VIENTIANE, June 21 (Xinhua) -- Local Lao consumers are paying one of the highest prices for rice in the region even though Laos is a significant rice producer, local daily Vientiane Times on Thursday quoted the latest edition of the World Bank's Lao Economic Monitor as saying.

Rice is the country's biggest agricultural commodity and most farmers still produce paddy rice in Laos. The crop covers about 75 percent of arable land in the country and 90 percent of the production is sticky rice.

The production meets 95 percent of domestic consumption along with 70 percent of Lao households' caloric and protein intakes.

However, Lao rice is not competitive in foreign markets with only 5 percent being exported, mainly to China and Vietnam.

The retail price for the second grade rice in Lao capital Vientiane is about 0.85 U.S. dollar per kg, the highest among neighboring countries.

The analysis suggests farmers have comparably low profit margins, while consumers are paying one of the highest prices for rice in the region.

Key challenges for Lao rice value chains include production costs, accounting for 29 percent of the final consumer price, the relatively high cost of hired labor, a lack of mechanization and low yields.

Key recommendations for improvement are enhancing value chain linkages such as facilitating closer integration between producers, processors, assemblers and traders.