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Observations for discussion at the CIAT workshop on
cassava value chains, Cali, Colombia
Simon Bentley
August 24-26, 2016
Trends in cassava trade and some
thoughts on policy affecting this
(and what this means for cassava value chains around the world)
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Agenda
• Overview of global trade in carbohydrates
• Focus on trends in trade in cassava products
• What this means for cassava value chains outside Asia
• Some observations on policy
• Wrap up

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The most important diagram:
Is this how population will develop?
Overwhelmingly, population begins to increase in Africa
World population African population
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2015 2025 2035 2045 2055 2065 2075 2085 2095
billionpeople
Africa Asia Europe S America N America
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Eastern Africa Middle Africa Northern Africa
Southern Africa Western Africa

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World trade in carbohydrates

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The world is increasingly divided into regional
buyers and sellers of carbohydrates
Asia and increasingly Africa import carbohydrates while, in addition to
North America, Europe and South America are leading exporters
World trade in carbs
• Africa has emerged as the second most
important importer of carbohydrates
• Post CAP reform and with the resurgence
of Black Sea grain Europe is now a sizeable
exporter of carbohydrates
• South America has emerged very rapidly as
the other important exporter of
carbohydrates competing with North
America

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Africa imports mainly wheat, as well as roughly
equal quantities of corn, sugar and rice
African carbohydrate imports are focussed mainly on food products
African imports of carbs
• Wheat imports have grown sharply,
drawing on growing availability in Europe
as well as other origins
• This is mainly for use in bread and
confectionery, areas where cassava may
struggle to compete

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In contrast Asia imports growing quantities of
corn whilst it is still a net exporter of rice
Feed grains have driven increases in Asian imports of carbohydrates
Asian imports of carbs
• Asian imports of corn have grown rapidly
and this is mainly for feed and industrial
use, areas where cassava competes well if
it is priced competitively
• While Asia was once a net exporter of
cassava these supplies have now been
taken up in internal use

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The Americas export mainly feed grains and
sugar as well as sizeable quantities of wheat
The big growth has been in exports of corn from the US and sugar from Brazil
and increasingly corn from Brazil
North American exports of carbs South American exports of carbs

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What does this tell us?
• The land rich, people poor regions of the Americas in particular and to
a lesser extent Europe and Oceania have excess sugar and grain to
export
• The densely populated and relatively low agricultural productivity
regions of Asia and Africa are buyers of these commodities paying
mainly with manufactured goods and minerals
• Carb prices should be (and are) high in Asia and Africa and relatively
low in exporting regions because of the cost of freight between
importers and exporters
• This price structure can support local value chains for cassava and this
has been particularly important in Asia

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Focus on trade in cassava products

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Global trade in cassava peaked mid 1980’s and
has been in decline ever since
EU reform of its grains markets killed off the trade in cassava pellets
World trade in cassava
• Asia developed as a sizeable exporter
mainly of cassava pellets to the EU to be
used as a feed ingredient
• Reform of EU grain markets generated
surpluses that pushed local grain prices to
export parity levels making the trade in
cassava pellets no longer profitable

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However as global trade died intra-Asian trade
took off…
EU imports of cassava products got diverted to East Asia as new markets
opened mainly in China for both dried chips and starch
Regional trade in cassava
• South East Asian (SEA) exports of cassava
continued to grow but rather than
supplying the EU exports were mainly
within the region and overwhelmingly to
China
• China now imports more cassava than did
the EU at its peak
• The freight cost from SEA to East Asia is
much less than between SEA and Europe

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…in both dried chips as a feed substitute and raw
material for ethanol production…
Dried chips flow overwhelmingly from Thailand to China
Exports Imports
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milliontonnes
Thailand Indonesia Vietnam Other
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China South Korea Japan Thailand Other

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…and also directly in starch for food and
industrial use
Cassava starch is also mainly a Thai-China trade with Indonesia emerging as an
important net importer
Exports Imports

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So far conditions have only supported intra-Asian
trade in cassava
Although both Africa and South America are major producers of cassava
so far very little of the crop is traded
Production and trade in cassava roots
• It is clear that there is almost no inter-
regional trade in cassava and all crops are
consumed mainly locally
• However, Asia is the exception because
economic growth and a divergence in the
types of crops grown has led to the trade
between SE Asia and East Asia which is the
major world movement of cassava
products

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…but perhaps there are very limited signs of
something similar developing in Africa…
There is limited evidence of intra-regional trade in cassava in Africa
African regional trade in cassava
• Although the volumes are very small there
is some evidence of regional trade in
cassava in Africa
• On the one hand surpluses in East and
Central Africa seem to be increasingly
exhausted while a deficit has arisen in
mainly South Africa
• However, compared to Asia this trade is
likely to be small because of the vastly
different geography and growth patterns

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Why has Asia been different?
• Put simply, growth in demand for carbohydrates in East Asia,
by raising the basis for cassava from SEA by roughly the
difference in freight costs between Asia and Europe, has
poured value into the South East Asian cassava crop. It is very
much a classical story of trade due to comparative advantage.
• This has led to growth in production of roots in both Vietnam
and Cambodia
• The question is, are these conditions present in any other part
of the world?

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What does this mean for cassava value chains
in other regions?

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Recap
• Asia and Africa are the big buyers of carbs. Among the
leading exporters, and because of climate, only South
America is a major producer of cassava while there is
limited potential to grow the crop in northern Australia
• So we need to ask is there a growth market for cassava
in Africa and South America that could mimic what has
happened in Asia?

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South America: intense competition, limited potential
• Lets deal first with South America. Since it is a leading exporter of
both sugar and corn, cassava must compete heavily with these
crops which are all priced at export parity levels giving no
structural or comparative advantage to cassava.
• Cassava productivity in South America is OK, but without major
improvements competition from other crops is likely to constrain
the profitability of cassava in this region
• As we saw above, most of the growth in exports has been in sugar
directly and not in starch sweeteners. On balance it is very hard to
find a case for strong growth in cassava in South America, at least
on the scale of other carbohydrate crops.

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Africa looks more like Asia and has more potential…
• Africa is different. It is a net importer of carbs and cassava is a local crop
much as in Asia. In short, all the positive features of the Asian market seem to
apply to Africa, but with three main exceptions
• First, cassava is consumed mainly as food in Africa and productivity levels are
low compared to Asia. This raises root prices and destroys somewhat the
competitiveness of the cassava crop
• Second, we saw that demand is mainly for a food crop (wheat) and not an
industrial crop (corn). This limits demand for cassava since it competes
relatively poorly as a direct substitute for flour
• Finally the geography of Africa is not so supportive of cassava trade since
there is no East coast of China market (yet) nor a cassava heartland like
Thailand located close to ports

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…so long as incomes continue to grow
• However growth in population and incomes in Africa should raise
demand for meat and thus feed grains and to a lesser extent
processed food. Cassava could then become more important
• Moreover if the coastal regions of Africa grow as predicted then
demand for carbohydrates will surely become very large
• This then raises this issue of whether, for example, corn from the
western hemisphere can reach African coasts at lower cost than
internal flows of cassava. This is hard to answer at such a distance
but history suggests this will be a big boost for African cassava.

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Some observations on policy

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Policies affecting trade in cassava products
• EU tariffs on starch derivatives (and previously domestic
support for starch products) — a relatively small policy impact
• AFTA and SEA free trade in products — supportive of regional
flows in cassava but again, relatively minor in terms of impact
• Indonesia’s increasingly protective policy for corn, a mixed
blessing for cassava
• Chinese domestic support for its corn sector — the most
important domestic policy affecting world (i.e. Asian) trade in
cassava products

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China has supported domestic corn well above
world market prices
The large gap that opened between US and Chinese prices is now under pressure
as China has finally reformed its domestic support policy
US and China corn
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US$/tonne
Corn China corn
• By raising domestic prices for corn China
affected the entire value chain for starch
derivatives in China (which are made
mainly from corn)
• In addition to all the other factors
supporting imports of cassava products
this has been very important since it raised
the price of roots in producing countries
and allowed expansion of area e.g., in
Cambodia

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To implement this policy large stocks of corn
have been formed at substantial cost
Chinese corn stocks reached very high levels
China corn stocks and price
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PricedifferenceUS$pertonne
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Stocks Diff over US Gulf
• Large corn stocks were acquired through
price supports at substantial cost
• Now China has followed the path of, e.g.,
the EU in moving away from price supports
and to more direct non-price support
• This should allow Chinese corn prices
eventually to settle at world market prices
plus freight. This has weighed on cassava
root prices in SE Asia

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Wrap up

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What have we learned?
• The flow of different types of carbohydrates around the world
crucially affects the economics of cassava value chains
• The best possible scenario (e.g. in Asia) is for a region to be
deficit a feed carbohydrate (basically corn) and to have a high
yielding local supply of cassava. This sucks value into the
cassava supply chain
• A more challenging environment is if a region is an exporter
of carbohydrates but also produces cassava in competition
with these. Then cassava must compete for both area and
productivity with often high yielding crops such as corn

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