabang and at Wattay Airport is
met by the food and beverage managers receiving their consignments. Efforts to substitute
this trade have so far not been successful, although companies like Lao Fresh Meats try.
5.3. The most striking part of trade is the movement of live animals which presents an
entirely different dimension to the livestock industry. Research by NAFRI shows that Laos
is a transit country for live animals moving from the South (Malaysia and Thailand) through
to Vietnam and China. 32 This trade has been fostered by liberalization under AFTA (Trade
in Goods Agreement – ATIGA) and by a reduction in the transaction costs of moving
animals within Laos.
Figure 16: Animal Movements Through Laos
Source: Dr. Aloun Phonvisay et.al. op.cit.
5.4. It is estimated that 85,000 live animals are exported annually from Laos. However,
the number might be much larger.33
32 “Assessment of Cattle Trade Development in Lao PDR: Study on potential impacts of trade
liberalization under AFTA on cattle trade and its implication for the cattle development policy in Lao
PDR’, Dr. Aloun Phonvisay et.al. 2016 33 Suggested by Dr. Phonvisay in conversation on 27th June 2017
35
5.5. Phonsavan does occupy a place in the export of live cattle to Vietnam or has done
so until recently when the traders claimed the Vietnamese Dong dropped in value against
the Lao Kip (LAK). The result was that Vietnam stopped buying Lao cattle. In this case, the
surplus had to be diverted to China via Luangnamtha. This is somewhat puzzling since the
Dong trades against the LAK at ~2.74. It did drop mid-2017 (July-August 2017) to 2.71 but
recovered to 2.75. Was such a small drop sufficient to cut off the trade, or was there another
reason? Much more needs to be known about what happens the other side of the border
before that question can be answered.
5.6. Live cattle are exported by an association that has been trading for 9 years but
officially recognized as an association in November 2012. Total membership is 30 traders,
but only six persons export live animals. The association employed provincial trade system
known as “Lump sum tax payment” in amount of 6,000,000 LAK per year. The tax is
imposed when member purchases animals from smallholder. They pay 50,000 LAK per
head to PAFO as an “agriculture commodity movement tax”.
5.7. The trade in live animals establishes the alternative market demand. Both the Chinese
and the Vietnamese markets are large, and the Lao supply is small, in which case the
traders in Xiengkhouang are “price-takers” – there is no way in which they can affect the
offered price. The established price for traded live animals thus sets the benchmark for all
other transactions.
5.8. In June 2017 the prices for cattle and buffalo based on “real meat weight” were as
follows:
• China exports: cattle 6,000,000 Lao Kip/60 Kg, buffalo 16,000,000 Lao Kip/230 Kg real meat weight.
• Vietnam exports: Cattle price: 12,000,000 Lao Kip/180 Kg, buffalo price: 13,000,000 Lao Kip/230 Kg real meat.
5.9. These prices suggest a price per Kg of meat “on the hoof” of between 66,666
LAK (Vietnam) and 100,000 LAK (China). This compares with the controlled market
price in the Phonsavan wet markets of 60,000 LAK/Kg of meat that has been butchered.
6. Competitive Analysis
6.1. NSLCP LIC agribusiness specialists have conducted a comprehensive study of the
competitiveness of the Lao economy.34 The main findings are presented here.
6.2. Lao PDR ranks 93 (out of 139 countries) in world rankings of general economic
competitiveness. It is the least competitive of the Mekong Sub-region countries, except
Myanmar which is not ranked. For general economic competitiveness factors affecting the
livestock industry, Laos does worse, ranking 98. The country fails badly in relation to its
legal, technical and educational environment. Laos ranks 139 (out of 190) in the World
Bank’s ‘Doing Business Index’. It is the lowest ranked of countries in Asia and the Pacific.
34 ‘Policy Development - Competitiveness of the Livestock Industry in Laos’, LIC, NPMO, Vientiane, August 2017
36
6.3. A stable political situation, combined with a growing economy and a youthful
demographic profile, does suggest that investment in the livestock value chain could be
viable. However, SWOT analysis shows that, while there are these strengths, and some
opportunities, these are outweighed by weakness in the implementation of government
policy, poor education, lack of technology adoption. Threats arise from larger neighbors
and dependency on regional markets and imports.
6.4. Assessment of the various market forces suggests that Lao livestock producers are
relatively weak in terms of market power compared to buyers at home and abroad. The
strength of foreign partners is overwhelming, especially in the pig industry and in the
purchase of live cattle. Local meat producers cannot compete against imports.
6.5. Formal analysis (PESTEL and SWOT) were combined into the following table:
Figure 17: Competitive Analysis
Source: LIC,
6.6. Porter’s 5-Forces analysis was used, and aspects are relevant to the slaughtering
industry:
a. Entering the market – Unless it is for specialized products (e.g., beef jerky), the
Yellow Asia breed does not support a commercial export industry. The local market
is already dominated by local beef. As for pigs, the Thai giant agribusiness, CP,
would prevent Lao companies from becoming large players.
b. Supplier power – The available (cattle and beef) product is based on the Asia
Yellow breed that does well in Laos. The local cattle/beef has no impact at all on
the supply of high-quality meat. Farmers may have little individual market power,
but traders (aggregators or collectors) do have. They can export live animals or
choose to have them slaughtered in the city slaughterhouse or in the informal
“backyard” system.
37
c. Buyer power – a larger commercial slaughterhouse must take what animals are
provided unless the operators wish to enter the trade (i.e., as livestock farmers
and/or as suppliers of meat).
d. Substitutes – it would be unlikely to find substitutes for local cattle /buffalo in the
local slaughterhouses. Pigs are brought in from local farms or imported from
Thailand. Ironically, the Asia Yellow fits a niche market that values lean, tough beef
presented in roughly cut form at the wet market for immediate consumption.
Growing a “higher-quality” (by some international standard) beef for this market
would be a misjudgment, since it is the consumer who judges quality and value for
money. Imported meat is a different market segment, where there are many
substitutes based on origin and quality, but they substitute for each other, not for
the local beef variety. For pork meat, once again, this a large commodity market,
and the Lao producers must fit into it, determined by forces beyond their control.
e. Rivalry or competition between different agents – Smallholders do not seem to
compete, or at least there does not appear to be any formal mechanism for
competition between primary producers (e.g., auctions). There may be implicit
competition, with one trader going from one household to another to beat the price
down. Traders and collectors certainly compete, although association agreements
may divide the possible supply area up in to individual territories. The participants
are small-scale, and the largest farm found in Laos is probably not more than 200
hectares (excluding the Japanese investment in Xieng Khouang). Overall, the
industry power (if there is any) lies (a) with the traders transiting animals and
possibly buying the occasional local animal, (b) foreign buyers and financers of the
transit trade, (c) in the case of pork, the CP company and probably Chinese
investors, (d) local traders and collectors. That said, smallholders, unless they are
distressed sellers, keep their animals off the market until the price improves, or
simply not to sell. None of this suggest that the cattle market is imbalanced. The
pig/pork market does seem to be unduly influenced by foreign companies.
6.7. Summary: the proposed new slaughterhouse meets competition for raw material
(live cattle) from (a) the transit export trade, (b) from informal “backyard” slaughter pads,
and (c) from the existing slaughterhouse, although it is assumed that the license for this
operation would be withdrawn, it will be shut down and its business transferred to the new
facility.
6.8. As a service provider (simply killing the animals that are brought to it), the new
slaughterhouse does not face direct competition on the carcass and processed meat side
because it is not participating in these markets. Nevertheless, and as intermediate element
in the value chain, the slaughterhouse must charge fees that fit with the expected margins
elsewhere. The main determinant of the cost to slaughter of a live animal is the export
price; it must be worth killing the animal in Phonsavan rather than exporting it. The value
(consumer price) of the meat is determined by order of the government which sets market
prices.
38
6.9. Once again, if the slaughter fees are too high then the market sellers will buy from
slaughter pads. In neither case does the slaughterhouse itself have any influence, it must
set its charges to fit with both the raw material supply and the meat demand segments –
and it must (presumably) cover its operating costs.
6.10. There are two other competitive aspects. First, the assumption that the existing
slaughterhouse will go out of business. The call for its replacement is made by government
officials supported by consultants, including foreign experts with foreign ideas about food
safety.35 One suspects that these are the real impetus behind the sub-project. As far as is
known, no Lao consumer or consumer group, or combination of these and market traders
has cause any outcry or complaint against the slaughterhouse. It provides what to local
people is a normal service at a low cost, one that fits into the overall value chain model
discussed above. Since the slaughterhouse is a private enterprise, provides a useful
service and a livelihood for its owner-operators there is no reason to expect that it will close
voluntarily or indeed that closure will be welcomed by the community. This is especially the
case since the new slaughterhouse will also certainly have to charge higher fees and is
further from the wet market imposing higher additional costs of time and transport. The
slaughterhouse will have to be forcibly closed by the government. This raises questions of
legitimacy and compensation.
6.11. If the government was unable to close the old slaughterhouse, given that it provides
the said valuable and cheap service, it represents serious competition. If the Lao butcher
and consumer cannot see value in slaughtering animals under better conditions and be
willing to pay for that, then no one will use the new slaughterhouse. This needs to be said
very clearly: as far as is known, the Lao consumer requires cheap, fresh meat and cares
less how they get it. A new slaughterhouse will have to charge higher fees to cover
additional food safety operating costs and this will either (a) reduce the value of the animal
to the farmer and/or (b) reduce the marketing margin given the consumer price is fixed (if
it is not, then the consumer will have to pay more). In either case, sellers of live animals,
users of slaughtering facilities and wholesalers and retailers of meat have other options,
none of which include using the new facility. This is precisely the experience of such
projects in other developing countries and may have been one of the reasons that the
slaughterhouse in Luangphrabang was shuttered.36
35 The draft Decree op. cit. will make it necessary to shut the existing slaughterhouse. 36 Re-use as a golf course was another.
39
C. Social, Gender and Environmental Safeguards
1. Land Acquisition and Due Diligence
1.1. According to GoL laws, the community must be notified of the planned development
and have the right to object. This used to be under Decree 192, but that is now replaced
with Decree 084/March 2016, which is much less specific. NSLCP has undertaken
preliminary consultations with local stakeholders (including villagers, residents and
livestock traders and marketers).
1.2. A Land Acquisition and Compensation Due Diligence Report (LACDDR) was
prepared in July 2018 based on Land Acquisition and Compensation (LAC) fieldwork
carried out also in July 2018. In this context, information has been provided through 17
coordination, public village and individual meetings, which were attended by 165 (55 female
and 110 male) villagers. The topics of these meetings included an introduction to the
current Project phase, description of the slaughterhouse subproject, entitlement and
eligibility, grievance procedures, as well as requirements for land acquisition. In addition,
environmental impacts and their planned management were presented. The provision of
information will continue during both the detailed design phase and the construction phase
including further public meetings during mobilization of contractor, and others.
1.3. The feedback from villagers through public meetings or individual discussions
includes their acceptance of this subproject. However, their concerns relate mainly to
environmental items, such as: (i) waste water, (ii) air pollution, and (iii) noise, which must
be addressed in the Environmental Management Plan (EMP). It is noteworthy, that no
adverse social concerns or issues were raised by them, however some villagers mentioned
the expectation that the subproject might offer some work or job opportunities.
1.4. The report indicates no costs for compensation and mitigation measures. The
executing and implementing agencies have given high priority in cooperation with the local
authorities to land requirements. The location for the new subproject infrastructure has
been decided through the provision of governmental unused land including a dismantled
structure apparently owned by the provincial government (under the Department of
Finance).
1.5. Since there is no acquisition of private assets required (land, structures, others),
and no loss of income expected, this subproject is classified as an Asian Development
Bank (ADB) defined Category C Project (project has no involuntary resettlement impacts
and no further action is required). There are no impacts expected from physical or
economic displacement to households in this subproject.
40
2. Gender Action Plan
a. Background
2.1. The NSLCP Project gives much emphasis to women’s participation in livestock
production and commercialization because it is recognized that women are mostly
engaged in livestock production particularly raising pigs and goats which are raised in
backyards or in nearby places near the homes. And with the completion of the project, it
is envisaged that women alongside men will enjoy immense socio-economic benefits not
just along production but also towards engagement in livestock commercialization
following the value chain concept that will redound to a sustained increase in household
income; the project is a response to poverty alleviation/reduction.
2.2. To ensure that women’s needs, concerns and preferences are considered in project
design and implementation, a Gender Action Plan (GAP) was prepared which indicates
gender action targets and activities concerning gender mainstreaming as regards the
design and operation and maintenance (O&M) of the slaughterhouse. Under Output 2 of
the DMF, LVC Infrastructure Strengthened, two GAP targets are identified which are:
• 45% of total participants in consultation meetings are women.
• Separate consultations are held with men and women in the locations and
design of slaughters houses and documented evidence of consultation.
• Ensure that the design of slaughter houses include provisions for adequate
number of separate male and female toilets with adequate lighting and
reliable water supply system facilities.
2.3. To meet the above GAP action targets field activities were conducted by LIC’s Social and
Gender Specialist supported by DLF’s gender focal point staff and the DLF staffs (PIU) of Pek
District where Phonsavan city is located conducted on 3 May, 2018. This aimed to:
• Establish the socio-economic situation of the local population in Phonsavan who are
envisaged to benefit from the O&M of the slaughterhouse;
• Gather the needs, concerns and preferences including positive and negative impacts
and mitigating measures to address the negative impacts of the slaughterhouse.
2.4. Data gathering methodologies employed included i.) latest secondary data on the socio-
economic profile of Xieng Khouang province and Pek District where Phonsavan city accessed
from the provincial department of planning; ii.) focus group discussions comprised of men and
women meat processors, meat retailers, consumers and iii.) a key informant interview of a
male animal trader.
2.5. Participants to the consultations activities included the following:
• 37 participants from Ban Ly village comprised of village authorities’ officials and
and villagers (25 women and 12 men)
• 1 male animal trader from Ban Ly ;
• 12 participants from Ban Na Hoy village comprised of village authorities and
villagers (7 women and 5 men)
41
b. Field Data Gathering Results
(i) Socio-Economic Profile of Xieng Khouang (XK) Province
2.6. The province has a total land area of 15,992 square kilometers and a population
density of 16.35 persons per square kilometer. It comprises 477 villages, 53 kumbans and
7 districts. The total household population is 44,793 where only 757 HHs are considered
poor ; poverty rate is only 2% of total HH population. It appears XK is not a poor province.
The total provincial population is 261.519 where in terms of gender, there are more men
than women at 50.7% (132,585) of total population to women’s population of 49.3%
(128,934). The average household size in XK is 5 persons per household.
2.7. The average annual income per person per year is 1,794 (USD or Kip ?). In terms of
population of ethnic groups (EGs), the Lao-Tai is still the majority EG at 55.20% of total
population followed by the Hmong at 32.37%, Khmu 7.45%, Leui, 3.58% and other EGs
1.40%. A total of 354 primary schools are located in the province but the schools of higher
education are found in Phonsavan city in Pek District. Men have higher literacy rates than
women at 93.4% to women’s 83.5% where these data suggest that both gender population
are capable of attending training and capacity-building provided by the project particularly
technical training on slaughterhouse operation and maintenance and can comprehend
simple technical inputs. Furthermore, gleaning from the data on access to infrastructure
utilities, it appears that there is good access to infrastructure utilties because 41,328 HHs
or 92% of total HHs population (44,793 HHs) are connected to the power grid, another
37,443 HHs or 84% of total HHs have sanitary toilets. However, only 7,364 HHs(3%) of
total HHs have access to clean domestic water. These areas are likely the urban areas like
Phonsavan where there is a local water supply authority providing clean water supply
services. The household meat consumption per year is 314.22 kg per household.
(ii) Socio-Economic Profile of Pek District
2.8. Pek District where Phonsavan city is located has a total land area of 1,400 km2 and a
population density of 17.5 persons per km2 which is higher than the province’s population
density which indicate that the population is thicker being the urban center of the province
where most people congregate. The district has 103 villages and 6 kumbans. The location
of the proposed slaughterhouse is adjacent to Ban Ly and Ban Na Hoy villages. The total
district HH population is 14, 816, and an average HH size of 5 members per HH. Pek has
a total individual population comprising 80,795 persons in which women constitute 39,816
persons or 49.48% of total population The men still slightly outnumber the women at 40,979
male population or 50.52%.
42
2.9. As to population of ethnic groups, the Lao-Tai is the majority EG population at 58.35%
of total population followed by the H’mong at 28.36%, Khmu 8.38%, Leui,2.56% and other
EGs at 2.35%. The project poses no threat or any adverse impacts to the EGs because
there are no cultural landmarks to be affected nor there are negative impacts to their culture
and traditions and their local diets. The EGs are well-integrated with the Lao-Tai population
and their absorptive capacities while still lower than the Lao-Tai are not an issue in terms
of their participation in LPMGs and in the various capacity-building activities under the
project. The EGs are capable of comprehending simple training instructions. Men has
higher literacy rates than women which is 96.3% to women’s 89.3%. Nonetheless, women
can still be tapped as participants to training and other capacity-building interventions. They
too can share their views and opinions during consultation meetings and other related
information dissemination activities.
2.10. As to access to basic services and utilities, educational facilities comprising 25 pre-
primary schools, 77 primarys schools and 22 secondary schools are found in the district.
Moreover, good access of the population are also noted in their connection to the power
grid where out of the total 14,816 HHs, 14,522 HHs or 98% have power connections. About
12,716 HHs (86%) have sanitary toilets but only 4396HHs or only 30% are have access to
good and clean domestic water supply. Most of the HHs are accessing waters likely from
wells and streams.
(iii) FGD Results
2.11. All 50 men and women participants to the FGD expressed their interests to participate
in future consultations regarding O&M of the slaughterhouse because they said that the
slaughterhouse will be beneficial to them in terms of supplying the markets with clean,safe
and hygienically slaughtered animals and there is no need for them to buy meat in markets
slaughtered in makeshift, unclean surroundings in the houses of butchers. Processed meat
from slaughtered animal can now be prepared locally instead of availing these from far
away markets. Animal traders will be conveniently delivering their traded animals to local
slaughterhouse for butchering at less transport costs. Women meat retailers in the markets
are assured of fresh clean meat to sell and the possibility of meat spoilage is low. Animals
to be slaughtered will initially be checked by the local meat inspection units of DLF and
attested for their good quality.
2.12. However, they also perceived some potential negative impacts which are related
with the design, they said that design must consider sanitation aspects like clean water to
ensure that no flies and bad smell will penetrate the facility ; highly trained butchers, neatly
dressed must be recruited to perform the work to ensure that the slices of meat are orderly
and neatly done. There must be waste water pool where dirty water and blood from the
animal carcasses are treated before the water flows into the river. They said that what
should be considered as important requirements are the formulation and strict
implementation of rules, particularly the animal trading certificates at the slaughterhouse ;
also the facility must procure a truck to transport slaughtered animals to the markets,
Additionally, FGD participants want to be regularly informed of the progress in the
construction of the slaughterhouse.
43
Project
Beneficiaries (Value Chain
Actors)
Expectations from the Construction of the Slaughterhouse
Perceived
Socio-Economic Benefits of the Construction of
the Slaughterhouse
Perceived Negative
Impacts of the
Construction of the
Slaughterhouse
Mitigating
Measures to avoid/minimize
negative impacts
Men and women farmers/producers
• Convenience to supply animals to Slaughterhouse
• Clear Place and hygienic
• Reduce the transportation if the Slaughterhouse near by
• Take a short time to wait for the products
• Increased more of diseases
• Have Bad environment because increased of fry, smelly and waste water
• All animal which will bring in Slaughterhouse have to check up by veterinary
• Eliminate the waste
• Construction of the wastewater treatment pool before send water into the river
44
3. Environmental Impact
3.1. A preliminary environmental assessment is as follows:37
3.2. The site is less than ideal from an environmental standpoint. The Xiengkhouang
slaughterhouse site is located close to two waterbodies, a stream used for a variety of
human activities (70m) and groundwater-fed ponds used for fish production, crop
production and livestock (50m).
3.3. DONRE has noted that the facility should be a minimum 30 metres set back from the
road. However, the centre of the main existing building (the old timber mill) at its closest
point to the nearest road shoulder is 42 metres, so this appears satisfactory.38
3.4. Several site options were looked at by PAFO; unfortunately, there is no site-selection
documentation despite the listing of site-selection criteria in Project documents. It would
be good to know where those locations are (or verify how solidly they were looked at) in
case they have features of merit that were deemed unimportant when first considered.
3.5. Environmental risks are mainly associated with nearby surface water and
groundwater and community use of those waters. Solutions could be engineered, however
from an environmental-protection perspective the recommendation is to keep the design of
the slaughterhouse simple. The operation should be run up from a “pilot” scale until any
installed effluent-treatment measures prove themselves and are performing as planned.
Performance monitoring can be used to make refinements to effluent treatment/training
before scaling-up.
3.6. Detailed findings (subject to confirmation by the IEE) are:
a. Air Quality/Atmospheric Conditions
3.7. No air emissions, including smoke or dust, were observed. No odours were detected.
Noise was produced by periodic traffic along the nearby highway and from a rebar or
concrete cutter at a construction site in Ban Li village, to the east of Nam Ngoun and heard
from the SE edge of the Project site.
b. Aquatic Resources
(i) Nam Ngoun
37 A site visit was conducted by the LIC Environmental Specialists (Mr. M. Winsby, International
Environmental Specialist, Ms. T. Souphihalath, National Environmental Specialist) and the LIC Chief
Infrastructure Engineer Mr. Phetsomphone Kittipanh March 3-6 2018. Mr. Khampay Phommavong,
Chief, Provincial Project Implementation Team accompanied the environment specialists during
visits to the slaughterhouse site, meetings with government agencies and community interviews.
The field visit comprised examination of the site of a slaughterhouse and its surrounding
environment; meetings with government agency personnel and interviews of community members
in villages adjacent to the slaughterhouse site. 38 There is some uncertainty about the regulations. It could be that the front boundary of the property
must be 25 or 30 metres from the road centerline. In addition, NR 7 I a two-lane highway. If in the
future the road is widened to four lanes, this would represent a serious issue.
45
3.8. Observations were made 25 meters from the SE edge of the Project Site. This location
is at the top of a steep escarpment, approximately 20m high with Nam Ngoun flowing along
the escarpment foot. The escarpment has likely been formed over time by erosion from
Nam Ngoun and will likely continue to recede to the west and north (where there is a sharp
90-degree bend). At this location there is a short deeply incised gully down the escarpment
to the Nam Ngoun. The gully is in a grove of pine trees and shrubs; several species of bird
could be heard. It was dry when observed (end of dry season) but presence of verdant
grasses and shrubs in and adjacent to the gully bottom suggest a sufficient water supply
possibly from intermittent groundwater.
3.9 Further observations were made at the foot of the escarpment below the point of
observation at the top. The width of the Nam Ngoun at this point is approximately 4m,
depth approximately 15-20cm, and flow roughly estimated to be 0.1-0.2 m3/s. Streambank
debris suggest that the last seasonal flood height was at least 1m above the observed
water level. Substrate is large gravel and cobble under a thin layer of organic sediment.
The above-noted gully at point of entry to the stream was dry and displayed a fan of cobble
and large gravel indicating periodic high-energy flow down the gully. Escarpment material
nearby appears to be mainly fine silts/clays mixed with cobbles and large gravel.
3.10. Riparian vegetation along the right bank is comprised of mainly shrubs to 3-4m
height and some grasses. Along the left bank there is a 2-3m wide fringe of smaller shrubs
(to approx. 1.5 m height) and grasses (to 0.3 m height) between the stream and adjacent
rice fields. No wildlife was observed. Instream biota was periphyton mixed with organic
sediment, appearing collectively as a brown-grey veneer. Only several dipteran larvae were
observed among substrate rocks, likely pollution tolerant species. Bottom conditions are
indicative of organic pollution.
3.11. Rocks were piled to form small barriers/weirs at 30-40m intervals along visible
segments of stream, possibly to aid fish capture. The Nam Ngoun flow downstream of the
highway bridge [~0.2 m3/s], measured on March 5th.
(ii) Fish Ponds to SW of Project site
3.12. Observations were made along the eastern edge of the uppermost pond and at the
upper end of the next pond downstream. The upper pond is approximately 10m wide and
silty, with evidence of substantial livestock presence in flat shoreline areas. Soils in these
areas appear to be silty clays, contributing to the apparent high sediment load. The riparian
vegetation is small trees, including pine, and shrubs; birdlife could be heard at several
locations.
3.13. A short (approx. 20m) small gully on the east side of the upper pond close to the SE
edge of the Project site was examined. The gully is covered by pine and other trees and
shrubs and enters a small embayment on the east side of the pond. The embayment was
dry when observed and appeared to be well-used by livestock. Bottom material was very
wet clay/silt; the wet attribute extends 10m up a narrow vegetation-covered channel along
the base of the gully suggesting a groundwater influence as opposed to capillary draw from
the pond.
46
3.14. A 10-15m long channel connects the upper two ponds. The channel was mainly dry
at the time of observation; water was present in the lowest 5-6 m of the channel. A concrete
water control structure is present at the top of channel where it connects to the uppermost
pond. The water level in Pond 2 is approximately 4 m lower than the water elevation in
Pond 1. The upper end of the lower pond appears to be well-used by livestock.
c. Terrestrial Resources
3.15. The northern boundary of the site runs along the highway. The southern and
western edges of the site abut pastureland that slopes away from the Project site –
pastureland to the south has been recently tilled. A new dirt road has been constructed
along the east edge of the Project site – to the east of the dirt road is a small relatively flat
area that eventually slopes down toward the highway (where the highway veers south
towards Ban Li), and to the SE of the dirt road is the escarpment noted above. Solid waste,
mainly plastic, had been discarded along the road near the SE corner of the Project site; a
recent small fire was also evident.
d. Human Activities and Structures
3.16. The Project site falls within two villages (the boundary runs through the approximate
centre of the Project site, Ban Nahoi to the west and Ban Li to the east.
3.17. The nearest residence to the Project site in Ban Nahoi is a new small home
approximately 170m NW of the NW corner of the Project site. The nearest residence in
Ban Li is located on the west side of Highway 7, 270m to the SE of the SE corner of the
Project boundary.
3.18. The nearest businesses are both located in Ban Li, a small recycling plant 210m
SE of the SE corner of the Project boundary and a Beer Garden and fish pond complex
220m east of the eastern boundary of the Project site.
3.19. The nearest religious site is a temple approximately 1 km SE of the SE corner of
the Project boundary.
e. Discussions with Government agencies
(i) Provincial Agriculture and Forestry Office39
.
3.20. Three general concerns for the slaughterhouse project were identified:
• high cost of technology and need to be able to operate for a long time;
• effects on people living nearby from odour and pollution;
• negative effects of noise from equipment.
3.21. PAFO had no concern no concern for environmental and social issues related to
the timber mill site. No one was living nearby at that time.40
39 Mr. Yong Tealou, Director, PAFO 40 It may be that there are no houses immediately adjacent to the site (though that can change) but nearby villagers do use the water body behind the site.
47
3.22. PAFO will be in communication with DONRE to discuss issues and designs: PAFO
will implement the Project, DONRE will monitor and follow activities; DONRE standards
and regulations must be followed with a focus on quality of waste water before discharge.
(ii) Department of Natural Resources and Environment41
3.23. No previous environmental issues at or near the proposed site. Main concerns were
general in nature:
• Noise
• Air quality
• Water quality
• The site would be better set-back further from the highway - should have
minimum distance from main road of 30m. (this concern is more based on
urban planning than environment and comes from the Urban Planning
District Authority)
3.24. The project must prepare a mitigation plan for DONRE; DONRE will organize a
public meeting for local people and agencies and will collect recommendations and
comments. Based on that DONRE will issue the IEE certificate. Given that the Project site
is at a relatively high elevation, downstream ponds will be a priority.
3.25. Currently not aware of other plans for development around the site.
3.26. For Nam Ngoun: the irrigation section should have information on surface flows;
water is used for bathing, washing clothes, fishing, livestock and agriculture; they do not
have further information on local ecology or uses along the stream.
3.27. For the ponds immediately to the west of the site, the water to them comes from
groundwater seepage from under the highway. The water pond water level is always stable
– they have been in place for 10 years.
3.28. There are no protected areas or species, critical habitat or sensitive ecological
areas in the general area - nothing within at least 5 km of the project area.
f. Liquid waste
3.29. Disposal of wastewater and other liquids (blood, urine, feces) is a main concern and
requires special attention.
3.30. A series of ponds (visible on remote imagery) to the southwest of the project site is
supplied by groundwater that comes from higher elevation areas north of the highway.
People in the village of Ban Nahoi use the series of ponds for fish production, livestock
watering and downstream rice-field water supply. The western edge of the Project site
boundary is approximately 50-60m from the uppermost pond.
41 Mr. Honerfi, Deputy Director; Ms. Phiang Siaphaiy
48
3.31. The slope of the land is from the site to the water, and there could be a run-off of
effluent. A slaughterhouse requires lairage for the animals waiting to be killed located at a
distance from the actual slaughter floor. In the case of the selected site, the obvious point
is the quadrant with its tip on the water body. That is downhill all the way.
3.32. Field elevation-measurements indicate that the water table in March 2018 is
approximately 15 m below the elevation of the project site. This is nearing the end of the
dry season - groundwater recharge is likely from seasonal rains meaning that the elevation
of the water table probably rises to a maximum during September-October, and at that time
the difference between site-level and groundwater-level would be at a minimum (and
something less than 15m).
3.33. The project must ensure that waste-water potential contaminants are kept out of
the groundwater (such as segregating and separate treatment of facility-waste streams as
appropriate and importantly reducing volume of the critical streams).
3.34. Environmental, Health and Safety guidelines are produced by IFC and used by the
broader WB Group and regional development banks such as ADB. Those guidelines
include “meat processing” and “mammalian livestock”. The meat processing guidelines
include slaughterhouses and provide guidance for key issues including wastewater. The
wastewater component should be viewed as an integral part of the facility design/operation
to be included by the facility design team.
3.35. In Laos most of an animal carcass is consumed, the blood is collected and sold
along with other things considered waste in the West; the liquid from the gut is for sale in
markets. Most of waste water generated in the slaughterhouse will be from the cleanup of
the facility at the end of slaughter, the scalding water used to de-hair pigs and washing out
of the lairage daily. The amount of waste water generated, will depend on the number of
animals kept onsite and for how long. If 200 litres per head is allowed for cattle slaughtered
and 50 litres per pig, then this is not a large volume to deal with.
3.36. Another perspective is that waste liquids could be used onsite, to either grow crops
or forage. Other waste products will be the gut content of animals slaughtered and manure
from the lairage both of which are good fertilizers. It is suggested that the waste water is
collected in an underground septic tank and then used to irrigate crops or pasture onsite.
Alternatively, it could be pumped into a tanker (with a spray bar) and transported off site
for use as fertilizer. Another option is a bio-gas generator, however the scale of this project
maybe too small to make that viable.
g. Post-visit follow-up
(i) Site screening pursuant to Technical Criteria in NSLCP documents
3.37. The PAM 2014 provides technical criteria to screen identification and selection of
slaughterhouse locations (and other investment locations) – several criteria apply to
environmental safeguards; the Project EARF 2014 provides additional environmental
guidance/criteria for site selection of the slaughterhouse and other types of Project
investment.
49
3.38. A site screening or selection document using these criteria has not been prepared
in support of the decision to focus on the Xieng Khouang (XK) slaughterhouse site. In the
absence of a site screening/selection document, comments are presented based on an
understanding of how well the XK slaughterhouse site meets the two sets of criteria (PAM
and EARF). Question marks indicate criteria that should be confirmed by other Project
specialists.
Figure 18: Xieng Khouang Slaughterhouse: Site Screening Criteria presented in PAM
2014 and EARF 2014
Siting Criteria Comment
PAM 2014
(i) The site is located close to the wet market and is accessible to meat retailers from the wet market, as the slaughterhouse will supply fresh ‘hot’ meat. Out-of-town centralized slaughterhouses are not appropriate.
The chosen site is 7Km from the main wet market
(ii) The site is owned by the State and there are no on-going disputes regarding ownership.
Ownership is claimed by the Province, but no title deeds or documents have been seen
There is a potential for road-reserve/right-of-way dispute with Ministry of Public Works and Transport
(iii) The site does not have any relocation or environmental issues.
Close to surface water and groundwater – risks dependent on facility-size/effluent-volume and associated waste treatment requirements/costs
[SW corner of site is approximately 50m from groundwater-fed ponds used for fish production, livestock watering and downslope rice-production; SE corner of site is approximately 70m from Nam Ngoun, used for fishing, clothes-washing, bathing, rice-fields, kitchen-gardens]
(iv) The area is large enough to have lairage on site, or additional site is allocated for lairage close-by.
Yes
(v) The site is large enough to allow for future expansion. Yes
(vi) The site will not cause disturbance to local residents (e.g. noise and pollution, environmental health). There is community consultation to confirm agreement with site selection.
Overlaps with criterion (iii); potential disturbances can be avoided/mitigated
50
Preliminary discussions were held with heads and members of the 2 potentially-affected villages: no one stated objection to the proposed slaughterhouse location; concerns brought forward – noise, odour, flies, effluent (including effect on fish ponds, water used on rice fields and stream-fishing), solid waste, livestock diseases
(vii) The site has year-round access to the main road and there is adequate space for large trucks to enter, unload, turn and exit the site.
Yes
(viii) The site has access to main utilities – electricity and water. Yes
(ix) The site does not pose any problems for waste disposal and environmental hygiene measures to be taken.
Municipal or industrial-zone treatment systems not available to receive liquid waste, so all treatment must be part of the project design and cost
(x) All requirements under the EARF, RF, IPF in accordance with ADB’s Safeguard Policy Statement (SPS) to be met.
Yes, with acceptable mitigation/management of effluent discharge
EARF 2014
Considerations for site selection in combination with scale of investment (The EARF notes that the magnitude of environmental impacts will be determined largely by the scale of the investments):
(i) Distance from Urban Development: Slaughterhouses and meat processing facilities should not be located close to dwellings, schools, churches and other public or commercial buildings to limit or eliminate possible nuisance from noise and smell.
Likely future commercial and residential developments should also be taken into account.
Nearest dwelling is a new house, 190m NW of NW corner of site fence [in Ban Nahoi].
Nearest businesses are approximately 200-220m SE of SE corner of site fence [in Ban Li – a beer garden & fish pond enterprise and a small recycling depot]
(ii) Accessibility: The site should be accessible from a permanent road to allow ready transport of both livestock and meat and to minimize traffic impacts.
Yes
(iii) Water Supply: A water supply sufficient for processing and maintaining sanitary conditions is essential. The volume available must comply with appropriate design standards for slaughterhouses and processing facilities. If a town water supply is not available (either because none exists in the area where the slaughterhouse is to be located, or because the requirements for
Yes
Volume is adequate for facility design.
51
the facility exceed the capacity of the existing supply) a separate source must be identified. As constant groundwater sources are rare in the Northern Provinces, this is likely to involve a surface water source and an appropriate treatment system for the facility.
(iv) Waste management and recycling. A system for rapid collection of blood, bone, hide, feathers and any other discarded animal parts is necessary to kill any pathogens and render these items safe for handling and, where appropriate, further processing into products that can be sold or distributed, such as soil additives. Consideration should be given to the use of a biogas digester.
Yes
Biogas digester - Yes
Pre-conditions for slaughterhouses:
(i) Sites will be outside a flood prone zone; Yes
(ii) Sites will be at least 100m away from any temple, monastery or site of cultural significance;
Yes
(iii) Sites will be outside the buffer zone of any protected area; and Yes
(iv) Where possible, sites will be within a designated industrial area
No
This means that effluent must be adequately
managed to satisfy PAM 2014 criteria (iii) and (ix)
(ii) Tentative Identification of Groundwater Features at the proposed Site
3.39. Site-specific data are not available for groundwater; a recent publication on
groundwater in Laos provides insight (Viossanges et. al., 2018). A national-scale map of
groundwater locations in that report shows the province of Xieng Khouang and proposed
XK slaughterhouse location on that map. Consistent with field observations that map
shows the site over a shallow aquifer formed in alluvial material.
3.40. The elevation difference between the top of the aquifer (measured in the field using
a GPS meter at a deep pit 30-40m upslope from the ponds visible in satellite imagery) and
lowest portions of the site near the southern edge of the site is 17m. General descriptive
data for alluvial aquifers in Lao PDR suggest the top of the aquifer could rise 0.2 - 1.0m
with recharge during the rainy season. This potentially would reduce the elevation
difference to 16m at the end of the rainy season, roughly September to November.
Figure 19: Major aquifer units in Xieng Khouang Province
52
Source: Viossanges. M., et. al., 2018.
Note: the Province of Xieng Khouang aquifer map was extracted from
a national-scale map in the source report and then blown-up for
placement and use in this document – as a result mapped aquifer
features are magnified but the map legend is not. The aquifer unit
under our site location is Alluvial.
(iii) Conclusions and Recommendations
3.41. The Xieng Khouang slaughterhouse site is located close to two waterbodies, a
stream used for a variety of human activities (70m) and groundwater-fed ponds used for
fish production, crop production and livestock (50m). Directing effluent to a municipal
system is not an option at the site - all effluent streams must be managed onsite to ensure
pollutants do not enter nearby waterbodies. This can be technically achieved but the
magnitude of environmental risk increases in relation to the size of facility. Over the
operational life of the facility an important concern relates to management-diligence and
staff training for continued operation and maintenance of waste-treatment units.
3.42. Environmental risks can be minimized at this location by keeping the facility design
size to the smallest practicable to achieve operational good-practice and training
objectives. Scale-up to a larger size at the site should proceed only if waste treatment
facilities are shown to function appropriately to protect the nearby waterbodies and
associated human-uses. Environmental components at a minimum-size facility likely would
be correspondingly quite small. In concept these could be treated as a pilot, with
performance results of environmental protection measures used to make refinements for
scale-up to a larger facility at the same site or to identify proven measures for incorporation
into small-scale facility designs replicated at sites elsewhere.
53
D. Public Sector and Management Aspects
1. Land Title and Ownership
1.1. The land acquisition concerns one area of 35,183 m2 (according to UXO clearance
report, which is subject of confirmation through the land certificate PoNRE is currently
preparing). A land acquisition screening has been prepared indicating that there is no loss
of private land. The governmental ownership of land is documented. The former, unused
timber mill structure is dismantled and under government control through the Department
of Finance.
1.2. It is understood that the ownership of the facility will remain in public hands,
however the facility will be operated under a lease and operating agreement by persons
from the private sector. These persons have not been formally identified.
2. Management
2.1. The organization of human resources and their management is a critical success
factor. In addition, physical assets require management (e.g., maintenance) as do financial
resources (budgets, cash flows, payments etc.). Two enterprises, identical in their technical
characteristics may result in quite different outcomes depending on the O&M systems in
place.
2.2. As of today (date of this report), there have been no discussions of substance about
the management or organizational structure of the proposed slaughterhouse. It is reported
following site visits that various groups are “interested” in running the slaughterhouse. One
may include the operators of the existing slaughterhouse.
2.3. This raises the question about the capacity of the management to operate the new
facility according to modern best practices. The International Slaughterhouse Specialist
has raised this matter on several occasions, i.e., why should we believe that the new facility
will be properly operated when there is only one example in Laos (the Hungarian/ LFM
abattoir) that even attempts to operate to adequate standards for animal welfare and food
safety. At the least there will have to be significant technical support and training for the
incoming operators before there can be some confidence in the value of the facility.
3. Public-Private Partnership (PPP)
3.1. As indicated above, ownership of the slaughterhouse will remain with the provincial
government. However, the government itself has no wish or capacity to be the actual
manager of the facility. In this case, the plan seems to be to bring in the private sector either
as an individual or a group/consortium or cooperative. None of the detail of how this is to
be undertaken has been communicated to the consultants.
54
3.2. There is no formal PPP system or legislation in Laos. However, he Lao Government
is developing the framework for PPPs led by the Investment Promotion Department of the
Ministry of Planning and Investment (MPI) with support of the Asian Development Bank
(Governance and Capacity Development in Public Sector Management Program-GRANT-
0309 LAO) and the United Nations Economic and Social Commission for Asia and the
Pacific (ESCAP) secretariat. The initiative focuses on three main areas, namely (i)
institutional capacity building, (ii) policy and legislation framework development, and (iii)
demonstration of model/pilot projects in social sectors, namely education and healthcare.
3.3. To facilitate PPP initiatives, a task force unit called the PPP Unit has been
established within the Department of Investment Promotion (IPD). The task force is
responsible for initiating policy and legislation development and piloting PPPs on education
and healthcare. The task force has worked closely with the government concerned
agencies, ADB, international organizations, civil society and the private sector. At an early
stage of implementation, it is recommended that the NSLCP LIC open discussion with the
task force to gain from their experience.
4. Support by PAFO/DAFO and PONRE/DONRE
4.1. The agencies of the provincial government have been supportive and helpful. The
existing slaughterhouse belongs to Pek District, and DAFO, DCI and DoNRE have tried to
solve in problems about environmental impact from the slaughterhouse. Given the lack of
success, it was decided to close the slaughterhouse and start anew on a fresh site. All the
agencies are in favour of closure, and they will expedite the work needed to build a new
slaughterhouse.
5. Regulatory
5.1. Devolution of slaughter responsibility to provincial authorities reduces national
oversight, standards, food hygiene, worker and animal welfare. For example, the
government owned and operated slaughterhouse at Luangphrabang, which was shut down
in 2004, resulted in small privately-owned slaughter points commencing operation, making
regulation and monitoring practically impossible. In many places the slaughter process has
reverted to completely unhygienic practices. Lack of an adequate monitoring or national
assurance system has led to meat of unknown origin and hygiene and dangerous killing
processes for workers. FAO and OIE guidelines for humane transport and slaughter have
been in place since 2001 and 2006 respectively but animal welfare is of limited or no
interest in Lao PDR.
55
5.2. Nevertheless, there is legal foundation for slaughterhouses and processing. But
practical and effective implementation of these laws has not been established and does
not occur in practice. Various Prime Ministerial decrees for product control, meat hygiene
and animal products sanitary inspection. The existing Livestock Production and Veterinary
Matters Law 2010 (36) states in article 1 that it is designed to assure and regulate food
security, safety, consumer and environmental protection and economic production.
Slaughterhouse owners have the legal responsibility for slaughterhouse construction and
equipment and butcher shops for phytosanitary standards (article 4) but the relevant
standards for slaughterhouses, butcher shops and inspectors are not specified. A business
license is required to own and operate a slaughterhouse, meat processing or distribution
business. In addition, individuals, families or entities intending to conduct such business
must comply with article 25 and technical standards and laws to avoid negative impacts on
consumers, society and the environment. Livestock inspection is required by a Government
inspector, as described in this law, though slaughterhouse inspection is not specifically
noted. Article 4 also defines animal welfare as ‘appropriate use of animal labour,
responsibility for animal health care, provision of water, feed and care and prevention of
abuse’. It is prohibited to ‘torment animal or any other actions, which violate the laws on
livestock production and veterinary matters’ (article 72, clause 9).
5.3. It is worth quoting at length from a very comprehensive report by the OIE in 2011:42
“Apart from the conditions under which slaughter of animals is conducted and
which is not likely to be sufficient to foresee any exports of meat products
anytime soon, the performance of the veterinary meat inspection itself is also
sub-optimal. It is in principle entrusted to provincial, district veterinary
personnel and VVWs at village level. The (national) meat inspection unit of the
NAHC seems to play no role at all in this process, as it lacks the judicial
prerogatives and manpower to be efficient. No data exist on the number of
slaughter facilities, the number of (legal) slaughters, the (estimated) number of
illicit slaughters, nor is there documented evidence of attempts to enforce the
law in this area. ……. Animals may be offloaded and immediately slaughtered,
the carcasses and organs separated without tracking system, and leaving the
abattoir with the necessary papers, but without having been seen, let alone
inspected, by the veterinary services. If undertaken, inspection is merely
documentary, focused on the delivery and compliance of travel documents and
health certificates, issued by the district of origin. Upon completion of dressing
and inspection, a marketing (sales) certificate is delivered (or not), enabling
the trader or butcher to sell his produce on the market or to/in butcheries.
42 PVS Pathway Follow-Up mission (sic) Report, Tool for the evaluation of Performance of Veterinary
Services, Dr. Patrick Bastiaensen, Dr. Akemi Kamakawa, Dr. Mariela Varas. OIE September 2011
56
While it is reasonable to assume that every individual animal slaughtered in a
village has indeed been seen before slaughtered and inspected after
slaughtered, the level of technical know-how of the VVWs involved is unlikely
to be sufficient to avoid major health hazards when they would occur. Even at
district level, the qualifications and operational means of inspection staff are to
be regarded as utterly insufficient, despite their motivation and ethics.
Supervision of these numerous slaughter facilities by provincial and national
authorities is lacking. At best, districts will have a good knowledge of slaughter
facilities within their jurisdiction.….. At provincial level, evidence shows that
inspection is administrative, concise and incomplete, both in terms of ante-
mortem and post-mortem inspection. Again, the absence of appropriate
professional training accounts for the fact that inspection personnel lack the
scientific background needed to understand why certain inspection protocols
are essential, usually a strong motivating factor to perform adequately. Rules
and regulations in force today (but not the new legislation) stipulate that
animals should rest for anything between 6 hours (for pigs) to 12 hours (for
cattle, including buffaloes) before slaughter.43 This is very often not applied, as
observed during visits.
The ability to seize and destroy carcasses and parts thereof (including
organs) is variable. In some cases, ‘seizure’ means that no marketing
certificate is delivered for the meat and/or organs; whether this is sufficient for
a trader not to market the goods on the market (or to process it into soups for
restaurants, as mentioned by some) is doubtful. Most, if not all, abattoirs lack
facilities to destroy infected animals, or parts of slaughtered animals for that
matter.
The stamping system foreseen is these regulations has not been applied,
making it hard to distinguish inspected from non-inspected meat. Although
the regulations prohibit animal owners to approach carcasses or organs
during the slaughter process, visits of several abattoirs has shown this is not
applied. To the contrary, in a lot of abattoirs and slaughter slabs, the owners
are the only ones slaughtering, gutting, dressing and deboning the animals.
Formal legislation on meat inspection and hygiene is still missing as the new
Law on Live stock Production and Veterinary Matters does not seem to cover
meat inspection and hygiene. A much older decree (by-law) on the veterinary
inspection of live animals and products entering the Lao P.D.R. with the
product itself, only deals with the import and transit of animals and animal
43 Ministerial Decree (Prime Minister’s Office) 085/PMO (1993) : Decree on livestock management in Lao P.D.R. Ministerial Decree (Agriculture and Forestry) 004/MAF (1997) : Regulation on livestock management in Lao P.D.R. Ministerial Decree (Agriculture and Forestry) 005/MAF (1997) : Instruction on regulation of livestock management in Lao P.D.R. Ministerial Decree (Agriculture and Forestry) 313/MAF (2000) : Technical standards on livestock management in Lao P.D.R., strengthened by Departmental regulation DLF/0036
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products (meat, milk, eggs, skins, blood, etc.) but not with inland slaughter /
meat hygiene, nor with processed products such as honey, butter, sausages,
to name but a few. The latter would appear to remain entrusted to the Ministry
of Health.
The existing slaughterhouse in Phonsavan does not employ operating
procedures or standards. Animals do not have individual permanent
identification and no permanent records are kept. Hence the facilities and
processes increase the risk of infectious disease spread to the regions (i.e.
Foot and Mouth Disease, Hemorrhagic Septicemia, Classical Swine Fever,
Porcine Respiratory and Reproductive Syndrome) and microbial and parasitic
contamination of the sites, animals and carcass products. Mitigation of those
risks supervision and focus on critical control points. There is no evidence that
even such concepts are known and understood, let alone implemented.”
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E. Economic and Financial Analysis
1. Economic Costs and Benefits
1.1. The economic cost-benefit calculation for this sub-project centres primarily around
food safety. To an extent there is also an environmental perspective that suggests that the
existing slaughterhouse is mis-located, probably for reasons that seemed reasonable at
the time but have become outmoded; in any event, the decision to close the existing
slaughterhouse has been taken ex-ante this sub-project. A preferred way of understanding
the benefits of a new slaughterhouse is to look at the positive aspects rather than the
negative.
1.2. We have asserted that most Lao persons place food hygiene not as high on their
list of priorities as elsewhere. This is not to say that the Lao enjoy eating poor quality food,
indeed there is a strong organic movement developing in the country. However, practical
considerations (e.g., lack of refrigeration in many households) have led to a cuisine that
circumvents poor food hygiene by making boiled soup and by eating meat very rapidly after
slaughter. In this way, there seems to be no strong consumer pressure for better food
standards; neither does it appear that the health industry is particularly concerned. In this
sense, on the “demand” side of food safety there seems no strong “pull” for better
standards.
1.3. On the “supply” side, the “push” for improved safety tends to come from
international visitors to Laos and especially the NGOs and other donors, middle-class
Westerners who are, perhaps, over-sensitive to an upset stomach. Donors have sensitized
the Lao government to the issue, and hence there is support for measures that improve the
situation.
1.4. These two sides of the “market” for safe, “quality” food suggest that the price
ordinary Lao folk are willing to pay for safe food is considerably less than that paid by
visitors. This may be seen reflected in the price of food bought by ordinary folk on the street,
and the price paid by tourists in restaurants. Whereas a Lao is happy to eat laarb with semi-
cooked mince-meat that has undoubtedly come from an animal slaughtered the previous
night in shockingly unhygienic circumstance (objectively measured by bacteria and other
pathogens present in the meat), the visitor will prefer to pay ten times the price for imported
meat.
1.5. In this respect, it is unlikely that the citizens of Phonsavan will be willing to pay a
high cost for meat produced at a new slaughterhouse even if it is safer than the old supply.
In addition, the advance made at the new slaughterhouse may well be lost in transport of
the carcass from the new location to the wet market in the back of a pick-up truck (see
photo below, even if this pig meat had been processed in a modern slaughterhouse, lack
of care in handling it safely and hygienically will erode all the benefits). In the market itself,
unless the new slaughterhouse is accompanied by similar changes for the better, what
remains of improved safety will be further compromised. In other words, all the benefits
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derived from the investment will be overwhelmed by a general food supply system that is
inadequate and which generally people do not care about.
Figure 20: Meat on the move
Photo: courtesy Anthony Bott
1.6. Risk and uncertainty are inherent in analysis of impacts, but the area of food safety
presents difficulties. The standard approach in cost-benefit analysis involves the
assignment of probabilities to possible outcomes, from which expected costs and benefits
can easily be calculated. However, this can only be implemented when it is feasible to
estimate the likelihood of a risk and related outcome, which is not a typical situation in
relation to food safety and less so in Laos faced with the cultural issues mentioned above.
Faced with pure uncertainty (as opposed to risk which seem clear enough), what can be
done to quantify the costs and benefit? For example, in Laos there is little detailed health
data on chronic disease and its costs. We can guess that there is a loss of labour
productivity, but little or no way of quantifying let alone estimating the value of benefits in
increasing it as a direct result of the proposed intervention.
1.7. In this situation, the right approach is to base the decision on the “precautionary
principle”. This arises precisely when there is a known risk with potentially catastrophic
outcomes, but the probability of the event occurring is unknown; even of the probability was
very small, the scale of the possible outcome (e.g., deaths from food poisoning or long-
term damage to the economy from ill-health) means that the intervention should be made.
The principle is used by policy makers to justify discretionary decisions in situations where
there is the possibility of harm from making a certain decision (e.g. deciding to do nothing
about the egregious hazards arising from the slaughterhouses) when solid quantitative data
are lacking. The principle implies that there is a social responsibility to protect the public
from exposure to harm, when investigation has found a plausible risk.
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1.8. Since the precautionary principle clearly applies in the case of the Phonsavan
slaughter facilities, there is no need to go to further time and cost to construct a specious
economic benefit case. The new slaughterhouse should be built simply because the
absence of any safe slaughtering obviously gives rise to possible catastrophic outcomes in
the general population.
1.9. That said, the question remains whether the general public, as opposed to the
public servants making the decision, will be willing to absorb the extra costs mentioned
above. Absent a strong enforcement programme to shut down unlicensed slaughtering
pads, there is a risk that the facility remains unused, and this is a feature seen elsewhere
(quite recently in the Philippines). Individuals are far less likely to be persuaded by
arguments of precaution against public risk than officials. Much then will depend on the
actual business model adopted by the slaughterhouse.
2. Financial Analysis
2.1. The capital investment costs of the sub-project have been estimated at 16 billion
LAK or USD 1.9 million (excluding contingencies).
Figure 21: Capital Cost Estimates
Source: LIC estimates from Part 2, Figures 18 and 19
2.2. The capital expenditure (capex) rises to LAK 18.3 billion (USD 2.2 million) if a 15%
contingency amount is included. Given that cost estimates at this stage of design are
normally subject to a 30 margin of error (+ and -), it is wise to consider this amount for
budgeting purposes.
2.3. The international specialists (agribusiness and slaughterhouse) have emphasized
the need to keep the design of the slaughterhouse simple. This advice has not been
followed, hence the high costs associated with the current design. If a cheaper design as
previously followed were adopted, then capex would drop to LAK 13 billion (USD 1.6
million).
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2.4. The investment of this amount of capital has been considered as a cash flow over
a notional period of 25 years. The assumed discount rate is a standard 12%. Revenue is
generated for the slaughterhouse operator solely by a toll fee for killing the animal. In other
words, the revenue equals the number of animals slaughtered per year (assumed as 333
work days per annum) multiplied by the slaughter fee. The fee varies between cattle/buffalo
and pigs to reflect the size of the animals and the likely throughput (more pigs than
cattle/buffalo).
2.5. We have assumed slightly higher numbers of animals than currently slaughtered in
the hope that the new facilities and stricter enforcement of laws will encourage people to
come and use the new facility. In this scenario we have assumed 12 cattle per night and
80 pigs.
2.6. At the current slaughter fee charged by the existing slaughter house the new facility
shows a negative return on capital invested. At the current fee levels no one would be able
to sustain the business unless there was a subsidy received.
2.7. For the IRR to equal zero, the fee would have to be LAK 60,000/cattle and LAK
40,000/pig, still significantly higher than the present rate of LAK 45,000 and 30,000
respectively. This is still a losing proposition.
2.8. For the IRR to rise to the discount rate of 12% the fees would need to increase to
LAK 140,000 and 90,000 respectively. This still seems only marginally attractive as a
business proposition. However, the rise in fees is quite significant. The question is whether
this rise would mean that people would prefer to risk breaking the law and slaughtering
animals in the backyard.
2.9. Indeed, it is only possible to introduce a public-service facility like a slaughterhouse
if very strict enforcement is made to prevent there being an alternative. In the case of Laos,
it is quite uncertain whether this is the case.
2.10. The other option for people to take is not to slaughter their animals, but to sell them
live to traders for export. A calculation of the slaughtering element in the overall cattle trade
suggests that this may not be responsive to an increase in slaughtering fees. For example,
if the market value of live cattle is LAK 4.5 million/head, the value of the beef from the
carcass after slaughter is LAK 7.4 million at current prices, i.e., a margin of LAK 2.9
million/head. In this case, a slaughter fee of say LAK 140,000 represents only 5% of the
margin. Of course, no trader wishes to see his margin reduced, but if he/she can show in
the market that the meat is of better quality and comes via a humane and hygienic
slaughtering system, then the extra cost of slaughtering could be regained.
2.11. Much of the actual outcome of the new facility will depend on (a) management of
the facility, and (b) on the local authority’s capacity to enforce its use and discourage the
alternatives.
2.12. That said, with the fee set at the level they are, cost recovery might be a difficult
issue to negotiate with the potential operators.
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2.13. We have not undertaken any further sensitivity testing, since at best, from a strict
financial point of view, the facility is a marginally attractive investment. Raising the fee to
get the IRR to 25% would meet with serious opposition. Increasing the throughput of the
animals would require a different approach to marketing, one that is not foreseen. Other
charges (electricity, water etc.) are stable and the project is less sensitive to them in any
event. The fact remains, it is the relatively low level of throughout and constraints on the
slaughtering fee level that make the project as a stand-alone investment questionable from
a strictly commercial perspective. That said, if is it seen (as it should be) as a cost centre
in a trading enterprise, where the returns may be gained on more marketable and higher
priced beef, then the investment might make sense. In this case, the discussion about who
should operate it becomes a critical part in the development of the project; unfortunately
we have no information on this aspect.
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Part 2: Concept Design
A. Site and Structural Survey
1. Introduction
1.1. Lao Consulting Group Ltd. (LCG) was commissioned to assist Ministry of
Agriculture and Forestry to carry out of Engineering survey and assessment of the
proposed site to assess the status of the existing structure to provide the information on
existing infrastructure for basic information of the project design under the Northern
Smallholder Livestock Commercialization Project. The engineering survey was carried out
over 3 days from 28th. February to 3rd. March.2018.
2. Scope Of Works
2.1. The scope of the Engineering survey includes the review of existing information
provided by the Provincial Department of Livestock and Fisheries and/or other relevant
sectors and a visual inspection of the existing structure and key structural elements. Based
on the visual inspections and the available design information, a structural assessment on
the building’s structural integrity was determined. The comments and recommendations in
this report refer only to the structural robustness of the building.
3. Project Location
3.1. The Project site is located in vicinity of Phonsavanh Town about 7 km northwest of
the city centre. Administratively, it lies within Na Hoi Village, Phonsavanh District, Xieng
Khouang Province.
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Figure 1: Site Location
3.2. The project site compound is approximately 35,000 m2 and located along NR7
between Phonsavanh and Phoukoud Districts.
Figure 2: Detail of site location
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4. Site Layout
4.1. The Project site comprises of a fenced compound on a naturally sloping area from
the north to the south side. The area from the north-western end to the buildings have
been backfilled to the same level which is about 3m higher than the south west side of
site.
Figure 3: Existing site layout
4.2. The compound has one main building with several extension and outbuildings
separately around the main structure as show in figure below:
Figure 4: Site Existing Structures
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4.3. The site has two access gates, both on NR 7. The front of the property has a wall
of reinforced concrete posts and cement blocks with the side and back of the property
protected with concrete posts and barbed wire fencing.
4.4. The overall structure is covers an area of 66 x 44 m by separated into the different
parts as shown in Figure 2 in above: (i) 13.5 x 66 m at 9.5m height (from ground floor to
top of roof pitch) for the main structure; (ii) 11.5 x 52.5 m at 2.45m to 4.85m height (from
bottom to top of roof slope) for extension in north side and (iii) 17 x 57.5 m at 3m to 5.95m
height (from bottom to top of roof slope) for extension in south side.
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5. Site History
5.1. The existing structure was built in 1993 by a group of investors from Taiwan and
the structure was designed and constructed as a big sawmill and was in service when
construction was completed from 1994 until 1998 when the structure was abandoned by
reason of business negative shareholder equity. The building has remained unoccupied
since 1998. There are no official means to determine the exact construction start or
completion dates of the existing structures or obtain the design/as-built drawings since no
formal building permit application was ever submitted for their construction.
6. Detailed Building Structure
6.1. Details of each individual structure of the site is provided in LCG’s stand-alone
report.
7. Structural Assessment
7.1. The assessment of the structures is made through visual inspections only.
Destructive and non-destructive testing of the materials have not been made at this time.
It is deemed unnecessary since the visual inspections indicate that the key structural
elements in the Main Building are in good condition and have been over-designed for the
new purpose being proposed.
7.2. Structural analysis was carried out on key structural elements using information
gathered from the visual surveys and conservative assumptions of material properties have
been made in the assessment of these structural elements.
8. Other Facilities Surveyed
8.1. Surveys of the site was also carried out on existing drainage system and other
utilities such as water supply and electricity to meet demand that should be necessary for
the new project.
a. Drainage system
8.2. There are four drainage lines observed during the survey. Two lines (interior) are at
the junction between the slabs of the Main Building and the north and south extension and
runs in an east-west direction. One line is along the outside wall of the northern extension
running parallel to the other two drains. The last one runs in a north-south direction and is
the collector drain for the other three drains. The drain just discharges to the open field.
The drains are simple U-shaped channel of varying widths from 35 cm to 55 cm and varying
depths from 40 cm to 120 cm.
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b. Water Supply and Sanitation system
8.3. There is no information regarding the existing water supply and sanitation system.
Through the visual survey, the existing sanitation system is in the form of a toilet building
(Building J) located outside of the sawmill building with 6 WCs and inground septic tank.\
8.4. There are two water storage tanks, one at ground level, and one elevated tank at 2
m height. It is assumed that the existing water source was a shallow well but there are no
signs of such at the time of the survey.
8.5. There is a Nam Papa distribution main along the NR-7 in front of the property with
sufficient capacity to meet demand of the slaughterhouse (as reported by the Provincial
Department of Livestock and Fisheries – this will need to be checked).
c. Electricity
8.6. Only the electricity to meet demand for the new project was carried out during a site
survey; Poles of Electricité du Laos (EDL) in Xieng Khouang branch were installed along
the NR-7 with capacities 220 V; 380V and 22 kV which will ready to supply the electricity
for the new project of slaughterhouse as reported by the Provincial Department of Livestock
and Fisheries.
d. Road Access
8.7. The proposed site of project location is located at the roadside of NR-7 with
excellent road condition; it is asphalt road with 8m wide carriageway. The distance is
approximately 5 km from the outskirts of Phonsavan town, 7 to the city centre.
9. Conclusion
9.1. Based on the existing structure surveyed and assumptions mentioned above, the
building is structurally adequate for its intended use as a slaughterhouse for the new project
because the existing structure was constructed to a very high standard.
9.2. The structure is over 20 years old but has only been in service for 3-4 years only
after the construction completion. The structural strength loss is minimized if the service of
structure is low, while theoretically concrete strength generally increased with age.
9.3. Assessment of the key structural elements based on conservative assumptions
indicate that the Main Building structure is more than structurally adequate for the new use
as a slaughterhouse.
9.4. Some elements will need replacement to extend the life of the structure. All timber
is recommended for removal since these are high maintenance and generally less hygienic.
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B. Building and Process Design
1. Basic Design Parameters
1.1. Initial recommendation for a slaughterhouse for bovines designed to meet the
above requirements is that it is built as a “booth” style facility. Individual booths or work
stations will have all the required equipment to enable the butchers to hygienically process
a carcase. Each booth will come with a skinning cradle, winch (either electrically or hand
operated), a hand washing and knife sterilizing sink (preferably with hot water), a hose with
adjustable nozzle, a stainless steel table and a trolley to eviscerate the animal into. This
will allow all animals to be processed without edible parts contacting the floor. All operators
will need to have training in hygienic processing techniques.
1.2. The number of booths required will depend on the number of butchers who will use
it, of course some may be shared between butchers. The benefit of this system is it also
allows each butcher to process his own animals as before, using his own staff. It also brings
the . slaughter to a common area where standards of hygiene and animal welfare can be
imposed and regulated. A facility like this can be built for a relatively low cost compared to
an abattoir, there is also no expensive machinery to buy and maintain.
Figure 6: Differing approaches to slaughtering animals
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2. Proposed Site Layout
Figure 9: Master Plan
Figure 10: Simplified Building and Process Flow Diagram
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Figure 11: Cattle Lairage
Source: LCG, Detailed design, A8-0
Figure 12: Pig Lairage
Source: LCG, Detailed design, A9-0
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Figure 13: Animal Walkway (Cattle)
Source: LCG, Detailed design, A10-0
Figure 14: Basic Slaughtering Booth Design
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3. Equipment
Figure 17: Possible Equipment Schedule44
44 Illustrative. Subject to revision at detailed design by the International Slaughterhouse Specialist and differing from the revised BOQ. This is the simple set of equipment required.
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4. Costs and Bill of Quantity (BOQ)
Figure 18: Engineering Cost of Construction Estimate
Source: LCG summarized from BOQ in Figure 20
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Figure 19: Operational Fixed Asset Estimate
Source: LIC
Estimates are subject to a 30% standard error