S7.1 Changing Demand Patterns and Maize Value Chains in Asia

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Presentacion de 11th Asian Maize Conference which took place in Beijing, China from November 7 – 11, 2011.

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S7.1 Changing Demand Patterns and Maize Value Chains in Asia

  1. 1. Changing Demand Patterns and Maize Value Chains in Asia Bekele Shiferaw, Jonathan Hellin, Vijesh Krishna, Olaf Erenstein and Sika Gbegbelegbe CIMMYT b.shiferaw@cgiar.org 11th Asian Maize Conference November 7-11, 2011 Nanning, China
  2. 2. Outline• Changing demand (and supply) patterns• Maize value chains for – food – feed – high value maize (vegetable maize)• Projected future demand for maize• Implications for research, production and value chain development• Conclusions
  3. 3. Value chains• Kaplinsky (2000) defines the value chain as ‘the full range of activities which are required to bring a product or service from conception, through the intermediary phases of production, delivery to final consumers, and final disposal after use’.• Kaplinsky and Morris (2001) distinguish value-chain analysis from supply chains by emphasizing the: – linkages both between and within actors in the chain – Coordination and collaboration; joint investments; sharing of information for mutual economic benefit• Value chain analysis includes mapping of key actors, relations, price flows, value added, marketing costs, profits, risk and benefit distribution and governance 3
  4. 4. Value Chains Impact Farmer Farm Input Value Chain Consumption Income Commerc Foundation Seed ial Farm Level Plant Seed Distributi Crop Seed MaizeBreeding Production on & Marketing Producti Production Sales on Food, Feed Food, Feed Consumer: and other and other Consumption Product Product Marketing development Output Value Chain
  5. 5. Why Worry About Value Chains?• Impact = f(technology, markets, policy and institutions)• Information: awareness to make adoption decisions• Seed access: translate desired demand to effective demand• Capital and finance: credit and insurance services• Markets access: market linkages, marketing costs, price volatility, processing, storage, handling and distribution – access to domestic and regional markets – quality and standards in export trade – food safety – competitiveness, competition and fair prices• Policies : subsidies, extension, regulatory rules, discretionary intervention, capacity building, and sustainability
  6. 6. Maize value chains and drivers of change • Food maize • Feed maize• Population growth – Poultry feed• Income growth – Swine feed• Urbanization – Stover for ruminants• Globalization and trade • Vegetable maize – Sweet corn – Baby corn
  7. 7. Key issues• Understanding changing demand patterns• Research and policy implications for: – Adoption, production and supply (input value chains for seed, fertilizer, equipment, etc) – End user preferences, quality and standards – Markets and trade (prices, trade policy, etc) – Value chain development (integration, coordination, storage, processing, distribution) – Farmer participation to capture new and expanding markets – Equity and income growth for the poor
  8. 8. Maize globally and in AsiaRegion Annual average Annual average Area (%) Production area (million ha) production (%) (million tons)Eastern and Southern Africa 18.04 34.38 12.0 4.6Western and Central Africa 11.12 17.4 7.4 2.3West Asia and North Africa 2.17 13.63 1.4 1.8South Asia 10.53 25.11 7.0 3.3Southeast Asia and Pacific 8.26 25.92 5.5 3.4East Asia 31.4 165.51 20.9 22.0Asia 52.36 230.17 34.9 30.6Mexico and CAC 9.26 26.84 6.2 3.6Other Latin America 19.13 83.24 12.8 11.1Eastern Europe 6.5 29.13 4.3 3.9North America 33.57 330.89 22.4 44.0Developing Countries 109.9 392.01 73.3 52.1World 149.97 752.04 100.0 100.0
  9. 9. 2,000 4,000 6,000 8,000-4,000 0 -2,000 10,000 12,000 14,000 16,000 Iran 18,000 Iraq Jordan LebanonSaudi Arabia Syria Turkey Yemen India Myanmar Nepal Pakistan Cambodia Indonesia Laos Malaysia Philippines Thailand Viet Nam Japan ChinaNorth Korea Maize net imports in Asia (1000 tons)South Korea
  10. 10. Trends in area under maize in Asia (million ha)6050 Others40 Pakistan Viet Nam30 Thailand20 Philippines Indonesia10 India China 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
  11. 11. Trends in maize production in Asia (million tons) 250 Others 200 Pakistan Viet Nam 150 Thailand Philippines 100 Indonesia India 50 China 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
  12. 12. Trends of maize yields in Asia (ton/ha) 6.0 China 5.0 Viet Nam 4.0 Thailand 3.0 Pakistan 2.0 India 1.0 0.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 China India Indonesia Philippines Thailand Viet Nam Pakistan OthersSource: USDA, 2010
  13. 13. Annual average growth rate of maize area (%) 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 China India Indonesia Philippines Thailand Viet Nam Pakistan Others -2.0 -4.0 -6.0 2002-2004 2005-2007 2008-2010Source: USDA, 2010
  14. 14. Annual average growth rate of maize production (%)25.020.015.010.0 5.0 0.0 China India Indonesia Philippines Thailand Viet Nam Pakistan Others-5.0 2002-2004 2005-2007 2008-2010Source: USDA, 2010
  15. 15. Annual average growth rate of maize yield (%) 20.0 15.0 10.0 5.0 0.0 China India Indonesia Philippines Thailand Viet Nam Pakistan Others -5.0 2002-2004 2005-2007 2008-2010Source: USDA, 2010
  16. 16. Demand for alternative uses
  17. 17. Average annual maize demand for food as percent of total maize demand in Asia (2005-2007)9080706050403020100 Pakistan Jordan Iran Laos Yemen Korea, Rep Turkey Bangladesh Nepal Sri Lanka Saudi Arabia Viet Nam Thailand Malaysia China Syria Timor-Leste India Philippines Myanmar Indonesia Cambodia Korea, DPR West Asia South Asia Southeast Asia and Pacific East AsiaSource: FAOSTAT, 2010
  18. 18. 100 0 10 20 30 40 50 60 70 80 90 Lebanon Jordan Iran Syria Saudi ArabiaSource: FAOSTAT, 2010 West Asia Turkey Yemen Myanmar Sri Lanka India Pakistan Nepal South Asia Bangladesh Vanuatu Malaysia Thailand Viet Nam Philippines Indonesia Laos Cambodia Southeast Asia and Pacific Timor-Leste of total maize demand in Asia (2005-2007) China Korea, Rep Average annual maize demand for feed as percent East Asia Korea, DRP
  19. 19. 100 0 10 20 30 40 50 60 70 80 90 Turkey Jordan Iran YemenSource: FAOSTAT, 2010 Lebanon West Asia Syria Saudi Arabia India Pakistan Nepal Myanmar Bangladesh South Asia Sri Lanka Laos Indonesia Philippines Timor-Leste Malaysia Viet Nam total demand in Asia (2005-2007) Thailand Southeast Asia and Pacific Mongolia China Korea, DPR Average annual other demand of maize as percent of East Asia Korea, Rep
  20. 20. Growth rates for food and feed demand in Asia Annual growth rates for maize feed demand (%) Annual growth rates for maize food demand (%)20.0 18.0 16.2 16.0 14.715.0 14.0 12.010.0 9.4 10.0 7.4 8.6 6.4 6.7 5.8 5.3 8.0 4.9 4.4 5.0 6.0 6.0 5.2 1.9 0.9 4.1 4.0 3.2 0.0 Asia (total) Central Asia East Asia South Asia South-East West Asia 2.0 1.8 2.0 1.1 1.4 Asia -5.0 0.0 Asia (total) Central Asia East Asia South Asia South-East West Asia -2.0 -0.1 Asia -7.5 -1.9-10.0 -4.0 Annual average (1990-1999) Annual average (2000-2007) Annual average (1990-1999) Annual average (2000-2007)
  21. 21. International prices for major cereals (US$/ton) Maize Rice Wheat12001000 800 600 400 200 0 Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Oct Oct Oct Oct Oct Apr Apr Apr Apr Apr 2007 2008 2009 2010 2011 21
  22. 22. Cost of production in India1400 Cost of production (Rs/qn)12001000 818 800 693 624 600 400 200 0 Paddy Paddy Paddy Paddy Paddy Paddy Paddy Paddy Paddy Wheat Wheat Wheat Wheat Wheat Wheat Wheat Wheat Wheat Maize Maize Maize Maize Maize Maize Maize Maize Maize Bihar Chhattisgarh Gujarat Himachal Jharkhand Madhya Uttar Pradesh Uttarakhand Average Pradesh Pradesh 22
  23. 23. Average cost of production, prices and farm profits (Rs/qn) Cost of production and farm profits (Rs/qn) in eight states of India12001000 800 600 400 200 0 Cost of Harvest price Minimum Harvest price MS price profit-200 production (Rs/qn) Support Price profit (Rs/qn) (Rs/qn) (Rs/qn) (Rs/qn) Paddy Wheat Maize 23
  24. 24. Value chains for high value maize
  25. 25. Sweet corn• Production and exports • Thailand also has an advantage dominated by the United over US maize in Asian markets States and Europe because it does not grow GM• However, the US is losing its maize. market share of Asia’s • Significant shift in the international importers to Thailand and trade of sweet corn for Asia China • Import of sweet corn has reduced• Advantage in year-round fresh by 12% while export is increased production, lower labor costs, by 162% (2000 -2009) proximity to buying • China and Japan are the major destination importers and China with Thailand and Malaysia major expeorter• Improved quality of sweet corn products has led to an increase in Thailand’s exports.
  26. 26. World exports of sweet corn (1000 tons)1000 800 600 400 200 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 World Africa Americas Asia Europe OceaniaSource: FAOSTAT, 2011
  27. 27. Sweet corn exports from Asia (1000 tons)18016014012010080604020 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Thailand China Israel China, Hong Kong SAR Singapore Malaysia Indonesia Others
  28. 28. World imports of sweet corn (1000 tons)1050 850 650 450 250 50 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009-150 World Africa Americas Asia Europe Oceania
  29. 29. Sweet corn imports into Asia (1000 tons)120 Japan1008060 China40 South Korea20 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Japan China Republic of Korea China, Hong Kong SAR Philippines Singapore Saudi Arabia Kazakhstan Lebanon Others
  30. 30. Asias share (%) of sweet corn global trade45.040.035.030.025.020.015.010.0 5.0 0.0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Import Export
  31. 31. Baby corn• Short cycle crop with a duration of about 60 days as compared to the 110- 120 days for food grain crop.• Labor-intensive high value crop with significant export demand• Asia has emerged as the major producer and exporter (e.g. Thailand, India, Malaysia, China)• Competitiveness in export markets depends on quality and production costs• Income diversification and intensification for small-scale maize farmers - harvest multiple crops and
  32. 32. Baby corn• Contract farming with major seed companies or processors to access inputs and for timely marketing• Small-scale farmers need to meet quality standards to benefit from value chains• High domestic demand in China and other SE Asia countries .Growing high end domestic demand in South Asia• Thailand is the largest exporter in the world with over 61 thousand tons exported/yr• Export markets: USA, Japan, Malaysia, UK (canned baby corn) and• Asian countries (Hong Kong, Singapore, Japan and Malaysia) for fresh baby corn
  33. 33. Challenges• Access to inputs (new seeds, fertilizer, etc)• High risk (drought, floods, etc) and lack of insurance• Price volatility/seasonality• High marketing and transport costs• Inadequate farmer organization to achieve economies of scale• Limited contract farming by food and feed processors for grain maize• Storage and handling• Timely marketing - especially for high value maize (perishable)
  34. 34. Future demand for maize in Asia (IMPACT Model Projections) 34
  35. 35. Projected maize demand in Asia 600 500 Southeast Asia South Asia 400Million tons East Asia 300 West Asia North Asia 200 Asia 100 0 2000 2010 2020 2030 2040 2050
  36. 36. Projected demand for alternative uses600500400 Total Food300 Feed200 Biofuel Other100 0 2000 2010 2020 2030 2040 2050 36
  37. 37. Maize demand in East Asia 400 350 300 ChinaMillion tons 250 Mongolia 200 North Korea 150 South Korea Japan 100 East Asia 50 0 2000 2010 2020 2030 2040 2050
  38. 38. Projected maize demand in South Asia 90 80 70 Afghanistan 60 BangladeshMillion tons Bhutan 50 India 40 Nepal 30 Pakistan 20 Sri Lanka South Asia 10 0 2000 2010 2020 2030 2040 2050
  39. 39. Projected demand SE-Asia 70 60 Kmer and Laos Indonesia 50 MalaysiaMillion tons) 40 Myanmar Philippines 30 Simgapore 20 Thailand 10 Vietnam Southeast Asia 0 2000 2010 2020 2030 2040 2050
  40. 40. Net trade: Huge imports to meet the rising the demand.. 20 Southeast 0 Asia 2000 2010 2020 2030 2040 2050 South Asia -20 East AsiaMillion tons -40 West Asia -60 North Asia -80 Asia -100 -120 40
  41. 41. Projected maize net-trade in SE Asia 10 0 2000 2010 2020 2030 2040 2050 -10 China -20 MongoliaMillion tons -30 North Korea South Korea -40 Japan -50 East Asia -60 -70 41
  42. 42. Projected Maize Net-Trade for South Asia 5 0 Afghanistan 2000 2010 2020 2030 2040 2050 -5 Bangladesh BhutanMillion tons -10 India Nepal -15 Pakistan -20 Sri Lanka South Asia -25 -30 42
  43. 43. Conclusions• The rapidly changing demand for maize in Asia has opened new and untapped opportunities for agricultural transformation and income growth for poverty reduction in the region.• This however requires an integrated approach (technology, markets and policy) that stimulates expansion in production to meet the growing demand while also diversifying market opportunities for resource-poor farmers to access and benefit from emerging markets.
  44. 44. Conclusions• Improving access to new seeds, complementary inputs and services to expand production to meet the growing demand• Diversifying market opportunities for maize farmers in less favored areas to access emerging markets• Building market linkages between small-scale maize producers and other value chain actors• Improving access to market information and other business services to rural producers• Supporting organizational capacity of small-scale maize producers to achieve economies of scale• Enhance skills in maize vegetable production and post-harvest processing that add value to products• Policy support for small maize producer to understand and better satisfy product quality and delivery standards

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